Like many of the automation projects or software implementations, technology is only part of the success. A well-known rule of thumb is that 25% of the success is determined by technology and 75% by the organization and processes. There are different approaches to adopt Dynamic Pricing in companies, but we have identified five key steps to get started.1. Identify the potential impact in order to create a strong business case and ensure the top team is fully aligned with and committed to capturing that potential. With users we usually see the following potential:
- an improvement in the gross margin
- a time saving in the price process
- better price forecasts
2. The impact of dynamic pricing is comparable to the start of a new business idea and therefore merits the involvement of your best people. Don’t forget Dynamic Pricing is a business solution, not just an IT tool. The project and implementation should be owned by a dedicated business team that has the analytics capabilities to drive the project forward together with sales and marketing.
3. Especially for B2B organizations, the introduction of Dynamic Pricing is a mindset change which requires new capabilities. Legacy systems will not be the reason you fail; legacy thinking will. Identify likely promoters and detractors of the new solution across the organization. Develop a strategy for amplifying the former and converting the latter. Review incentives to better align them with value to help change mind-sets. Showing people that they are partners on the journey by involving them in decision making and incorporating their feedback, for example, is also critical.
4. Our experience indicates that companies do better if they are entrepreneurial and think in action. Fail fast and learn fast and combine consuming the results with improving the technology. It is better to deploy a minimum viable product fast and get valuable insights to the front line in a matter of weeks, while setting the stage for long-term impact. Companies that follow that agile approach typically achieve the first bottom-line impact within three months; they also keep innovating and refining their approach over time, making their systems increasingly autonomous and self-learning.
5. Success requires a broad mix of talent. Start early hiring people understand data analytics and start partnerships with companies that can help you implement a Dynamic Pricing tool. Combine the knowledge of partners and data managers with more-traditional talent who understand the industry, the company, customers, and competitors.
Dynamic-pricing skills are fundamental to stay ahead of the competition. But in our experience, tools and algorithms are not enough to capture and sustain significant impact. Companies need to put equal focus on people and processes.
Do you want to know how we can include all those five elements in a pilot? Schedule a demo.