Industrial Manufacturers: Ensure Resiliency by Digitally Transforming Pricing and Selling
In this blog post, we’ll examine what digital transformation means for industrial manufacturers and how software is critical for overcoming inflation and volatility-driven pricing and revenue growth challenges.
Challenges Loom for Industrial Manufacturers Amid Economic Uncertainty
The latest reports on inflation are all over the place. While U.S. inflation eased ever so slightly in early 2023, the global economy remains in a crisis state as it grapples with continued high inflation. Additionally, fears of a possible recession have “surged in recent weeks,” according to a recent Reuters article. The fact is that economic uncertainty remains in play, which is especially troublesome for industrial manufacturers as constant cost fluctuations make profitable pricing and sustained revenue growth major challenges.
Consider this quote from Slalom Senior Director Matt Baker in a recent appearance on Zilliant’s B2B Reimagined podcast:
“Manufacturers really need to focus on being nimble, responsive to the changing realities that are out there. Costs are constantly in flux. Customer expectations are changing. Is inflation going up, is it going down? Going sideways?”
But the question remains, how do manufacturers enable a nimble approach to respond to today’s turbulent economy? Broadly, the answer can be boiled down to one word: Digitalization. By ensuring organization-wide digital transformation and leveraging data-driven software, manufacturers can ensure resiliency in our era of unprecedented inflation.
“Manufacturing companies that are strategically deflating inflation with software will be the strongest revenue drivers in the coming years,” states SmartIndustry.com.
In this blog, we’ll examine what digital transformation means for industrial manufacturers and how software is critical for overcoming inflation and volatility-driven pricing and revenue growth challenges.
Digital Transformation and Using Your Data
“Manufacturers have increased their digital investment over the past few years and accelerated the adoption of emerging technologies. Companies with higher digital maturity have shown greater resilience, as did those that accelerated digitalization during the pandemic,” states Deloitte’s 2023 Manufacturing Industry Outlook.
For many manufacturers, complex systems and processes have tied the hands of pricing and sales teams for years. Previously, something as simple as a quarterly price update often took months to execute as the process typically consisted of emailing spreadsheets to sales leaders to get feedback, then manually loading them into their ERP system. That process is too slow to deal with an economic climate where costs can change daily.
Industrial manufacturers must be able to respond to cost changes, competitive dynamics, or macroeconomic events with appropriate tactical adjustments. Manufacturing companies that do not make the best use of the data ─ be it order data, product data, customer data, historical invoice data, competitive data, cost data and more ─ available to them will struggle to maintain profitable pricing. By digitally transforming and leveraging data-driven software, coupled with other innovations such as self-service tools and automation, manufacturers can unshackle themselves from technological limitations and be nimble enough to react to market changes or even capitalize on them.
Manufacturing companies that succeed in today’s landscape will be those who put pricing at the forefront of their evolution. Pricing teams need intelligent tools that can consolidate a wealth of data to set, optimize, manage, execute, and deliver prices in all go-to-market channels efficiently and effectively. Only then can price be used as a strategic lever to improve financial performance.
Additionally, the sales process is ripe for data-driven transformation. Manufacturers must equip their salespeople with point-in-time actionable insights they can use for more productive conversations with customers. By doing so with embedded visual analytics, manufacturers can give salespeople confidence in the offer they are bringing to a customer – and detailed information that answers, “this is why this product makes sense for this customer and here is the data behind why the price is the price.”
Enabling a Comprehensive Pricing Process
For industrial manufacturers, unpredictable events are forcing price changes more frequently. As discussed above, manual pricing processes are inadequate to manage these external triggers. Manufacturers should consider a smarter approach to pricing and leverage the power of cloud-native price optimization and management solutions.
Zilliant Price IQ® is the market-leading B2B AI-driven price optimization application. Price IQ® produces market-relevant prices to drive volume or margin growth by:Accounting for all factors that influence price Optimizing system prices to deliver market-aligned price guidance Measuring price elasticity and enabling the pricing team to predict the outcome of pricing strategies before publishing prices Providing override guidance with guardrails to reduce over-discounting when a deviation is necessary Seamlessly delivering price guidance into any ERP, CRM, CPQ or eCommerce application in real-time and dynamically as conditions change Visualizing KPIs and pricing performance with flexible, customizable, and business user-friendly analytics Generating prices that are easily explainable and defensible, ensuring sellers use them and customers accept them
The ability to deliver prices to customers that reflect their valued relationship while also reducing margin loss associated with misaligned pricing is critical for success in today’s business landscape.
Additionally, when it comes to price management, modern software eliminates the guesswork that is typical in manual processes and can help capture more margin and manage cost fluctuations in any environment. Zilliant Price Manager™ allows users to set, manage and update prices and rebates for all price types using a rules-based approach. Price Manager™ can also make mass updates to price lists and customer-specific price agreements, execute and publish pricing initiatives to sales reps, and build statistically and strategically relevant segmentation structures.
For global manufacturers, the pace of change has rendered the spreadsheet method of setting and managing global and country price lists obsolete. As cost changes increase in frequency, the time to enact a price change is simply too long, leading to lost margin. Fortunately, the Zilliant Quick Start package for Global and Country Price Lists enables companies to be up and running with Zilliant Price Manager™ in as few as four weeks and enables users to easily update global list prices as costs change using pre-defined cost pass-through strategies.
Establishing Data-Driven Selling
How does digital transformation impact sellers? Gone are the days when salespeople could get away with being order-takers. In the past, field reps were the mechanism by which customers placed all their orders. They could largely show up and say, “What would you like to buy today?” Now that customers can order through digital channels, they expect sales reps to add significant value in each conversation.
The problem that manufacturing sales reps run into is how to transform their selling approach to a value-driven one. Not just with their top customers, but with their entire book of business. That’s an impossible order for any one human to accomplish on their own. This is where data-driven digital transformation must come into play. Manufacturers must equip their salespeople with point-in-time actionable insights they can use to then have a more productive conversation with each customer.
In other words, industrial manufacturers need to leverage the power of Revenue Operations and Intelligence software. These solutions use advanced data science to easily uncover all new relevant opportunities, continually refresh those insights, and systematically deliver them to salespeople using traditional business intelligence tools or spreadsheets.Revenue operations and intelligence software can equip sales with guided actions, to: Increase wallet-share with new and existing customers Identify the best-fit products for prospecting Win-back lost business Sell excess inventory Flag customer agreements that don’t meet volume commitments Identify and recommend products substitutions or preferred brands Deliver actions directly to eCommerce, marketing, and sales-led channels
The fastest path to growing customer relationships and executing revenue-driving strategies in the field is with the Zilliant Quick Start package for Revenue Operations and Intelligence, which enables companies to be up and running with Zilliant Sales IQ™ and Campaign Manager™ in as few as three weeks. This purpose-built solution is designed to intelligently and scalably derive and deliver revenue-driving, account-specific actions to sales reps, eCommerce sites, and marketing automation tools.
“Data is the foundation of sustainable business,” according to Forbes.com.
Industrial manufacturing companies that successfully transform their pricing and selling processes and leverage the power of their own data will undoubtedly set themselves apart from the competition, ensure resiliency in the face of economic uncertainty, and flourish over the next decade.