Studies indicate fewer than 1 in 7 B2B customer relationships are optimal – a pretty shocking statistic, but completely believable when you factor in globalization, the informed buyer, and commoditization. I recently had the chance to chat with Tom Jacobson, chairman of Accenture’s Global Pricing & Profit Optimization practice, who, interestingly, worked as a clinical psychologist in a past life. Here are excerpts from our conversation about pricing and its affects on the customer:
What are some trends you’re seeing in the pricing management practice?
Jacobson: “One of the things we do as a practice [is we approach pricing] transformationally. We’re really trying to understand all of the demand forces that our clients face and how they play out, and the supply side of the equation as well. Certainly, one of the challenges that’s very big across industries, both B2B and B2C, is what I would call transparency – either going global or now add mobility to that and divide it by loyalty to get that equation. That’s the kind of the thing that most of our clients are dealing with – in which the existing channels that they’re familiar with, and have a great relationship with their customers, suddenly get upended by global competition that they’ve never experienced or becoming global through mobility.”
Jacobson: “I think companies understand that price has a role in retention and acquisition, but it’s only one part of the puzzle. I think one of the areas where we’re having to do more and more deep dives is not just on pipeline…I get more knowledge and information out of losses sometimes than I do wins. We constantly do loss reviews and it’s easy to click “price” as the reason for the loss, but when you crawl underneath it…companies that do it well understand that price has a role, but there are so many other factors. Sometimes, it’s whether or not people have grown more sensitive to the absolute ends to something versus the unit cost of…you might find that in addressing the fact that it’s not just unit price, or by asking, ‘Are there other ways you can commercially make a deal make sense for both parties by pulling different levers?‘”
Do companies really tailor their product and service offerings around the needs of their customers?
Jacobson: “I think part of what we’re seeing in many industries is a transition from what I’d call ‘ego-centric analytics’ to ‘empathetic analytics,’ getting much closer to what those customers need and want, connecting to what they’re willing to pay for, too, and then adjusting the cost to the service level so all those pieces are aligned. If I’ve done my job right, I’ve got a good sense of what the customers need, or want, a sense of what product or service is going to meet that need at a price point that’s commensurate with what they’re willing to pay.”
You’ve noticed some discrepancy in how companies “view” their customers needs to begin with.
Jacobson: “In many cases, on the B2B side, companies aren’t ‘happy’ about their customer, or don’t feel that they’re optimal to them, and we spend a lot of time talking about not whether or not that customer is optimal to you, but whether you’ve optimized the customer in some ways, and not thinking about labeling them, i.e. ‘this is a strategic account’ or ‘this is a tactical account.’ We try to talk more about what the role of that customer is in your profitability, and your growth, your objectives, and conversely, what is your role in their vision.”