BCC: Pricing for success - an interview with Pol Vanaerde, President of ePP

Quoting a well-known study ‘The Price Advantage’, a 1% enhancement in the pricing management translates into an 11% profit growth. Hence, the potential for improvements is immense. Pol Vanaerde, President of European Pricing Platform, talks about the concept and main goals of ePP and how to improve the pricing policy. What was the idea behind the birth of the European Pricing Platform? The idea of sharing best pricing practices started from a group of pricing managers who attended my training session on strategic pricing. The group asked me whether I could facilitate somehow their networking and experience sharing. After some informal workshop meetings, the idea emerged to set up the European Pricing Platform, offering a more complete range of workshops, training events and interactive discussions. This first group of pricing mangers decided to fund the initiative with a ‘participation fee’, which made it possible to invest in a portal site www.pricingplatform.eu to share the contents and tools.

What are the main goals of ePP? The European Pricing Platform (ePP) is the first open European network focusing on supporting the pricing decision makers in a wide variety of industries and sectors. The ePP supports all qualitative ‘pricing’ initiatives and shares the knowledge with its participants. The mission of the ePP is to be the on- and offline meeting place for European pricing decision makers and pricing academics. The ePP helps pricing decision makers to put pricing on the CEO agenda and creates a platform to extend the network of pricing professionals where they can find and share pricing knowledge, search and post jobs, and build relations. The ePP supports pricing decision makers with knowledge development, sharing sources of knowledge, tools and technologies in the complex environment of strategic pricing by means of trainings, workshops, seminars, congresses and publications.

How does ePP works? The ePP provides cross-business answers to the latest pricing challenges. By combining on- and offline media (workshops, seminars, training events, in-companies, webinars, round tables, portal site, etc.). Companies gain inside knowledge and cross industry insights needed in order to benchmark their pricing strategies, they maintain critical competitive advantages and ensure maximum value capturing. Participants enhance their pricing know-how through interactive trainings and workshops, in which they get state-of-the-art pricing knowledge. Our most popular training events at the moment include: Strategic Pricing, Euro Pricing, The Pricing Toolbox, FMCG Pricing, Value Based Pricing, Pricing in more difficult times, B2B Value Selling, etc. Of course, the ePP also offers pricing decision makers an opportunity for peer-to-peer contacts with European pricing decision makers to share the best cross-industry practices. To assure high quality and practical relevance of the initiatives, in each country the ePP is empowered by a strong reference board of pricing professionals. Reference boards guarantee excellent performance of the platform in each country and monitor the delivery of top quality activities. In 2009, the ePP launches “The PricingFuel Days” which will be held twice a year (starting in Germany, Belgium and the Netherlands). In 2008 we cooperated with Pros Pricing, a leading provider of pricing and revenue optimization software products, on the organisation of “The European Pricing Forum – 2008” held in Frankfurt. It was the year’s most comprehensive event dedicated to pricing and revenue optimization excellence. We also organize a yearly European Pricing Thesis Award sponsored by Vodafone, KLM and TNT Express. The idea behind this award is to promote pricing with graduates and young professionals. After all, the need for pricing expertise will increase significantly in the coming years. Knowledge development of pricing strategies, software, tools and tactics are key elements for organizations aiming at sustainable growth and value capturing. Only few organizations have pricing managers today. As the need for more talent will seriously increase, students who focus on the pricing subject might be one step ahead of others at the moment they enter the career market. We herewith stimulate a new generation of professionals starting their careers with fundamental and applied knowledge in the pricing area which is the driver behind the European Best Pricing Master Thesis Award.

Who are the participants and experts of ePP? Our participants are high level executives, CxO’s and managers interested in learning more about pricing. At the moment we have over one hundred top companies who joined our Pricing platform. Our academics are lecturers and professors at European universities, linking academic knowledge to managerially-relevant pricing knowledge and solutions We have partners in different businesses which can be classified under different titles: pricing experts, pricing research experts, and pricing technology experts.

What benefits can ePP participants expect? EPP participants get discounts on state-of-the-art interactive workshops and seminars. They also enjoy a discount of 10% on all ePP trainings, and a 15% discount on the Pricing Conferences partnering with – and endorsed by - the ePP around Europe. Participants can also download all the ePP workshop presentations free of charge and have free access to the list of “need to read” articles. Besides this, participants are getting a promotional rate on the Journal of Revenue and Pricing Management. Furthermore, as a participant you have access to a focused network of pricing professionals, which is more specific than most open business networks. As a participant of the ePP, you can always rely on the support of the ePP office team when having Pricing enquiries. On the ‘Pricing Blog’ ePP participants have access to the latest pricing news. Finally, the ePP offers its participants several on- and offline possibilities to share experience and knowledge, connections and networking.

