Episode 32 Jun 17, 2021

B2B Reimagined: Ep 32 | Pricing: The New CEO Imperative w/ Stephan Liozu

We are joined by author and pricing evangelist Stephan Liozu on the eve of the release of his new book, Pricing: The New CEO Imperative. Liozu has spent the better part of two years interviewing C-Suite executives, pricing consultants and software vendors around the globe to curate this first-of-its-kind tome. The book represents a collective effort by the key players in the pricing profession to articulate the value of pricing to the C-Suite.

Host Lindsay Duran interviews Liozu about the writing and curation process, Zilliant’s chapter on the massive opportunity in B2B to increase profits and reduce margin leakage, what the future holds for the pricing function and much more.

Get Pricing: The New CEO Imperative on paperback or Kindle. Connect with Stephan Liozu on LinkedIn or at www.stephanliozu.com.

Stephan Liozu

Stephan Liozu

I spoke to the CEO of a company I know very well, and they do their pricing manually. And in this day and age they couldn't increase their price. It took him 90 days to manually change his prices in the system and to implement a price increase. 90 days in an inflationary period, it's deadly.
- Stephan Liozu

Episode Transcript

Stephan Liozu:And this is why we timed the book to be out now, because now we're recovering and you can see already the impact of cost increases and price increases. And imagine if you have to do all that stuff manually and raise your price five times in six months manually, some people are going to get some gray hair there.

So it's a good time to be in pricing today. It's a good time to have all these technologies that you know, like the Zilliant technology that's available in commercially access. And I predict a, an explosion in pressing technology adoption. I'm very optimistic as you see.

Lindsay Duran: Welcome to B2B Reimagined. My name is Lindsay Duran, and I'll be your host for this episode. I'm joined today by Stephan Liozu, a pricing evangelist and author. Stephan, welcome to the podcast.

Stephan Liozu: Thanks for having me. It's a great pleasure.

Lindsay Duran: Stephan, before we get started, why don't you tell us a little bit about yourself?

Stephan Liozu: Well, I will tell you right out, I'm not a pricing expert. I love pricing. I'm learning pricing. I've been in it for many years. But I’m a student of pricing, I do quite a bit of work in value management and pricing management. And I've done that now full time, I would say for the last, probably 12 years. I also became a doctor in the topic, got a PhD in pricing management and published books. And today I'm trying to help the pricing profession by being an evangelist for the industry and the function, I would say, [00:02:00] of pricing. And this is one of my passions.

Lindsay Duran: Excellent. Well, you have a brand new book out called “Pricing: The New CEO Imperative.” Tell us all about the book.

Stephan Liozu: Well, I think we have a brand new book. This is the first time we collectively as a pricing profession, as the industry of pricing, put our minds, our thoughts, our efforts together, and produced a book for this. And this came out a couple of years ago where I really was puzzled by how difficult it was to justify pricing investments in the C-suite.

And I was puzzled that we could show such a great ROI, a great impact, but we still didn't get our fair share of pricing investment approvals, and I'm like, “What's going on? What's happening out there?” I started doing interviews and talking to lots of people and I created the CAP initiative, the Coalition for the Advancement of Pricing [00:03:00] on LinkedIn. It's a group on LinkedIn, and then also a project that under CAP we launched, produced one book from the pricing profession to the C-suite. And then we joined forces as, software vendors, pricing consultants, experts, practitioners, to put something together that convinces the C-suite to pay attention and invest more in pricing.

So here we are, the book is out on Amazon and it is called “Pricing: The New CEO Imperative.”

Lindsay Duran: Well, we were very thrilled and honored that you asked Zilliant to be a part of the book. And so we're thrilled to see the chapter in print and very excited about that. How many contributors are there to the book, Stephan? And how did you go about choosing the voices who would be part of this?

Stephan Liozu: Yeah, so one of my objectives were, was to be fair inviting people. So I went wide and invited quite a bit of people, as you can imagine. I also, I wouldn't say [00:04:00] begged, but I encouraged people to really jump on board because this is a once in a lifetime opportunity to produce something together with PPS, they have supported the project, the pricing society.

But, I went very wide into inviting representation from the industry and we ended up with 21 chapters from 21 different contributors. And including me, I wrote one of the chapters. And a good representation from the software space. We're lucky to have a Zilliant on board, but also some of the top consultants.

