We talk often about the intricacies and requirements that go into optimizing prices in B2B environments. Just as important is the other half of this equation: executing on price quickly, accurately and intelligently. Those who approach the pricing and selling functions as a tightly connected end-to-end process will deliver the best customer experience while increasing top- and bottom-lines.
This is easier said than done for just about every B2B industry. Pricing and selling have only grown more complex in the past decade. Ellen Beres, senior principal product manager at Oracle, led a session at MindShare 2021 that broke down these complexities and shone a light on how leading B2B organizations are executing on optimized prices.
The barriers to execution are imposing, and only becoming increasingly more so. Beres explained how the following blockers disrupt commercial excellence goals:
Product Complexity – Compared to just 10 years ago, there are many new kinds of channels and ways of fulfilling orders. Optionality and self-service have emerged for B2B buyers, while companies are offering intricate bundles and configured products. Revenue models have become increasingly sophisticated, going way beyond one-time sales to include the entire subscription economy. Not to mention fixed price and project pricing, all of which need to be addressed in a unified fashion in order to execute on your pricing.
Process Complexity – An increasing number of stakeholders have become involved in all aspects of pricing. From the front-end marketing teams working on strategic campaigns through to the many different fulfillment and billing scenarios that are in play with emergent subscription offerings, the traditional “commercial team” has ballooned. How do you create a unified process given all the players involved?
Systems Complexity – Typically, we see a patchwork of existing and isolated systems that are involved in executing against the optimized pricing, all while customer demands are increasing. This means that disparate systems are strained trying to keep up with compressed response times.
Pricing Architecture Complexity – “With the sophisticated pricing that is available through Zilliant price optimization, the whole pricing architecture is becoming more and increasingly demanding of the price execution applications and process,” said Beres. “So we have many, many different price lists, we have many different price types such as the subscription renewal rate plans and usage. We are faced with this challenge of, ‘How do we execute on all of those complexities that have been increasing in the whole pricing architecture?’”
So How Do We Execute?
We first must get a sense of how the dynamics differ on the price execution side versus price setting. The execution process is separate, but no less complex.
“It’s really a different world. We’re dealing with completely different personas when we look at sales and marketing and fulfillment and all of the different stakeholders and departments that are involved in executing that optimal price,” said Beres. “When we look at price execution, we’re talking about more of a transactional process that needs to be managed in a unified fashion.”
According to Beres, the price execution process consists of five steps: 1) create quote, 2) configure product, 3) add product to quote, 4) price insights, 5) price score/approvals. To integrate the price setting process with these execution steps, medium-to-large sized companies need a Configure, Price, Quote (CPQ) solution. Oracle CPQ communicates directly back-and-forth with Zilliant pricing software to execute on three main concepts – Matrix Prices, Price Envelope, and Win/Loss Data.
Matrix Prices – Oracle CPQ can publish matrix prices and expose them to the sales user. CPQ collects these prices from Zilliant in real time, dynamically, via API.
Price Envelope – The most common use case is the Start/Target/Floor price envelope coming from Zilliant in real time as the sales user is modifying a quote.
Win/Loss Data – Oracle CPQ can also capture the win/loss data from quotes and feed that data back to Zilliant to help enrich the predictive accuracy of the price optimization model. This capability is transformative, as typically when a data load is done strictly from an ERP system, we’re only considering the “won” data. Now with CPQ integration, we can introduce “loss” data into the pricing model.
Example: Real-Time Integration of the Price Envelope
To demonstrate one of these concepts, Beres walked through the use case of integrating a Zilliant price envelope into Oracle CPQ. To get a sense of the straightforward nature of this integration, see below. You can also reach out here to get a live demo of this functionality.
Zilliant determines price elasticity at a micro-segment level based on customer attributes, product attributes, location, order size, and more
Oracle CPQ calls Zilliant REST API, IQ Anywhere™ submitting the transaction’s values
Zilliant returns the Matrix price and/or deal envelope guidance
CPQ displays Zilliant pricing
As the sales user adjusts pricing/discounts, CPQ calculates and displays price scoring, a pricing gauge for current pricing vs. guidance, and/or a need for approvals
CPQ manages workflow for approvals
Sales user issues proposal and receives eSignoff
CPQ validates readiness to submit sales order
CPQ integrates sales order with downstream systems
Fulfillment systems fulfill sales order
Billing invoices for Net Prices
Each price recommendation is put in context for the sales user, with visual analytics provided by Zilliant, and the entire quoting and approval workflow is driven off the Zilliant price guidance. This combined system creates harmony between all the factors that go into calculating the optimal price and the downstream process that ultimately delivers that price to an end customer for purchase.
From our joint implementations, customers have reported a number of success stories, including:
9x increase in sale rep self-service quoting
10x improvement in order accuracy with guided selling
4x reduction in time and effort to introduce new products
2x increase in average deal velocity
2x improvement in sales rep, channel manager and customer satisfaction
End customer satisfaction is improved by an overall faster, more accurate and more convenient experience. Sellers benefit by consistently getting the quote right the first time, while corporate enjoys higher revenue and margin. Zilliant and Oracle customers typically see a two-to-five-point margin lift when our solutions are implemented together.