Customer advocacy, lacking KPIs, poor policies and processes, improper internal communications, and more lead to breakdowns in the cycle between price creation and price dissemination. To further complicate matters, “I have always done it this way,” or “my business is different” are fuel to the fire of change resistance.
While much of the behavior may be founded in “good intentions,” the rogue behavior and lack of consistency lead to fissures in pricing strategies, diluted analytics, and bottlenecks in the customer experience management process.
Sales Point of View:
They rationalize their decisions by saying that they will lose the deal unless they bend the rules. And after all, they are only looking out for their customers….
Change resistance, “black box” perceptions, inflexible analytics systems, and a distinct lack of intra-department teamwork resulting from Sales-led organizational personalities, provide the sales team the culpable deniability of “only I know my true market price.” These characteristics tend toward workarounds and non-standard business operating practices to keep transactions off of the daily radar.
This, coupled with compensation incentives not matching price creation strategies, leads to the best laid plans fall apart under the pressure of sales having a louder voice.
They rationalize their decisions by saying that discounts will run rampant. That we optimized prices off historical numbers, assuming that they even had the right prices to begin with, and after all, the math is the math….
Exasperated leadership, missed opportunities blamed on price, transactional inconsistency, introverts (pricing) vs. extroverts (sales), slow time to respond to customer exceptions, and pricing teams recoil around rogue (or perceived) behaviors. While having good intentions organizationally, the focus leads to additional cost to serve and waning customer satisfaction. This flight to centralization often shows up in settings when inter-departmental trust has been eroded or a quantitative only approach is taken by the pricing department.
The breakdown in organizational behavior eventually leads to an “us vs. them” feeling regarding the pricing lever. Sales believes policies and processes are put in place without regard to their workload while they are serving customers for 14 hours a day. Lack of clear and distinct messaging between the grous leads to price leakages as sales validate their “off the cuff” decision making as being time sensitive. Ultimately, their responses either revert to old methods or worse deicsions are being made on less information, so price concessions win out.
The Pricing group sees the lack of consistency in process adherence and lack of use of strict price recommendations as being combative and their hard work not being supported by leadership. The additional work required for ad-hoc analysis leaves little time to actively manage the prices which are moving further away from calculated recommendations. As this erosion continues, segments fall apart in future predictive analysis; thus, creating a viscous cycle as opposed to the desired virtuous one.
Combined, these forces ultimately impact the customer through increased response times and issue resolution, thus bruising the customer experience. If left to continue, any initiative toward Strategic & Scientific Pricing will ultimately fall apart.
To mitigate the risk of this slide, any price change initiative needs to be supported by Executive Management, and an owner identified to spearhead the transition. Communication plans need to be in place, and all voices need to feel as though they have “a seat at the table.” Work plans need to be available for all to see, and a feedback loop created to respond to the unexpected hiccups that WILL occur. New KPI’s must also be determined and a transition plan from the old compensation structure to a new one aligned with the pricing strategy, needs to be outlined early on in the initiative. Quick wins communication often will help to validate ROI and assist in the change management process.
If you need help with an on-going initiative or don’t know where to start with a future planned evolution, ConsilieX is here to help.
