Working w/Pricing Consultants.Pps Fall2010 Presentation%20v8[1]
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Transcript of Working w/Pricing Consultants.Pps Fall2010 Presentation%20v8[1]
The Pricing Consultant “Dance”:
Achieving Mutually Successful Project Results
Professional Pricing Society ConferenceFall 2010San Francisco, CA
Presented by: Alan Hollander and Peter Maniscalco
Agenda
• Introductory Case Study
• Session Objectives
• Consulting Firm Business Models
• Role and Expectation Management
• Key Questions for Consideration
• Project Management “101” Principles
• Pricing Practitioner Survey Results & Takeaways
Case Study A
Semiconductor manufacturer
• Major account plan and strategy for multi-year contract renewal supported
by Regional Sales Executive and Business Unit GM
• Consulting team utilized to help develop account level negotiation strategy
with value based selling approach (understand cost to serve, customer
value, competitive options)
• Sales team achieved $10+ million increase over prior contract pricing on
large $50 million electronics account
• Led to establishment of pricing function to assist in large account
management (strategy, pricing, negotiation)
• All “strategic” accounts required utilize same process for major customers
Case Study B
Communications Solution Provider (hardware and software)
• Product price migration program to incent customer upgrades supported by
Business Unit GM and VP of Product Management
• Consulting group commissioned to analyze and recommend the most
effective price program for moving installed base to latest release
▫ 4-5 full time internal client team resources (product, pricing, marketing) utilized
• Program launched resulting in <$1million in upgrade revenue over 9 months
and <1000 upgrade licenses (installed base $70+ mil)
• Sales confusion caused due to overlapping promotions and unclear value
proposition
• Other critical product development and launch projects delayed due to lack
of resources
Question: “Why were there such completely different outcomes?”:
Objectives & Outcomes for Today’s Session
After today’s presentation you will be able to:
• Understand consulting firms‟ key motivators (what makes them tick!)
• Articulate the most/least effective roles and/or scenarios for engaging with a
pricing consulting firm.
• Determine key/critical project management factors to set yourself up for
success on a project.
• Create a „mental checklist „of key questions to prepare for internal
discussion.
• Utilize perspectives from other pricing practitioners to help achieve
mutually successful project outcomes
Consulting Firm Business Model
Objective Benefit/Outcome
Leverage
resources
(e.g. fixed assets)
• High analyst/consultant utilization (e.g. billable time)
drives revenue
• Enables more scale in project coverage/quality control
by partners (e.g. # billable projects)
Establish/Maintain
Client Executive
Relationships
• Generates more opportunities for follow on business
with current client
• Drives opportunities to expand across divisions or
business units within same company
Ensure Market
Reputation Quality
(e.g. referrals)
• Customer testimonials and/or referrals aid in acquiring
new clients
• Possible input to annual price changes (e.g. billable
rates)
• Market messaging and differentiation through case
studies/ success stories
Role Definition & Expectation Management
Setting the right expectations starts by collective assessment of the
“best fit” role for both consultants and practitioners in an engagement
• Roles for consultants which tend to work well:
▫ Sounding board for major initiatives (outside perspective)
▫ Best practices expert and advisor (desired/future state)
▫ Capabilities development & expansion (data, systems, processes)
▫ Strategic pricing initiative roadmap development (e.g. 3-5 years)
• Roles that tend not work for anyone:
▫ Extension of internal execution team (temp implementation resource)
▫ De facto Pricing lead / Interface to senior management (exec
communication)
▫ Project/program management (internal coordination)
▫ Outsourced analytical team
Key Considerations Before Starting the “Dance”
• Is the project intended to address an acute tactical pricing problem or a
broad strategic issue?
• Are there differing views of the problem from key functions (sales,
marketing, finance)?
• Who is the project sponsor or owner? Who owns the end result? What
function and position do they occupy in the organization?
