When it comes to creating a pricing fluent organization, retailers must first lay the right foundations with strategy, people, processes and technology.
Imagine a scenario where you need to get a group of people to a distant location. They could probably walk there, but that would be inefficient – so you need technology to achieve this. Assume technology is covered and you have a car. Just because you have a car doesn’t mean that you will be successful. Maybe it’s manual and you only know how to drive an automatic. Maybe it’s low on gas. Maybe it hasn’t been registered properly or isn’t the right car for this particular trip. Perhaps it doesn’t have enough seats or it’s January in Minnesota and your high-performance car is useless in the snow.
Assuming that none of these are problems, are you able to get all of the right people on board? Do you have the right process for getting them on board – if you need to install a child safety seat, do you know how to do so properly? Are you able to efficiently get everybody in the car comfortably, safely, and fast enough to reach your location on time? Assuming you did everything right, are you confident that driving there was better than public transportation? Maybe you stopped too many times along the way because there was no alignment on when to take breaks or stop for gas or food. Perhaps you adopted the ‘car’ technology but forgot to adopt ‘navigation’ technology and ended up sitting in construction the whole time. Ultimately, even a simple road trip can become a disaster if you have a bad driver, the wrong technology, and the wrong processes in place. And don’t forget strategy – may be the right strategy was to fly and nobody thought outside of the box in the first place.
For most readers of this blog, the above wouldn’t prove to be too challenging of a task – most adults are driving fluent or transportation fluent and have mastered the art of moving themselves and others from one location to another. Mastering the above, however, didn’t happen overnight – it happened in phases . . . each one involving training, best practices and a robust trust in technology and processes.
The Four Characteristics of Pricing Fluency
Developing a pricing fluent organization requires all of the same foundational elements listed above and is absolutely critical in today’s increasingly dynamic and competitive retail landscape. Similar to learning how to drive, building the pricing organizations to meet tomorrow’s challenges won’t happen overnight, but once accomplished, it will open up endless roads of possibilities and opportunities for your company. The following are four key areas to focus on when developing a pricing fluent organization:
Pricing fluent organizations have centralized, data-informed strategies that achieve enterprise objectives. They leverage shopper data, market data and advanced analytics to inform all elements of their strategy ranging from key item classification to category pricing roles to promotion selection. Pricing fluent organizations don’t just have a robust, enterprise strategy, they’ve also leveraged the solutions and insights available to evaluate other strategies and have made informed decisions that considered numerous possibilities.
Pricing fluent organizations never allow a collection of unaffiliated merchant pricing strategies to steer the enterprise in the wrong direction.
Pricing fluent organizations have a strong pricing organization powered by analytically minded, strategic thought partners who enforce their company’s pricing strategy by leveraging the best practices and tools available. They are experts at driving pricing excellence for their organization and partner closely with executives and merchants to ensure that their organization is developing, adopting, and measuring the most optimal strategies to achieve business objectives. They are upwardly mobile value generators for their organization and play a critical role.
Pricing teams in a pricing fluent organization do not spend their time manually executing merchant derived prices in unsophisticated spreadsheets. They do not perform menial, unanalytical tasks. They are a profit center.
Even the best people and strategies can fail if the process is not optimal. Governance is critical to the success of any strategy and if an organization doesn’t have the right process steps and measurements in place, it will surely fail. Pricing fluent organizations don’t just optimize the pricing process to improve efficiencies and execute pricing more seamlessly – they also institute a rigorous process to ensure their strategies are being adopted, executed and properly measured. Because science-based pricing can drive such enormous value for organizations, the most fluent pricing teams also develop processes to increase the number of prices they are able to execute.
As demonstrated in the car example above, technology is critical for achieving pricing fluency. Even the fittest, most experienced hikers will always lose out to a car or a bus or a train. Furthermore, trusting science and technology is critical to achieving fluency. Today’s drivers are comfortable that their brakes will work when needed, that traffic lights will function, that railroad crossing barriers will protect them. They are confident that their fuel gauge is correct and that their odometer will enable them to follow local regulations.
Pricing fluency requires the same adoption and trust in technology and science. Organizations need to not only adopt the leading pricing and analytics available, but they also need to inherently trust it and incorporate it into their new ‘normal’ the way drivers do with GPS and all of the aforementioned technologies. The ability to drive pricing excellence through AI capabilities is extremely powerful and organizations that don’t adopt leading practices and solutions will fall behind.
Building a Pricing Fluent Organization for Success
The above are just a few examples of how pricing fluent organizations function. Like driving, nobody gets there overnight, and technological advances will continue to offer new possibilities, but don’t let perfection get in the way of progress. Focusing on the above four areas and instituting best practices will drive enormous value for your organization and help it compete and thrive in today’s retail environment.
For more on Pricing Fluency, download our ebook Driving an agile, forward-looking pricing organization with Pricing Fluency.