Aligning and adapting pricing models and pricing strategies to changing customer behavior and needs including current market conditions is a crucial part of B2B sales and revenue planning. Without incorporating the right data driven price setting while doing this, companies face the challenge of not having a balanced market-aligned pricing model. Catch more from this conversation where Jon Higbie, Chief Scientist at Zilliant shares a few thoughts on B2B pricing challenges.
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Can you tell us a little about yourself Jon? We’d love to hear about your biggest highlights from your journey in tech / B2B so far!
To start, I’ve been enjoying my time at Zilliant since joining the team in early 2020. In my role as chief scientist, I’m currently working to expand our rapidly evolving platform offerings to new customers in various industries on top of supporting current customers with solution visioning.
As someone who’s been in the pricing and data science fields for nearly 25 years now, I’ve had the opportunity to work on some exciting pricing projects like customer-specific pricing, real-time price management, and large-scale network optimization for a variety of B2B and consumer companies like Walt Disney Television, Maersk and Marriott International.
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What are some of the biggest pricing challenges you’ve seen newer enterprises face? Overall in the B2B segment, if you had to share 5 top of the mind tips to solve pricing challenges, what would they be?
Enterprises often perceive that not having enough existing customer and competitor data is a barrier to optimizing prices. In many cases, these companies have all the data they need within their order history and transaction data. In the absence of data-driven price setting, companies commonly set a list price and allow sales reps to negotiate and discount based on gut feel, intuition and observing what their competitors are doing. Part of the underlying issue with this approach is that pricing will grow more complex as the company grows and, without market-aligned pricing for each unique scenario, ultimately their profits and overall growth potential will be undermined. So, in order to solve these pricing challenges, B2B companies — old and new — should:
- Align not only their product pricing to corporate P&L strategies, but also establish a dedicated pricing function based on their respective organization’s people and culture;
- If not consolidate, then tightly coordinate elements of the pricing process. If product management own list pricing, and the pricing group owns segment pricing and customer specific pricing their efforts need to be aligned. I’ve seen cases where list prices were changed, and the pricing group found out weeks later after many low-margin prices had gone out;
- Go beyond descriptive and rules. Maximize data potential by implementing data science initiatives such as constraint-based price optimization and predictive sales analytics;
- Leverage software solutions that will help them tailor pricing strategies based on current market conditions, customer trends and elasticity to use price as a strategic business lever;
- Communicate value and establish distinctive benefits for customers while providing sales reps with contextual visual analytics so they can quote with confidence; AND
- Focus on a consistent pricing experience across all sales channels: online, in-person, on the phone, at the store counter or otherwise.
How have these same challenges evolved during the last few weeks while the Covid-19 pandemic has been playing out and how has Zilliant helped keep up pace to help its users?
With the COVID-19 pandemic, manufacturers, distributors and services companies are facing unprecedented disruption, whether it be in their supply chains, workforce, customer demand or broader operations. What that ultimately means is that companies are realizing they must adapt and align their pricing strategies with what’s currently happening in the market in order to retain profit margins. Zilliant has been working intensively with our customers to help them use price elasticity as a guide when making pricing decisions during this time. If there is no volume to gain because of a drop in overall demand, it does not make sense to lower prices. However, there may be instances where a lower price can result in incremental volume, and we can use elasticity to help them pinpoint those opportunities. We have also been helping companies assess a number of adjacent sales issues, such as inventory and allocation planning, expansion to ecommerce and anticipating economic fluctuations to help them achieve profitable growth in the longer term.
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Could you talk about some recent / creative ways in which Zilliant has enabled the efforts / goals of its customers? (without being too promotional!)
Zilliant is supporting our customers in a number of very interesting ways. To start, one customer is using our Strategy Interface to adjust prices for select SKUs and others are adapting the Sales IQ engine to continue to provide the most relevant sales opportunities in some potentially volatile markets.
We’ve also produced a Price Defense workbook to allow customers to understand how Zilliant is using data science and analytics to determine final segment prices, providing more visibility into our best-in-class pricing process. Along with that, we are currently working with a European customer to provide science-based prices displayed in physical stores. And drawing on pain patterns we’ve observed among multiple customers in the rental industry, we are building a first-of-its-kind price optimization capability that factors in forecasted demand and capacity.
We have also opened up our platform to allow customers to rapidly deploy new capabilities. One customer is using our platform to deploy a KVI algorithm to their distribution hubs.
What are some of the future plans (short to long-term) / innovations for the platform or products in mind, given the way businesses are being forced to re-evaluate how they function because of the pandemic – how does the team at Zilliant plan on innovating further to meet these evolving business needs in B2B?
Good question! At Zilliant, we’re committed to helping our customers reimagine sales and pricing by helping them transform their commercial processes. Our innovation culture is largely driven by our close collaboration with customers and relies on helping them resolve pain points, listening to their concerns and developing capabilities tailored to their needs.
To that end, we are continuing to invest in data science/AI initiatives and developing software solutions that will allow our customers’ commercial processes to be as scalable, agile and adaptable as possible as B2B companies continue to rapidly evolve.
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Jon is the Chief Scientist at Zilliant