Last week, I traveled to Houston for Ardensi’s USA Pricing Summit. Inflation and market volatility were, of course, ever-present topics—yet more importantly, they are forcing different approaches, alternative solutions, and new ways to innovate. After many keynotes, breakouts, and bar conversations, below are the top themes and my takeaways from the event.
- Partner with sales. I debated listing this topic five times. As market turbulence rages on, now is not the time for pricing to operate in a black box. (We’ve all heard it.) In terms of recommendations: the simpler, the better. Make sure your logic is clear, and if you can’t explain it on the back of a napkin, don’t go there.
- Prioritize quick wins. Building momentum during volatility can often include tackling short-term profitability projects. This includes bringing visibility to discounting habits, or even better, understanding why discounting is happening in the first place. In areas where discounting is behavior-driven (instead of market-driven), providing data-based insights can be a prompt to rectify the issues.
- Stay ahead of inflation. Inflation rates will take years to stabilize. A focus on long-term profitability is essential to not only ride the wave, but also grow in the face of current challenges. In addition to discounting behavior, teams can also review cost-to-serve across their portfolio to consider firing unprofitable customers. Look for ways to create unique value, including partnering with other companies within the channel to better serve the end customer.
- Automate processes wherever possible. Pricing-related decisions must happen quickly – and any time companies can automate their pricing processes, it frees up resources. Teams are automating pricing execution, and it’s paying off in terms of profitability and freeing up time to focus on more strategic issues.
- Maintain a dynamic strategy. Cost and demand levels can vary drastically by product/service. We expect that to continue. Some products may be in recession, while others may be in more of a bull market (despite high inflation levels). Make sure your focus areas are lined up with the demand and cost levels of each product, and that you’re not forcing your portfolio into a one-size-fits-all strategy.
Overall, our ability to make decisions quickly and balance short- and long-term profitability seem to be the most essential elements of succeeding in the next few months. As you partner with sales to close out the year, keep the following questions in mind:
- Are you faster than your competitors in how quickly you react to market conditions?
- Before touching price, how do you optimize on profitability? Have you gotten bad costs and bad habits out of your ecosystem?
- Is the sales team armed with what they need to fight changing customer needs? How well are you equipping the team on the front lines?
