Content navigation:
- Implement a Pricing Platform as a Means to Drive Awareness of Pricing Within the Organization
- Focusing on details instead of a big-picture strategy
- Not Allocating Enough Resources for Organizational Change Management
- Not Dedicating a Proper Team
- Going Too Wide with Competitive Pricing
- Neglecting Proper Data Handling
- Not Track Impacts: A Crucial Oversight
- Summing Up
When retailers embark on the journey of refining their pricing strategies, the allure of external consultants or pricing tools can be strong. However, the adoption of a pricing platform must be accompanied by a well-defined vision, strategy, and organizational structure. This article delves into the pitfalls often encountered during implementation, offering insights on navigating these challenges for successful outcomes.
1. Implement a Pricing Platform as a Means to Drive Awareness of Pricing Within the Organization
When retailers contemplate their pricing strategies, they often seek assistance from external consultants like McKinsey, PwC, KPMG, or Simon & Kutcher or consider implementing pricing tools. However, simply adopting a pricing platform without a well-defined vision, strategy, and organizational structure can lead to failure. Operationalizing pricing without understanding business needs and team requirements can be detrimental.
The first critical topic is attempting to go operational without a solid foundation in strategic planning. Neglecting the strategic side, such as defining pricing movements, establishing governance, and aligning with the team's needs, can sabotage the success of any pricing platform. When done gradually and according to the strategy, the pricing solution could give a 20% increase in trade spend effectiveness. But rushing into implementation without a clear pricing strategy in place is a recipe for disaster.
2. Focusing on details instead of a big-picture strategy
Finding the equilibrium between granular insights and the bigger picture depends on internal KPIs and the retailer's overall strategy. Leadership teams play a pivotal role in setting the tone and priorities. For instance, if the focus is on increasing margins or turnover for the year, it's impractical to meticulously assess every single product.
Herein lies the role of a Pricing Solution – to discern when customization efforts should taper off. While our aim is to address as many specific scenarios as possible, a point comes where it's unwise to channel excessive resources into rare cases that hold a minimal impact on the larger network.
To avoid such pitfalls and master the art of pricing optimization, striking the right balance between depth and breadth is essential. It's time to chart a course that steers clear of excessive sprawl and instead focuses on targeted precision, all while keeping the broader strategy in sharp focus.
3. Not Allocating Enough Resources for Organizational Change Management
Now, let's talk about another important thing - managing changes. It's like guiding a big ship through a sea of adjustments, especially when it comes to big companies. Smaller ones are usually better at dealing with changes because they have fewer people and less resistance. But if you don't handle it properly, things can get messy. In your retail organization considering 10+ people already involved in pricing/category management this is a good time to consider taking more attachment to OCM.
Change management isn't a side act; it's a pivotal player in any project that ushers in modifications, and our initiatives are no exception. Now, let's delve into what this entails and how to ensure adequate resources are channeled. While a C-Level executive can procure technology, it's not as simple as sending an email and one or two onboarding sessions company-wide to initiate usage.
A well-defined OCM strategy allows for the mapping of all relevant stakeholders and their roles in the project. Some stakeholders may be decision-makers, while others may only need to be informed of the changes. To ensure a smooth implementation, it is crucial to understand the impacts that the project may have on various areas of the organization, and merge or separate some roles and functions.
Unfortunately, many companies tend to overlook the significance of change management and treat it solely as a task-driven project. However, OCM is much more than that; it involves comprehending how the project affects different teams and individuals. One of the initial exercises that should be undertaken is identifying and understanding the stakeholders who the changes will influence, those who can influence the project, and those who need to be kept informed. Regrettably, this mapping process is often not done proactively or documented, leading to potential complications later on.
To address this, a comprehensive change management strategy must be established from the outset. Such a strategy includes effective communication, feedback loops, and stakeholder engagement. Ensuring stakeholders are involved from the beginning and actively seeking their feedback is crucial for several reasons. Firstly, it helps identify potential issues early on and avoids signing off on solutions that are not ideal for the organization. Secondly, involving stakeholders in the decision-making process ensures that the project's requirements align with the needs of all affected parties.
In this context, change management thrives as the compass guiding the ship through the stormy seas of transformation. Its effective stewardship can't be overlooked; instead, it demands deliberate attention and ample resources to steer the course toward a successful destination.
4. Not Dedicating a Proper Team
In the intricate journey of implementing a pricing platform, the importance of a well-structured team cannot be overstated. It commences with the delineation of essential roles, roles that are integral to the successful execution of each project. While some personnel might assume dual responsibilities, the clarity and presence of these defined roles are paramount.
