crescendus™ | practical framework for managing pricing at your company

© Crescendus™ 2012-2014. All Rights Reserved.

Preparing your Business for Whatever is Ahead™

Practical Framework for Managing PRICING at your Company

Crescendus™Step 1: Get the Team together ( reporting to CEO)


Preparing your Business for Whatever is Ahead™2

Finance Controllers CFO

Sales (Products &

Services)

Sales Managers &

DirectorsVP Sales

MarketingProduct

Managers & Directors

VP Marketing

Legal Contracts Manager

Legal Counsel

Operations Manufacturing Managers

VP Operations

Team Universe Establish Central Pricing Office

Marketing Leads Effort - Insights, Demand Curves, Elasticities, Model Design & Segmentation Scenarios

Sales Provides Valuable Customer Insights & Competitive Pressures

Finance does Model Analysis & Controls (incl. Sales Compensation)

Legal Streamlines Contractual & Regulatory Issues

Operations does Capacity Analysis by Site & total Industry

Crescendus™Step 2: Do Status Quo Analysis with your Existing Data



Price vs Time Graphs(by Product, Territory, #

Competitors etc.)

Price Scatter Analysis(by Customers within Existing

Market, Nationally, Region etc.)

Price vs. Volume Graphs(by Product, Territory and

Duration of Contract)

Supply & Demand Curves

(by Local Market, Product)

Price vs Profit Graphs(by Product, Territory, Customer

Segment, etc.)

Price Elasticities(Local, Region & National by

product segment)

Note- You can do a wide range of additional analysis, but at minimum, do the above work for each product segment & by market (local, region, country). Also, have drill down capabilities so that you have the ability to monitor every customer.

Crescendus™Step 3: Collect Additional Data



Sales Intelligence (Lead- Sales)

• Specific Customers (esp. Strategic Accounts)

• Competitive Pressures in Key Markets

Marketing Intelligence (Lead- Marketing)

• Market, Industry, Competition, Customer Insights

• Lifetime Value Analysis (Customers)

Customer Management Interviews (Lead-Cross-functional)

• VP's & Director visits to Key Accounts

• Understand Customer's Strategic Roadmaps & Challenges

For very large accounts, we also recommend CEO's & CFO's to meet the customer's management teams. During these discussions, it is sometimes beneficial to have private 1:1 conversations without your sales representatives present (Note-Sales representatives can join the general group discussions).Remember- Don't wait till a crisis to meet your customer's management teams. Make it a practice to meet them personally 4-6 times/year.

Crescendus™Step 4: Conduct Strategy & Scenario Analysis



Segment for Growth & Margin Expansion

Supply Reduction in Selective Markets

Lose Low Profit Customers to Competition

Competitor Response Modeling

Raising Prices (contrary to traditional race to

bottom)

Value Propositions & Attributes for Pricing

WARGAMING

Crescendus™Step 5: Perform rigorous rankings and optimization


Preparing your Business for Whatever is Ahead™

Loca

l Competitive Intensity Ranking

Customer Loyalty Ranking

Customer Lifetime Value Ranking

Ranking of Customers to Lose to Competition

Innovation Ranking of Products (for Premium Pricing)

Capacity Ranking (between various Suppliers)

Must Retain Ranking (for Customers)

etc.

Nat

ion

al

Competitive Intensity (country, variations by Regions)

Competitor Presence (National vs Regional)

Capacity Effects (Supply Constraints, Ability to replace from inter-regions, etc.)

National Customer Accounts (Cost to serve by local or regional market, their supply alternatives on national scale, etc.)

Op

tim

izat

ion Graphs (as shown in Slide 3)

Wargaming (different Scenarios, incl. catastrophic losses to Competition)

Long term Strategic Moves (driving down Competition's profitability by selectively losing low margin/high cost to service customers)

Capacity & Supply Chain Cost Efficiencies

Maximization Analysis (Revenue, Profit, Customer Lifetime Value etc.)

6

Crescendus™Final Comments



• Spend more time on your strategic goals

• Get comfortable with scenarios & segmentation uncertainties

Strategy

• Price products & services using units that are different from your competition

• Understand what attributes customers value & don't be afraid to raise prices

Units of Pricing • Use time, value & scarcity to

your advantage (regionally or nationally)

• Keep optimizing assumptions every month based on new data

Dynamic Review

Crescendus™Contact Information



[email protected]

Knoxville, TN, USA