Ideas and Quotes from the Professional Pricing Society Fall Conference in San Francisco
Steven Forth is a Managing Partner at Ibbaka. See his Skill Profile on Ibbaka Talent.
The Professional Pricing Society had its Fall Conference in San Francisco last week. Ibbaka was there to learn from other people in the pricing space. We also gave a talk on pricing and innovation (stay tuned for some follow up posts on this theme).
Here are some of the key themes that came up, along with some memorable quotes.
People are preparing for a tough 2023
There was a lot of talk about inflation, interest rates and a possible recession. People are preparing for a rough ride in 2023. How rough? We don’t know, but there are a lot of storm clouds. Smart pricing teams are taking a scenario planning approach and getting ready for several different possibilities.
Two basic pieces of advice.
Do not peanut butter spread. In other words, the same pricing action will probably not work for all your customers. Redo your pricing segmentation for the new situation. Start by looking at how a recession will impact your customers. The impact will not be the same across your customer base. Some will become more price sensitive. Some will lose purchasing power. Others may thrive.
Do not lock yourself in. You may find yourself giving some kind of concession during a recession. It could be a rebate or discount, it could be a rebat, or you may extend more generous terms. Don’t let your response to what could be a short term recession set the new baseline. Frame any action as short term and make sure you can back out.
Get adaptive - Adam Howatson from Logisense showed how the ability to implement new pricing models can give you the tools you need to respond selectively to a recession. Next year may well be the time to test new pricing and business models.
Pricing has a role to play in innovation
Jacqui Davis from Adobe gave a compelling keynote on ‘Creating a Culture of Innovation Around Pricing.’ She went well beyond basic pricing innovation and showed the role that pricing people can play in business and revenue model innovation. Business model innovation requires culture change, and people are more likely to buy in if they feel they have been heard and have been part of the process.
This was a great set up for my own presentation on the role that pricing people can play in shaping innovation and giving it a direction. We can only do this, as pricing professionals, if we learn the frameworks and processes used by innovation and product management, like design thinking, service design and Doblin’s ten types of innovation.
AI and Big Data are Not a Panacea
Steve Haggett charmed us with a wonderful talk that wove in the design of the Duomo in Florence and many images of Renaissance painting. It was a great change in tone. His keynote was on ‘A Pricing Technology Journey’ and he set out the approach he has taken at Iron Mountain to using advanced technology to solve pricing problems. His guidance is to understand the processes, data flows and insights you are looking for before locking yourself into a technology.
Steve helped us remember that the data used to train AIs can be
Biased
Random (especially in B2B where N is typically small)
Backward Looking (it may not work well if you are introducing innovation or if the environment is changing, as it is today)
Steve has been reading Daniel Kahneman’s new book Noise: A Flaw in Human Judgement, which he recommends.
Value is what ties all the systems together
Gabe Smith gave a great keynote ‘Value Everywhere.’ Pricing needs to understand many different systems these days. In addition to classic pricing software (Gabe is at Pricefx), there is the CRM (Customer Relationship Management), CPQ (Configure Price Quote), Billing System, Finance System, Customer Success System, Usage Management system …
How can we connect all of these systems in a meaningful way? By organizing around the value delivered to the customer. The value cycle of Create, Communicate, Deliver, Document and Capture value can be a framework for information integration.
Ibbaka is working with Pricefx on how to use Ibbaka Valio and Pricefx Velo together to help companies execute on value based pricing and win at large deal negotiation.
And some memorable quotes
“Choose to be happy.”
A message from Wiglaf Pricing. Thank you. Wore the button. Brough back a handful for my children and grandchildren.
“Pricing sticks their nose in everyone’s business.”
“Scoot on Over.”
Pricing needs to ask leaders of other functions to ‘scoot on over’ to make room for pricing to contribute.
“Value ties in the customer immediately. Happy customer, happy company.”
Patience Mutsio, CHEP
“If you under value your product in the market your customer will also under value your product.”
“Sales often resists changes in the business and monetization model. Ride in the truck with sales. Get them onboard early.”
“Sometimes innovation is needed to keep the lights on.”
Jacqui Davis, Adobe
“Our pricing strategy is to have fair pricing. Pricing that is fair to all of our buyer and pricing that is fair to us.”
Steve Haggett, Iron Mountain
Prepare your pricing for 2023
Ibbaka has been sharing our ideas on pricing in 2023.
Part 1 Pricing and Inflation: How to Respond
Part 2 SaaS Companies plan to raise prices in 2023, do they know how to do this?
Part 3 Inflation does not give you a Carte Blanche to raise prices
Part 4 Value Driver Priority and Pricing Under Growth and Interest Rate Scenarios
Part 5 Pricing in consolidating markets
Part 6 How will a recession change market dynamics and impact your pricing strategy