Blog, Pricing

Demonstrating Real ROI for Your Pricing Solution

By Mitch Lee
February 5, 2019

When allocating any significant amount of budget to a particular tactic or tool, you need a strategy for demonstrating ROI. Leadership wants to know the value of their expenditure and whether or not it’s the most effective way to achieve their goals. The bigger the investment, the greater the demand for a healthy ROI.

But demonstrating ROI isn’t always clear cut. You may be convinced your tactic was hugely successful or the fact you are completely reliant on your new tool demonstrates need but can you quantify the benefit in plain terms? Can you point to evidence of success beyond gut-feel?

Super Bowl advertisers face these tough questions every year. A thirty second commercial during Super Bowl LIII cost between $5.1 and $5.3 million and production costs push the expense line even higher. Advertising on the most-watched TV show of the year costs more every year.

There are a variety of ways companies demonstrate Super Bowl advertising ROI today. Market researchers launch viewer studies to measure ‘brand lift.’ Social media mentions are strategically fed and then closely monitored. Companies build tracking capabilities like promo codes into their campaigns in the hopes of seeing a sales boost or at least growth in purchase intent.

Investments made in pricing software are no different. How does the solution you’re using to optimize your pricing deliver real ROI? There are several ways to measure this – from margin improvements to shorter sales cycles and many benchmarks in between.

How Corning Set Metrics

Corning Optical Communications recently implemented Vendavo Profit Analyer™ to price, analyze and optimize across more than 200,000 company SKUs. In addition to growing profit, they also wanted to lower IT costs so they replaced their aging, on-premise data warehouse with the Vendavo cloud-hosted option. The result was a lightened IT workload, enhanced security and reduced infrastructure expenses – all quantifiable metrics if the measurement process is established early on.     

In addition to moving to a SaaS model, Corning added Vendavo Professional Services to maximize their investment in price optimization. Vendavo consultants supported Corning’s solution design and configuration, change management, and value measurement.

Specific value cases were created for Corning, including the identification of negative margin and low margin transactions, creating a process to monitor and manage costs-to-serve at a granular and actionable basis, establishing business routines for optimizing pricing in general and creating value-based pricing for key products.

 “The biggest benefit we experienced with Professional Services was in go-live preparation and planning,” says Ken Foret, manager of pricing enablement for Corning Optical Communications. “The Vendavo pricing consultants worked with us to outline metrics for success, set goals, and then measure those goals precisely and consistently. Those resources have made a huge difference in helping us prove value and progress throughout the organization.”

Corning’s work has paid off. Corning is optimizing prices across their wide range of SKUs and sees both significant margin improvement and cost savings. Real, demonstrable ROI.

Vendavo’s integrated professional services have helped us climb the learning curve faster, implement more smoothly, and deliver on the value of this investment which we’ve calculated in the first year at approximately $10 million in positive financial impact,” says Foret. “Their professional services have been crucial to our success.”

To learn more about how Vendavo has helped Corning realize significant value in their price optimization work, download the full story here.

  • Corning , margin improvement , pricing , ROI

    Mitch Lee

    Mitch is a Profit Evangelist at Vendavo with 25+ years of experience in the technical, operational, marketing, and commercial arenas of the process industry. Prior to Vendavo, Mitch was with BASF and Orica in product marketing and business management, driving operational optimization, pricing excellence, and margin improvement, as well as personal engagement in high value sales negotiations. Mitch also has deep experience with raw materials supplier portfolio management having negotiated large scale and long-term agreements with global suppliers.