Why Pricing is the New CEO Imperative
By Zilliant
Jun 22, 2021
Table of Contents
Are you one of the manyC-Suite executivesthat haveyet to be convinced thatambitious pricing transformation projectsshould bea high priority?Or,are you a pricing practitioner buried in spreadsheets and manual processes looking for a way to finally get some relief by way of pricing software investment, if only you could get the higher-ups to sign off?
Whatever end of this spectrum you are on, a new book,Pricing – The New CEO Imperative,is required reading. What makes this book,shepherded by pricingconsultantStephanLiozu,different from the sea of business tomes that are releasedin a givenyear? This onewas written by the most influential pricing consultants and software vendors from around the world specifically to educate the C-Suite on the urgent value of pricing investment. For the first time, the most important voices inthe industryworkedcollectivelyto make the case for pricing as the key function for profitable growth in our turbulent, and digital, business environment.
Liozudropped by theB2B Reimaginedpodcast to chat with Zilliant Chief Marketing OfficerLindsay Duranabout how this book came together, what he’s learned in extensive conversations with executive leadership, his view on the future of pricing and the pertinence ofZilliant’schapterin the book. Below are some highlights from their conversation:
Q: Wewerevery thrilled and honored that you asked Zilliant to be a part of the book. How many contributors are there and how did you go about choosing the voices that’d beapart of this?
A: One of my objectives was to be fairin inviting people, so I went wide and invited quite a bit of people. Iencouragedpeople to jump on board because this is a once-in-a-lifetime opportunity to do something together.We ended up with 21 chapters from 21 different contributors and a good representation from the software space and some of the top consultants. I also have a chapter where I collected voices of practitioners – we have seven testimonials fromvice presidentsanddirectors of pricing about their experience in working with the C-Suite, as well as other experts from around the world.
Q: Our CEO often calls pricing “the last bastion of guesswork” in any business. Why do you think that pricing as a lever to improvefinancial performance has been overlooked by the C-Suite for so many years?
A: That’s a great question and that was the motivation behind this book. I ran 31 interviews withexperts,and I askedthem the same question. Even with so many stories of success, we’reoftennot getting listened to (on budget requests). I think it’s a combination of things. Therearea lot of misunderstandings on what pricing is in the C-Suite, and therearealso myths: “The market sets the price,” “I don’t control my price,” “Cost-plus is good enough,” etc. At the same time in business schools, pricing is still neglected, it’s not an elective that you find often. Then also, as pricing professionals we may not do the best job at convincing, at creating stories, at showing the true impact and risk analysis of doing pricing transformation. That’s the feedback that I got from CEOs, that they look at the investment requests and they don’t believe (the value).
Q: InZilliant’schapter, we lookat how price is a leading cause of margin leakage but also the most effective lever to grow profits.Why does this gulf exist between performance and potential when it comes to pricing?
A: Well, you lookat how many of the Fortune 500 have dedicated pricing teams, and it’s 20%. That means that 80% of the Fortune 500 do not manage pricing.As such, they struggle. They doitmanually, they do cost-plus, they do it with sales or finance involved, and thatfragmentation isa big issue. Until we have more penetration of the function of pricing in these organizations, they’re going to struggle with it. Now when they do have a function, a lot of the time you would have a global Fortune 500 company with just a couple managers running pricing. So,imagine $100billionof business run with two managers!
Q:There has certainly been an uptick in the adoption of price optimization and management software in recent years. How do you feel about the current level of investment and what do you think it will look likefive to tenyears from now?
A: Frankly, I’m pumped up. McKinsey, Accenture, Deloitte, during the COVID crisis, came out with awesome papers on why pricing needs to be on the table more than ever. When you talk about eCommerce or optimization or new business models around subscription, for all the things that are necessary in the new normal pricinghas tobe front and center. Those are reports that are read by the C-Suite.This is whywe timed the book tobeout now because now we are recovering (from COVID) and you can see already the impact of cost increases and price increases and imagine if youhave toraise your price five times in six months manually, some people are going to get some gray hair there. I predict an explosion in pricing technology adoption.
