Why Do B2B Companies Settle for Status Quo Pricing?
By Thomas Delloye
Oct 06, 2020
Table of Contents
Technology accelerates faster than most humans’ capacity to understand it. This notion is fairly self-evident given the stunning advancements in consumer applications like powerful smartphones, GPS tracking systems and even self-driving cars. There are many products on the consumer side that we use every day while taking the underlying technology for granted.
In the business world, however, new technology tends to face more scrutiny. Innovative or transformational technology can be scary in business because there’s often more at stake: recommending tools that don’t drive the promised business value can cost someone a job and gaining adoption is much more difficult because you’re relying on other people to behave the way you want them to. You or I buy an iPhone and generally use it daily. If we don’t, the only ones we’re hurting is ourselves (or our pocketbooks). But with advanced business systems, the intended user base can number in the thousands, and value is only returned when those users actually, well, use it.
This is why long evaluation cycles consisting of whole committees of stakeholders inspect new solutions from every angle – the technical architecture, the usability, the value similar companies have received, and on and on. One of the drivers of this skepticism and over-analysis is that most powerful human emotion – fear. Fear of change, fear of failure, fear of lost time and resources.
It’s entirely understandable, as there is built-in risk with adopting cutting-edge technology in your business. Humans tend to be risk-averse, but every day companies are missing out on serious rewards by remaining stuck in ancient ways of doing things or fall prey to the “analysis paralysis” when a possible solution is presented. I’m willing to bet if you polled the ten most technology risk-averse stakeholders in your company, zero out of ten would trade in their smartphone for an early 2000s-era Nokia flip phone. Why? Because modern devices deliver an intuitive experience with countless features that make their lives more efficient. So why does the hesitation to invest in more intelligent business tools persist in many B2B companies? Let’s explore a few of the reasons:
Simple Tools Stick Because They Work … For a While
It’s alarming how many global multi-billion-dollar B2B companies still rely on primitive tools to accomplish mission-critical commercial processes. But that’s the thing about primitive tools – they have been proven to work for eons. I’ve often heard pricing managers say things like, “Excel spreadsheets are the bane of my existence, but they work well enough and my team knows how to use them.”
Many large organizations with incredibly complex inputs and outputs still rely on extensive spreadsheets to handle critical decisions such as cost, pricing, campaign management and other business planning processes. It’s a reflexive decision due to the ubiquity of Excel and the simple fact that most of us cut our teeth in the pricing world using it to calculate and house transaction data. And it does do the job, but only up to a point of diminishing returns at the enterprise level. Companies waste valuable time with all the manual work involved, and they sacrifice accuracy due to the inherent risk of human error.
Organizational Inertia
Most companies know that they could benefit from a modernized approach to their commercial processes. But knowing it is one thing, and acting is another. The latter for many requires a dreaded change management effort or levels of organizational pain that are no longer sustainable. I’ll tackle these factors one by one.
Change
The fear of change doesn’t always mean fear of the unknown. Sometimes the known elements of a proposed change are just as harrowing. Perhaps your company still bears scars from a past technology project that exposed weaknesses in your organization’s ability to pull off a cross-functional change. This happens because to change the way people work, teams must understand the new normal and be guided with carrots and sticks from executive leadership on down. As one of our customers recently said, “Half of the success come from the tool, half comes from the change management.” Spend your time evaluating a data science-driven pricing or sales tool accordingly by investing at least 50 percent of the effort in how its implementation will drive a new normal for your stakeholders.
Pain
A little bit of pain is easy enough to live with, and it’s probably not hurting your ability to perform too much. But as market triggers accelerate and data becomes increasingly overwhelming, a nagging organizational headache quickly becomes a migraine. Another Zilliant customer is fond of saying, “Don’t wait for the pain to be unbearable, make a decision early enough.” What this customer learned was that arduous manual price management and the margin-killing nature of suboptimal pricing created unnecessary pain. The tools available on the market today can remove administrative pains while elevating pricing teams to a strategic, proactive position in the organization. Not to mention, the time spent allowing a small pain to grow into an unbearable ache will cost any company a sizeable amount of capturable profit.
Lack of Imagination
It’s always interesting to see how organizations tackle their needs. From my vantage point, I do still see very archaic organizations where any new software is perceived as non-strategic extra spending, and these companies tend to default to a “do it yourself” approach with existing tools. In addition to financial considerations, I tend to chalk these decisions up to a lack of imagination of what’s possible. The opportunity that modern technology brings to the table coupled with the ease of implementation of cloud-native software is often underestimated.
Another unimaginative path sees companies bring in tools that are better than what they currently use in-house, but that remain insufficient. Imagine you own a landscaping business and need a new vehicle to transport your supplies to job sites. You would be in the market for a truck, or at least an SUV. You wouldn’t even consider a standard car, unless you were prepared to make multiple trips to and from your storeroom to your customer’s garden to get the right tools every time you had to plant a tree. It wouldn’t be rational to purchase a vehicle irrespective of your needs.
However, we sometimes see such behaviors in the software decisions (or non-decisions) made by large corporations. They may have long-ago outgrown the DIY approach, but still they press on. Or, they invest in software that would be more than suitable for a small or medium-sized business, but that doesn’t come close to meeting their needs. What happens at that point? They will declare the pricing software fix a failure and revert to spreadsheets and emails to accomplish important tasks.
While it may be difficult to keep up with all the advancements in data science and other cutting-edge business technologies, the best advice I can give you is this:
Avoid doing your company a disservice by accepting a known pain instead of exploring a lesser-known or slightly scary opportunity.
At Zilliant, we’ve seen organizations across the B2B industry spectrum truly transform their business performance and increase both customer and employee satisfaction by making the leap to intelligent software.
Standing pat in these turbulent times is just not going to cut it. The flip phone is not making a comeback.
Reach out to me on LinkedIn or email me at Thomas.Delloye@Zilliant.com to continue the discussion.
About the Author
As director of business solutions consulting, Thomas’ primary responsibility is to ensure Zilliant brings value to its customer and prospects. Thomas works with leading B2B companies to identify and quantify uncaptured profit and revenue that exists in their businesses today. Additionally, he helps Zilliant customers apply predictive intelligence to their data to achieve profitable growth, increase competitive advantage, reduce business complexity and successfully implement business transformation. Prior to joining Zilliant in 2016, Thomas led the EMEA client pricing team for Dell, and held various roles in competitive analysis, pricing initiative & transformation, omnichannel pricing & bid pricing. Thomas graduated from HEC MBA & ISEN (MSc engineering). He currently resides in Montpellier, France.
