Last week, Zilliant Regional Sales Director Mick Naughton shared the pros and cons when deciding whether to invest in pricing and sales software: Whether to invest before or after implementing other major systems such as ERP or CRM and when deciding if your datasets are clean and prepped enough to proceed. Catch up on the first post here.
Before I jump in to the two final scenarios most B2B companies contemplate before deciding to go forward with the implementation of pricing and sales technology, I’d like to offer a short aside on a critical topic: change management. No matter what your criteria is to move forward with deploying pricing and sales software, pricing is integral to a company’s DNA. In many ways it is the manifestation of how a company sees itself. “Am I the low-cost provider or do I deserve a premium in the market?” Inside each of these cases there should be some consideration of how well (or not) your company is poised to accept the change being considered and how challenging it will be to the morale of the team being asked to undertake the change. Read more about change management, customer success and ensuring successful projects.
We now return you to your regularly scheduled blog post...
Case No. 3 - Before a Company Re-organization?
If there is one thing I have learned from 20+ years in business, there is nothing senior leadership loves more than a good old-fashioned re-org! Whether it’s to align to market segments or move to a product line focus, there never seems to be a shortage of suggestions on how to re-arrange the folks inside your company.
Pricing technology can provide insight that drives success
One of the benefits of an AI/ML based pricing system is that its foundational calculations use transactional data to develop precise segmentation of customers. This insight into the buying patterns of your customers can help not only ensure that you are setting market prices accurately, it might also help the newly re-aligned sales teams better understand their customers.
You might not have enough data in new markets or a well-defined approach
Sometimes a re-org is done to fundamentally shift the way a company goes to market. It might be switching its approach to pricing entirely (i.e. changing from a product- to service-based approach) or entering a new market. In that case it might be worth waiting for the new approach to get traction and take the opportunity to gather meaningful transactional data before trying to use technology to optimize the recommended prices.
Case No. 4 -Before financial recovery or expected ownership change?
This scenario obviously hits close to home in light of the recent economic challenges caused by the COVID-19 pandemic. Unstable markets and/or working in an industry where there is a significant amount of consolidation taking place can make the decision to invest in technology challenging. Depending on the circumstances there are conditions that make the investment compelling, but in some cases the timing just might not be right.
Opportunity to automate
Innovation (or sometimes automation) is often the result of challenging times. The old axiom “necessity is the mother of invention” is as true today as ever. In a time in which a company needs to maximize revenue and profitability or (unfortunately) must cut headcount, technology can be brought in to automate processes otherwise left to humans. Pricing technology typically has a return on investment of 10-20x. When you need to find every dollar available, technology that uses AI/ML in areas that historically have been people-driven may be an investment of necessity.
Can’t fall behind
This is something of a companion piece to the first point. Even if an organization can weather the storm of an economic downturn it is likely their competitors are using the situation to streamline operations and look for systems that will make them a stronger player in a more competitive market. Just because a company can survive an economic downturn without change doesn’t mean it shouldn’t change.
Being acquired is inevitable or desired
This can really be looked at two ways. First, if your company is in the market to be acquired and the likely suitors already have pricing technology in place, paying for and implementing a different system than the one they are currently using may be a poor use of resources and an obstacle to integration down the line. On the other hand, if as part of the investment thesis a strong margin improvement story is critical to your pitch to potential buyers, then investment in a system that drives that activity could be seen as a value-add during valuation.
In the end there isn’t typically a 100% right or wrong answer on when to invest. One of the elements that seems to be consistent, however, is that considering the alternatives in and of itself can be the greatest source of anxiety.
“A study at MIT Sloan Management Review reports that 63% of managers believe the pace of technological change in their workplaces is too slow, with the most cited obstacle for digital transformation being a lack of urgency. They also express that the benefits of newly introduced tools are poorly communicated. With the need to constantly improve productivity often comes the pressure to find the correct technology and to have it integrated in a timely manner.”
As someone who has been on both sides of a technology decision (both as a buyer and seller), the simplest advice I can give is: be informed, fully consider the options and listen to your instinct. There is no perfect answer on when the time is right, but if you position your company to consider the different variables that present themselves early, you will be able to make a decision that aligns with the corporate strategy and has a better chance at long term success.
If you’re interested in how Zilliant can help your company determine when the time is right to make an investment in technology, send me an email at michael.naughton@Zilliant.com or connect with me on LinkedIn.
About the Author
Mick Naughton, M.S., MBA, is a sales director at Zilliant where he helps global B2B companies realize improved financial performance using advanced technology. Prior to joining Zilliant Mick spent 20 years in the life sciences industry in a variety of pricing, sales and technology roles.More Content by Mick Naughton