And then I created a couple of unique concepts where I have a chapter where I collected voices of practitioners. So we have seven testimonials from VPs and Directors of Pricing about their experience in working with the C-suite, the impact of pricing they show to the C-suite as well as other experts from around the world.

Also very good geographical representation, and hear voices of [00:05:00] local experts. So we have someone from Chile, Japan, Germany, Poland, that wrote also some of their impressions on selling to the C-suite. So I felt the book is great. It's 480 some pages, but also has good representation geographically and also for the sources of pricing expertise.

Lindsay Duran: Excellent. How long has the book been in the works?

Stephan Liozu: Oh it's quite a project, as you can imagine. I am the project manager and the editor of the book, so it is not my book. It's our book, all the contributors. And I think it's probably 18 months of intense work, a lot of that chasing chapters and revisions.

And I've done many edited books before and there's a process to it. And we want to make sure that this high quality is relevant to the C-suite, to the audience. We have good visuals. We have novelty as well in there. The writing styles are pretty much the same, so it is quite an intense endeavor, but[00:06:00] I like to take on the challenge and I really wanted to have something good from the profession to the C-suite and I truly believe that it's going to be a very good book for the C-suite.

Lindsay Duran: Indeed, our CEO often calls pricing the last bastion of guesswork in any business. And I'm sure that resonates with you a bit. Why do you think that pricing as a lever to improve financial performance has been so often overlooked or ignored by the C-suite for so many years?

Stephan Liozu: Yeah, that's a very good question. And it was the heart of the motivation behind it, so, I ran a few interviews. I think I ran 31 interviews with experts, from CEO of pricing software company, and CEO of practices of pricing.

And I ask him the same question: “What's going on that although we’re showing all these great numbers and there's so many anecdotes and stories of success, we're not getting listened to? And then when we need to put some ink on the paper for the investment request, [00:07:00] sometimes we don't get it?”

And I think it's a combination of things. And this is a part of the introduction that I wrote for the upcoming book, there's a lot of misunderstandings on what pricing is in the C-suite. You have to remember that we still have the Gen X in position here in the C-suite most of the time.

And they still see pricing as a clerical function. They see it as an economics function. So, so there's misconceptions and there's also myth, right? The market sets the price, I don't control my price. Cost is good enough, all this stuff. So there's a fair amount of that. At the same time in business schools for the past 20 years, pricing is still neglected.

It's not an elective that you find often, you see more executive education courses than pricing electives. And today the topic of analytics is replacing a lot of pricing courses. So it's not getting better. Then also there is a real issue at the C-suite where, I think as pricing professionals, we may not do the best job at convincing, at [00:08:00] creating stories that's showing the true impact and the risk analysis of doing pricing transformation. And that's a feedback that we got from CEO and C-suite executives that you look at the investment requests and we don't believe it. Or we truly look at this and say, the result is good, but the effort is tremendous.

And I don't think we're going to be able to do it. So there's a series of reasons that right now we don't compete well against digital transformations, investments in analytics, investments in innovation. And we got to get better as a profession.

Lindsay Duran: Indeed. And pricing is such a powerful lever. In Zilliant’s chapter, we look at how price is a leading cause of margin leakage, but also yet of course, the most effective lever to grow profits. Why do you think that companies struggle so much with effectively pricing in their business?

Stephan Liozu: Wow. That's a big question. I think the [00:09:00] first one is that you look at how many of the global Fortune 500 have a dedicated pricing team. And I wrote a paper in 2019 on that long two years of research and it's 20%.

So that means 80% of the rest of these fortune 500 companies do not manage pricing. And as such, then they struggle. They do that manually. They do cost. Plus it's fragmented. We do it with sales involved and we take, sometimes sales or finance takes over the process. And that's a big issue. And I think until we have more penetration of the function of pricing in organizations, they're going to struggle with it. Now when they do have a function, a lot of the time, what my research shows is, you would have a global Fortune 500 company with just a couple managers running pricing. So imagine a hundred billion dollars of business will run with two managers. And most of the time you'll have some directors and less than 10% of the firms that do pricing are the pricing [00:10:00] teams in VP positions.

And that's right where there is a problem because in the C-suite they want to see great leaders at the VP level running and driving pricing transformation, including software and pricing roadmap. And if you have a manager in place, or even the director in a central function, they don't believe that they have the capabilities and the talent to do it.