What would be the first step for a company that wishes to improve their pricing? Companies without pricing strategies often have a lack of control over the pricing process and price setting. These companies frequently have ineffective basic price processes, lack of procedures or poor control over the procedures and no clearly defined pricing RACI-models. They usually use cost-plus or break even pricing and are faced with day-to-day price fire-fighting. For these companies, to gain control and working towards a descent pricing strategy is the first step. Starting with a pricing audit is the best way. Price leakages can be fixed, procedures for price setting and pricing discipline are put in place. Often, a minimum price reporting is installed, and a competitor price watch and lost/won client analysis is in place. Once these elements are under control, it is time to install a pricing team, appoint one or more price managers and define their roles. Periodic pricing reviews are conducted, and these companies start using more complex techniques such as price segmentation, use of value based pricing, price guidance/segment, etc. This doesn’t mean the end of the journey. There still remains the need to implement price KPI’s and a price control dashboard. It’s also the time to integrate the bonus systems to align everyone around the pricing strategy.

How can the software tools help in improving pricing? Software tools can help to take control over data, delivering fact-based information which is often the first hurdle to take starting with pricing. Software tools can also be necessary to define behavioural price segmentation, install price guidance per segment, support sales with pricing tools and start yield management.

What kind of tools are these? Although Excel can help a lot at the start, in a further step to pricing excellence you will need other software if you have to deal with large-scale data gathering, typical for industries with thousands of ‘price points’ (energy, telecom, travel, banking, etc.). Most often, extra software is needed as a layer ‘above SAP’ to extract relevant pricing intelligence.

What kind of investments a company needs to improve pricing? We often see that companies are best helped when they start with a pricing audit to understand the actual challenges and opportunities in pricing. The investment for an audit has to be estimated. Implementation of the advice is typical project management but if the company has pricing managers to support the implementation, investment expenditures at this stage can be kept low.

How fast can you get return on the investment? Based on my experience, I could say that the margins can raise from 3% to 7% in 6 to 12 months, which makes it an extremely worthwhile investment.

What is the role of pricing policy now in the time of recession? As the European Pricing platform we advise companies to analyse the changing buying patterns and market dynamics first. Fear and aggression are very effective profit killers. Nowadays the reasonable pricing strategy is even more important than in the time of prosperity. Why not come to our next training: ‘Pricing Management in more difficult times’. We share concrete practices helping to increase margins without increasing prices.

Interviewed by Mirosława Huk, BCC

Pol Vanaerde has a successful marketing strategy track-record. He was responsible for the European launch of Alpro Soyfoods. Elected as product marketer of the year in Belgium. Later joined MC. Bride PLC (private label detergents & Cosmetics) as European Marketing Manager and Conoco-Philips as New Business Manager. Pricing was always one of the key responsibilities. Founder of Vanaerde Consulting, Truemarketeers and TruePricingexperts. Guest speaker at Vlerick Leuven/Gent Management School, University of Brussels, VNO/NCW the Netherlands, and in a wide portfolio of in-companies, seminars and conferences in different industries all over Europe. He is the initiator and president of the European Pricing Platform.

Marcin Gałczyński, Sales and Distribution Team Leader, BCC: Pricing in SAP The insight into buying habits of our customers is based on the sales data analyzed in terms of the volume of sales to particular customers, their size, location or industry. Thanks to the use of Business Intelligence tools we can prepare segmentation of our customers from the point of view of similar buying behaviors. This is the first step in employing an IT system to support the company’s price management and sales processes. For a company which uses a SAP ERP system, SAP BI will be a natural choice. It seems worthwhile to invest in the development of pricing tools which will help to define prices for particular customer segments in a transparent way and to implement SAP Workflow tools supporting price changing and approval of the sales offers and orders. The defined prices, supplemented with additional pricing thresholds calculated on the basis of SAP BI analyses (minimum price, last purchase, estimated price the customer is ready to pay, sales target) can be displayed to the sales representative at the time and place of closing the sales deal. Equipped with such comprehensive data, the sales representative will be able to prepare the optimum proposal for the customer, meeting all their expectations. The development of detailed aspects of such solutions requires extensive knowledge and experience or support of an external partner. Furthermore, implementation of dedicated pricing tools which can be integrated with SAP can also be considered. Their suppliers usually offer ready-made reference models for various industries which considerably facilitate implementation and allow for quicker return on investment. The implementation of such solutions is a project comparable in size to a small rollout of an ERP system. The examples of software worth recommending include PROS Pricing Solution Suite and SAP Price and Margin Management by Vendavo.

Source: http://www.english.bcc.com.pl/index.php?s=5&nWMact=2&nid=535

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