• Do you plan to use a virtual team comprised of different functions,
dedicated pricing team or a mix? Are the number of resources sufficient?
• What is the planned cadence of communication? Are executive “check -
ins” included? How will issue escalation and resolution handled?
• What is a realistic vs. aggressive timeline, including execution, to achieve
the desired results or outcomes (target vs. stretch)?
Project Management “101” – Planning for Success
Checklist
Criteria
LOW SUCCESS POTENTIAL HIGH
Consultant Role •Process
Execution
•Program Mgt •Targeted
support/expert
•Strategic solution
partner
Problem
Definition
•Fix our price! We
need a strategy!
•End period
discounts (acute)
•List price setting
(structural)
•Strategic pricing
capability “map”
Functional
Alignment
•Single function •Internally facing
view only
•Externally facing
view only
•Cross functional
Seniority Level
Alignment
•Grassroots /
Functional mgrs
•Division / P&L
specific
•Sr. level mgt
review forum
•CFO, CEO, COO
Resource
Availability
•Limited-to-none •Virtual team of
SMEs
•Existing pricing
team
•Dedicated cross
functional team
Progress/Result
Measurement
•As needed –
when fires emerge
•Milestone driven •Regular cadence
review with work
team
•Formal readout
with sponsors &
team
Execution Plan •To be determined
in future
•Post completion
handoff to Ops
group
•Pre-determined
implementation
team
•Change mgt /
training team
Pricing Practitioner Web Survey Results
Avg Rating
6.4
7.6
6.5
6.6
7.0
7.0
6.4
What aspects of the engagement did you feel were handled/ run best? (Select Top 3)
What aspects did you feel were not run well and needed the most improvement ? (Select top 3)
How would you rate the following aspects of the project on a scale of 1-10? (1 being lowest/worst and 10 being highest/ best)
Pricing Practitioner Web Survey Results
Top 2 Box =75%
Were the expected results or
enhancements both achieved AND
measured?
How would you rate the pricing project in
terms of its direct financial or operational
impact to your company?
Pricing Practitioner Web Survey Results
14% 2
16%
332%
436%
512%
Project Satisfaction Rating (scale of 1-5; 1=lowest & 5=highest)
Very Likely20%
Likely48%
Neutral/ Unsure16%
Unlikely8%
Very Unlikely8%
Likelihood of Recommending Pricing Consultants to Others
Avg =3.24
How would you rate the overall personal satisfaction
from this last consulting project with 5 being extremely
satisfied and 1 being completely dissatisfied?
How likely are you to recommend hiring of or
working with pricing consultants to others?
Top 2 Box =68%
Fellow Practitioner Insights/ Takeaways
• “You need to have a clearly defined process roadmap as a guide. You need to ensure that the business and consultants are on the same page.”
• “…. ensure ownership stays with you at all times with regular direction updates as well as a sign off on the problem/project before their evaluation and findings work BEGINS “
• “….an internal person, if not crunching the numbers him or herself, [should] be intimately involved in some way with the analytics used to draw conclusions.”
• “A strong internal team should be engaged through out the process to keep the project in the right direction, and at the end, to be able to translate the recommendation into actual implementation.”
Some Final Thoughts….
• Assess internal needs, resource skill sets, pricing capability and expertise gaps
against consultant capabilities and approach
• Onus is on the company and practitioner to proactively own, participate in, manage
the project. Cannot defer everything to the consultant
• Implementation is responsibility of practitioner and company, not consultant. However
the consultant must help develop the critical steps necessary and should be held
accountable for understanding and incorporating potential political issues/ roadblocks
into the execution plan
• Quality consulting project work is different from impactful project work, the difference
lying in how the work is translated into action
• Bottom line is there must be a hand off between consultant and client for the project
to be successfully executed which requires equal effort from both parties
THANK YOU!
Contact information:
• Alan Hollander
908-290-8347 (office)
• Peter Maniscalco
484-947-6450