So they just don't do it. That’s a huge barrier in the adoption of pricing and the development of capabilities. A lot of the time as well, companies are complacent. They, they do 20% EBIT or 15% EBIT or 10% EBIT. And they don't see the value of, me going and getting another two or three points.

And they look at the impact or the risk of doing pricing projects. And we don't want to, wake up the customer spirits and we don't want to poke the bear and try to just do it by improving their cost plus or do things manually, incrementally. And that's a shame [00:11:00] because we are leaving quite a bit of money on the table.

As we know, even the first 90 days, you could see tremendous impact after you deploy your software solution. So again, it goes back to us doing a better job, promoting the methodologies, promoting the software, promoting impact. And it takes time.

Lindsay Duran: It does, I always used to observe that at the C-suite level or the executive level, everyone owns pricing and no one owns pricing. It impacts so many different functions of an organization yet the sole ownership of it often doesn't sit with just one leader and that I think can make it challenging as well.

Stephan Liozu: Yeah. And you'll see Lindsay that, you will have a lot of companies with margin improvement plans, typically under finance and they'll focus on gross margin improvement.

And before getting that, before the gross margins, you have a lot of variables there, product mix, price mix, customer mix and all that, all these discounts and maybe a finance [00:12:00] professional doesn't have the pricing knowledge that, to really go deep in the pricing science to fix things.

Lindsay Duran: Absolutely. Speaking of elevating pricing in an organization, what advice would you give to pricing professionals who are trying to get the C-suite’s attention or get investment to make a transformative change in how they approach pricing? What advice would you give them when they're trying to make that business case up to the C-suite?

Stephan Liozu: Yeah, so, and that's something that, that's a good question. That's something that I heard from the C-suite executives I interviewed. The first one is include a dimension of risk management in your instance cases. So, maybe a bit more of scenario planning, risk of volume losses. And we see a lot of pricing investments being asked with good numbers, but not the risk side is a bit missing. And that's a message I got from the C-suite. Second is execution. How are you going to do this? Who's going to do it in [00:13:00] what order: deployment, execution, success, and frankly I think I've seen a lot of roadmaps in my life and business cases, because believe it or not, as an evangelist, I'm solicited quite a bit by people asking me to review their decks and I tell them, it's great, but it's too technical.

It's too “pricing.” And there's no execution in there. How are you going to do this? And they need to break it apart in multiple initiatives over time and not show the huge, big bang as it's often shown that may scare some of the commercial functions or even the CFO looking at this, like it's too risky.

So a better story is that our roadmap, lots of change management, great focus on execution and looking at the deployment, especially if you go on a global scale, and then overall, I think you need to have a relay in the C-suite. Someone in the C-suite who's going to help you coach.

When you get your 15 minutes of fame in the C-suite and you get to present your initiative, if someone is going to prepare you well with all the stakeholders in the C suite, [00:14:00] anticipating objections, pushbacks and create a great story.

Lindsay Duran: Indeed. And I think we've started to see many pricing professionals doing that more effectively as there has certainly been an uptick in the adoption of price optimization and price management software. And in recent years, companies are looking to go beyond those manual processes. How do you feel about the current level of investment in pricing technology and what do you think it will look like five, 10 years from now?

Stephan Liozu: Well frankly, I'm pumped up. And I'm very excited because, we didn't have to do the storytelling. McKinsey, Accenture, Deloitte, during the COVID crisis, came out with awesome papers on why pricing now needs to be on the table more than ever. When you go to eCommerce you go to optimization, you go to new business models around subscription, all the things that are necessary in the new normal, what they call the new normal pricing has to be front and center.

[00:15:00] And we did an awesome job at selling that because those are reports that are read by the C-suite. Right. I anticipate that you may have seen that yourself; a lot more inquiries. And when we get into managing omnichannel strategies, moving to eCommerce and optimizing bundles, and, you can do that manually in Excel, right?

So, and this is why we timed the book to be out now, because now we're recovering and you could see already the impact of cost increases and price increases. And imagine if you have to do all that stuff manually and raise your price five times in six months manually, some people are going to get some gray hair there.

So it's a good time to be in pricing today. It's a good time to have all these technologies that's available and commercially accepted. And I predict an explosion in pricing technology adoption. I'm very optimistic as you see.

