price
optimization
opportunity
price
optimization
opportunity
CELBRIDGE INC.
Where Do We Start?
There are 5 Key Steps:
1. Complete and Analyze Survey – As pricing can and will change the competence ...
1. Survey: Engaging the Organization
Survey allows organization a voice in the change process while also
serving as a benc...
2. FACT-Based Pricing Process
FF AA CC TT
Financial
Metric
Baseline
- Win Rate,
- Discount Percentage,
- Average Deal Size...
3. Customer Life Time Value Analysis
LIFETIME
CUSTOMER
VALUE
Acquisition
Costs
Promotions
Pricing
Product
Configuration
Cu...
4. Deal Desk for Profit Profit Realization
Price strategy will be integrated across all activities
Proper data and analyt...
OBJECTIVES
• Improve and simplify the review and approval
process for Price List Establishment, Pricing
Increases and Pri...
of 7

PriceOptimization_Opportunity_general

Published on: Mar 4, 2016
Source: www.slideshare.net


Transcripts - PriceOptimization_Opportunity_general

  • 1. price optimization opportunity price optimization opportunity CELBRIDGE INC.
  • 2. Where Do We Start? There are 5 Key Steps: 1. Complete and Analyze Survey – As pricing can and will change the competence of the organization the survey enables customer facing staff to have a voice in the process. 2. Establish FACT Based Pricing – The establishment of price discipline through financial review, analytics, change management, and transformation. 3. Implement the CLTV (Utilize Customer Life Time Value) Methodology –This segmentation starts with the understanding that not all customers are equally important. CLTV-based segmentation model allows the company to predict the most profitable group of customers, understand those customers‘ characteristics, and focus more on them. 4. Design and Implement the Pricing Deal Desk – Deals desks play a critical role in accelerating transaction velocity and value. With careful consideration to the design and implementation of a deal desk function companies can improve profitability, drive sales efficiencies, strengthen SOX controls, and enable clear visibility into current and future business performance. 5. Establish Pricing Governance Framework – Pricing governance is a business control framework to ensure that pricing strategies are designed to enhance the corporations financial goals and objectives. It ensures organization compliance is aligned with corporate vision, values, and strategy. CELBRIDGE INC.
  • 3. 1. Survey: Engaging the Organization Survey allows organization a voice in the change process while also serving as a bench mark for future Price Process enhancements: PART 1: PRICING MANAGEMENT 1. What Function do you perform at your company: - Sales – Account Management - Finance - Legal 2. How would you rate the pricing process on delivering competitive bids to win and renew business? - Exceeds my expectations; - Meets my expectations; or - Below my expectations. If you rated this item “Below’, please provide supporting comments as to why and what should be changed? Comments: 3. How would you rate the organizations ability to innovate and create value added offers? - Exceeds my expectations; - Meets my expectations; or - Below my expectations. If you rated this item “Below’, please provide supporting comments as to why and what should be changed? Comments: 4. How would you rate the pricing training process relating to imparting quantitative skills to help you achieve your goals? - Exceeds my expectations; - Meets my expectations; or - Below my expectations. If you rated this item “Below’, please provide supporting comments as to why and what should be changed? Comments: 5. How would you rate the overall pricing communication process? - Exceeds my expectations; - Meets my expectations; or - Below my expectations. If you rated this item “Below’, please provide supporting comments as to why and what should be changed? Comments:
  • 4. 2. FACT-Based Pricing Process FF AA CC TT Financial Metric Baseline - Win Rate, - Discount Percentage, - Average Deal Size, - Profitability Per Deal Analytic Competencies - Competitive Pricing, - Benchmarking, - Segment Prices, - Vertical Prices, - Reference Price Points Change Management - Sales, - Customer Facing Training, - Price Scorecards, - Discounting Scorecards, - Segment Scorecards, - Customer Satisfaction Surveys Transformation - Weekly Price Reporting, - Executive Scorecard Changes, - Pay Practice Changes, - Employee Orientation CELBRIDGE INC.
  • 5. 3. Customer Life Time Value Analysis LIFETIME CUSTOMER VALUE Acquisition Costs Promotions Pricing Product Configuration Customer Losses Customer Loyalty Product Purchase/ Usage Service Costs Infrastructure/ Channel Costs Company Information Number of customers 26,500 Number of new customers per year 1,200 Number of lost customers per year 1,800 Average profit per purchase/transaction $175 Average # of purchases/transactions per year 52 Average customer lifetime (number of years) 5 Average cost to acquire a new customer $6,500 Average cost to retain a current customer $525 Customer lifetime value $38,475 Customer retention rate 93% Overall customer lifetime value $1,019,587,500 Overall annual profit $203,917,500 CELBRIDGE INC.
  • 6. 4. Deal Desk for Profit Profit Realization Price strategy will be integrated across all activities Proper data and analytics will drive execution and action orientation Pricing Strategy - Drive price strategy consistency throughout the organization - Provide un-siloed, holistic strategy and guidance to sales and account managers Solution Pricing -Lead in development of clearly defined value management approach - Bridge gap in price value equation - Bridge gaps on offer ownership Pricing Governance - Used as control point for business and pricing decisions -Drive knowledge into the customer facing staff - Improve discount approval process share responsibility Competitive Intelligence - Keep our products competitively priced by regularly updating market based competitive research Deals Review Support - Proactively support sales with RFP and RFI analytic guidance - Increase win rate and reduce sales cycle time by having pricing experts involved from the start - To be used as critical control point at the deal level - Initial execution arm for enhanced policy - Educate and train customer facing field on proper strategy and support Tools and Guidance -Integrate guidance and thresholds into usable tools that increase sales velocity Measure Results Driven From Key Pricing Initiatives - Discount approval threshold changes - “Discount agreement” policy changes - Expansion of Deal Management Tool (`) - Modify programs, policies, promotions, offers, and strategy as data and feedback improve understanding of customers and marketplace Create and Monitor Key Pricing and Business Metrics - Win rates - Discount levels - Deal Profitability Holistic Value-Based Offer Pricing Measure and Monitor Sales and Deal SupportRealization Circular Feedback Loop
  • 7. OBJECTIVES • Improve and simplify the review and approval process for Price List Establishment, Pricing Increases and Price Analytics • Improve internal understanding and communication the impacts of proposed price • Educate Align Senior Management with Field • Have standard documentation for proposed price relating to the major components of price ENGAGED GROUPS • Finance • Sales • Legal • Marketing • Operations • Insure standard documentation for proposed price relating to the major components of price: - Financial - Client/Market/Competitor - Strategy Execution 5. Pricing Governance * Standing Monthly Meeting to review Pricing Strategy Top Customer Segment Profitability, Competitor Actions, and Key Initiatives. CELBRIDGE INC.

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