Typically, each team boasts a project sponsor, often a C-Level personality, strategically positioned as the project's champion. This individual occupies a central spot, wielding the responsibility for catalyzing the company's transformation. Their leadership acumen is indispensable, but equally crucial is their alignment with other departments. Pricing, as a multifaceted domain, necessitates synchronization across organizational teams. Collaboration with neighboring departments becomes the cornerstone of progress.
Enter the role of the business process owner or pricing owner – a key decision-maker within the client's ranks. In the consultant-client dialogue, this individual wields the power to choose from presented options, analyzing pros and cons to steer pricing strategies.
In the orchestration of this endeavor, a dedicated project manager takes the stage, armed with a well-honed methodology. While the role can sometimes be embraced by an existing team member, its core purpose is to ensure seamless coordination. Timely task execution, comprehensive stakeholder engagement, and fluid communication form its core mandate.
Usually, there are several regular end users who will perform pricing tasks on an everyday basis and work with pricing solutions closely. However, for larger teams, the inclusion of superusers assumes significance. These adept individuals garner profound expertise in product usage, facilitated through a structured educational system - "Train-the-Trainer." Our Competera experts impart knowledge to these superusers, who, in turn, educate their peers. This dynamic process encompasses foundational setup and supplementary in-depth workshops. Our support remains steadfast, ensuring a network of assistance is just a message away.
5. Going Too Wide with Competitive Pricing
In the ever-evolving landscape of retail pricing strategies, some pitfalls stand out prominently. One such misstep, which we delve into in this article, is the temptation to cast too wide a net while working with competitive data. It's a common scenario: retailers enthusiastically embrace the idea of monitoring every nook and cranny of the market, only to realize that the expenditure of effort, finances, and resources is disproportional across all their products.
Our recommendation to navigate this challenge is to employ a thoughtful approach. Rather than attempting to monitor each and every SKU in exhaustive detail, a more judicious method involves creating a curated list of products. This can be achieved through various methodologies like the ABC analysis or focusing on AB groups, Key Value Items (KVI), and similar categories.
Additionally, a crucial aspect lies in the selection of relevant competitors tailored to specific product categories. While some stores offer a vast array of goods, spanning groceries to electronics, it's essential to question the value of closely scrutinizing a category where the retailer isn't an industry leader.
6. Neglecting Proper Data Handling
Let's talk about data, a crucial element in our journey. During Comptera’s years of working with retailers, we’ve seen that team maturity and ambitions are not always supported by data readiness.
Good pricing plans really depend on having the right and well-prepared data. Sadly, some retailers don't store, organize, or get their data ready enough, and this makes it hard to make good decisions. Ignoring this important step can cause wrong ideas, bad price changes, and, in the end, not getting the best results. It's like trying to go somewhere without a good map – you might reach your goal, but the way there could be full of problems.
Once data is in place it can be used for various purposes. Change can face resistance, and different opinions might arise. Our job is to keep asking questions like, "What does the data tell us?" Yes, there might be feedback from clients, but how much feedback is there? What part of the clients are affected? How does this change the average shopping basket or overall data?
7. Not Track Impacts: A Crucial Oversight
Without a well-established system to measure uplifts and assess the project's success, companies may miss out on crucial insights that could optimize their strategies and enhance profitability.
It’s pretty obvious that retailers should prioritize setting up robust data infrastructure and methodologies for tracking impacts. A reliable data warehouse is essential to gather the necessary information to assess ROI accurately. This data not only helps quantify the project's success financially but also identifies opportunities for improvement throughout the implementation journey.
Additionally, it is vital to focus on usability and user experience during the project. Companies should track how users navigate through the pricing platform, analyzing the number of clicks and identifying areas that require simplification. Usability feedback provides valuable insights into whether the platform meets user expectations and helps optimize the overall user experience.
Resistance to change is a common hurdle faced during implementation. To mitigate this, organizations should foster open communication and encourage anonymous feedback to address concerns effectively. Agile methodologies with a dedicated squad lead can facilitate smoother communication and feedback loops.
Despite careful planning, resistance, and challenges are often inevitable during implementation. The key lies in actively addressing governance and management issues. Companies should be proactive in managing stakeholders, encouraging open dialogue, and avoiding delays caused by resistance.
Summing Up
To conclude, as retailers strive to optimize their pricing strategies, key considerations come to the forefront. Establishing a robust strategic foundation, striking a balance between granular details and broader objectives, and committing to comprehensive change management is imperative. The synergy of a dedicated team, curated data analysis, and vigilant tracking of impacts form the bedrock of a successful pricing implementation. With these insights, retailers can chart a course toward pricing excellence and lasting success.