Lindsay Duran: As do we, certainly, we've seen quite an uptick in demand, and I was just having a conversation with someone right before this podcast about [00:16:00] how COVID was certainly an accelerator in that you've moved a lot of customers ordering online, as opposed to customers talking directly to a sales rep, ordering and ordering online. And in so many instances, a sales rep would manipulate the price as the customer's ordering, changing, whatever the system price was and acting as that filter to try to get an acceptable price in front of a customer.

And when you move that buying online, you remove that filter of the sales rep and all of a sudden, the need to have prices that are very granular and specific to that customer out of the gate and already in your system becomes much more acute. And I think many companies were caught a bit flat-footed over the past year as they had to deal with that reality.

Stephan Liozu: That is correct. That is correct. And that's a beautiful McKinsey report on that. That shows that only 30% of the sales process is fully automated. [00:17:00] So, and as CPQ is a huge portion of that automation and imagine the potential right there, the customers will not wait two weeks for an answer. They want an answer real time.

It needs to be automated. And for most of the process, they don't want to talk to anyone self-service online. In a few minutes. Wow. That's changes the game, right?

Lindsay Duran: It does indeed. It does indeed. And I know that's the view from the salesperson perspective and in many ways, but I was just speaking with one of our customers yesterday who uses quite a bit of steel as they're manufacturing their products.

And his words to me were, there's no way we could get through this inflationary time if it were not for having a solution like yours to help us pass those cost increases through right. To your point manual efforts when we're looking at cost increases on a daily, weekly, monthly basis, are just insufficient.

Stephan Liozu: Yeah. And let me give you another anecdote. I spoke to the CEO of a company I know [00:18:00] very well, and who do pricing manually. And in this day and age they couldn't increase their price. It took him 90 days to manually change his prices in the system and to implement the price increase 90 days in an inflationary period, it's deadly.

And the CEO is like, “Oh my God, we need to change things because…” And imagine if you have to do three more times this year.

Lindsay Duran: Right, leaving quite a bit of money on the table. I think the more companies are able to rocket up and intelligently pass along cost increases and parachute down the better off they’ll be.

It's really becoming a competitive advantage. Given the volatility in the market that we're seeing.

Stephan Liozu: And the diversification of business models, a company may be able to now price online, subscription, price dynamically or automated, and all the way to the cash collection.

So even payment. So, wow.

Lindsay Duran: Indeed. There's quite a lot of room for [00:19:00] automating that process and making that process much more intelligent as we go forward. Stephan, is there anything else that you'd like to share with us about the book?

Stephan Liozu: No, I'm excited. I'm really excited about first of all, it was hard work and it was a pleasure working with you guys and all the contributors.

I would ask the audience to support the book and buy a copy for their CEO or CFO, because it is indeed a global, truly collective effort. And we're doing this book. We did this book for the benefit of the profession. So, we need to have a lot more evangelists out there to make sure pricing is on the radar.

We get our fair share of investments and, and we support these software companies that have worked very hard for the past 15 years at increasing the adoption and altogether we need to help the profession. So thank you in advance for the support.

Lindsay Duran: Absolutely. And where can our listeners buy a copy of the book?

Stephan Liozu: Well, it's on Amazon, [00:20:00] both available in paper copy and in an ebook format, the Kindle format. So, stay tuned. It is right now in Amazon. So if you don't find it keep going back and look for it, but it is being added as we see.

Lindsay Duran: Excellent. So hot off the press. Look forward to reading it. I didn't quite know that it was over 400 pages, long stuff, but I look forward to tackling most of those chapters.

And if our listeners want to get in touch with you directly, how might they do that?

Stephan Liozu: Probably the best way is to go through LinkedIn. This is where I do most of my communication. Then people connect with me. And then we have my email or my website’s dot com attached. And you can find that through Google and then you'll find all the books there as well. The link to the book is on my website, too. So thank you for that.

Lindsay Duran: Excellent. Well, thank you Stephan, for joining me today for this episode, we really appreciate it. And if you are interested in accessing the Zilliant [00:21:00] chapter of the book, of course, please go and buy the full copy of the book on Amazon, but we will be hosting the Zilliant chapter of the book as an excerpt on the Zilliant website, in the Resources section.

So be on the lookout for that. I'd like to thank Stephan for being our guest for today. And thank all of you for joining us for this episode of B2B Reimagined. Until next time.

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