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

alan.hollander@lexisnexis.com

908-290-8347 (office)

• Peter Maniscalco

pmaniscalco@dekabatteries.com

484-947-6450