How to Connect Pricing with Selling
The 2022 Growth + Profitability Summit in Stockholm had something for everyone. Attendees enjoyed two packed days of keynotes, sessions, demos, UX labs, product discussions, and plenty of opportunities to network with pricing and commercial experts. One of the hallmarks of the event was a panel moderated by Vendavo’s Vice President of Product Management, Karl Larsson about connecting pricing with selling.
Koen Hoogstoel, Global DX Strategy Manager at Yokogawa, Kati Illka, Senior Pricing Manager at Huhtamaki, and Corey Schroeder, Senior Director of Product Management at Vendavo joined the panel to share insights on how their organizations operate, the challenges they face, and how they view the future.
Pricing Structures at Yokogawa, Huhtamaki, and Molex
In the panel, we first heard from Koen Hoogstoel, from Yokogawa, a global electrical engineering and software company. He shared that the company is split into six major regions (serving 55 countries) in which their pricing is organized. He shared that one of the most difficult challenges with global pricing at Yokogawa is managing and connecting all the regional list prices.
Kati Illka from Huhtamaki, a global provider of sustainable packaging solutions, shared that they have similar challenges, serving 38 countries. Huhtamaki is in the process of implementing Vendavo Pricepoint and Vendavo Intelligent CPQ to help manage global prices. Huhtamaki has country-based pricing and tailors their prices to each country. Huhtamaki aims to bring the values of a big company, while still honoring regional pricing and not losing the benefits that come with it.
Before Corey Schroeder joined Vendavo, he was the Director of Commercial Excellence at Molex, a manufacturer of electronic, electrical, and fiber optic connectivity systems. At Molex, they had four regional list prices. But the majority of their business was based off independent special pricing. About four years ago, Molex implemented Deal Price Optimizer. Implementing the tool allowed Molex to separate the list price from the negotiated price, remove the human element from mundane daily tasks, and use that resource to outline the strategy to setup the system. Thus, as thousands of price requests came in every week, they had a system that automatically drove their pricing decisions, instead of relying on humans to do the work and make the decisions. Schroeder mentioned that introducing Deal Price Optimizer was probably the single most impactful pricing investment they had made in the last decade.
The Journey Toward Value-Based Pricing
Yokowaga has endured a long road of change management. They’ve had to do a bit of convincing when it comes to introducing new list prices, and moving away from cost-plus selling.
Huhtamaki has many business units and each of them has a bit of a different approach to pricing. They are on a journey to coordinate and centralize pricing, make pricing more transparent, and help sellers to do value-based pricing instead of cost-plus pricing.
Panelists mentioned KPIs they are measuring on their journey toward value-based pricing including:
- Price effectiveness
- Speed to quote
- Win-loss ratio
- Hit rate
- Profitability of salesperson
Prior to partnering with Vendavo, there was a lot of manual work in panelists’ ERP or excel workbooks. With Vendavo, they each have a powerful system that does a lot of the work automatically.
Common Challenges with Data
Data was another hot topic during the discussion. Panelists unpacked the data challenges each of their organizations have worked to solve, including:
- Having multiple ERPs with a tremendous amount of data within each
- Incomplete product data structures
- Syncing data from ERP to CPQ and breaking down siloes of data
- Data quality to ensure the right business decisions are being made
- Identifying the right data points for reporting across to the organization
- Ensuring data is clean, up-to-date, and accurate
Sharing the Pricing Vision Across Your Organization
Once you have a handle on your data, you need to focus on your people. In Yokagawa’s case, they separated out the business side of the equation from the IT side. As they implemented their CPQ, they decoupled the business needs from the IT process. Ensuring the implementation was focused first on the needs of the business, then focused on the technology.
At Huhtamaki, they are very focused on change management and open communication around pricing. They work hard to define roles across the organization, have a bottom-up approach to adoption, and are always open to hearing perspectives from various departments in the organization.
For Molex, it’s all about vision and making sure that everyone is aligned on that vision. When everyone was rowing in the same direction, with clear understanding of the objectives, it made it a lot easier to execute.
One challenge for global organizations like Huhtamaki, Yokagawa, and Molex are the cultural differences across regions and countries. It is extremely important to approach change management with openness and understanding. Communicating and sharing your pricing vision is challenging for large, global enterprises.
They also talked about the why behind change management. Helping the organization understand why they should change the way they do pricing and do things differently. Of course, it’s about growth, profitability, improving margins, and revenue. It’s also about future-proofing business.
It was a privilege to listen as these panelists took the stage at Vendavo’s Growth and Profitability Summit in Stockholm. Register for the North America version of Growth + Profitability here and join us in Denver, CO from September 12-13, 2022!