August 19, 2013
The answer is simple: cadence is directly applicable to pricing discipline. You need a regimen in price management. To reinforce this, I offer you the following curated list of cadence activities.
On a daily basis:
• Review a set of predefined relevant price and margin KPIs to identify areas of poor performance. Explore your price waterfall to identify the root cause in low margin products, poor sales performance by seller, product line, and region. Work with your colleagues to address these issues via process and/or policy changes.
• Monitor alerts for violation of discount or margin thresholds. Review specific deals and transactions that are outside the sweet zone.
• Monitor volatility in your list and target prices, assessing which raw materials price changes are affecting you. Consider and rapidly implement a price change where and when needed.
On a weekly basis:
• Host a Friday call to offer support and learning for your Sales force. Answer questions on specific deals, take the opportunity to teach a pricing concept, or discuss why policy changes in a discount threshold were made.
On a monthly basis:
• Review Contract Volume Compliance to identify products or customers that are consistently underperforming. Address these opportunities with the Sales organization to drive corrective actions.
• Review your performance in comparison to the market, to a set of market indices or your competition. Ensure performance is in line with expectations relative to the market.
• Study your price waterfall using rolling monthly and quarterly views. One good study is to explore under-performing customers. Find the root cause and address it.
On a quarterly basis:
• Facilitate business reviews with your centralized pricing team, your distributed pricing specialists, and management. Insist that your pricing leaders communicate their performance, findings, and improvements leveraging your company’s price waterfall. Make the waterfall the foundation of all pricing discussions. Using the waterfall in business reviews is a great way to indoctrinate the discipline.
• Publish a column in your company intranet or internal social media platform to communicate what the pricing team has been doing and the impact you have had on the business. Be vocal about results, both positive and negative. Be certain to communicate what you have learned and celebrate successes.
On an annual basis:
• Review your segmentation model. Analyze the drivers of pricing variation. Have they changed since the segmentation model was developed? Has your business model changed? If so, work to get that done and implement it into your pricing discipline.
• Review and refine your pricing strategy. Host a two-day workshop with your team and senior business leaders to openly discuss and debate your strategy, setting the framework for an updated approach to help the business over the course of the next year.
Cadence plays a big part in management and leadership. It plays a big part in your pricing discipline. This notion of being deliberate about a set of activities facilitated on a regimented basis is critical to success. How do you keep the rhythm of pricing discipline beating within your team, your division, your company?