Commercial Manager: 10 most sought-after skills in ASX businesses
As net operating profits decline, the power of a single point of margin has never been greater. A convergence of multiple forces is accelerating the pace of margin erosion. The pressure to find a single point of margin is set to intensify. As businesses feel the pressure to take their business and pricing models from one era to the next, Taylor Wells observes a rise in demand for pricing managers, analysts, and commercial manager/s for price improvement programs.
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In this article, we will identify the top 10 most sought-after commercial pricing skills leading Australian-based organisations are searching for to maintain a competitive advantage in highly disrupted industries. The price management skills in demand by Australian employers are changing rapidly, according to research by Taylor Wells talent advisory firm. Joanna Wells, the founder and director of Taylor Wells firm, says accelerated competitive intensity and technology disruption are behind the change.
What are the roles of a commercial manager?
The role of a commercial manager is pivotal in optimising a company’s pricing strategies, which directly impact its financial health and competitive position. As a business consultant, it’s essential to understand the key functions they perform in this critical area.
First and foremost, commercial managers are tasked with crafting and implementing effective pricing models. They meticulously analyse market dynamics, cost structures, and consumer behaviour to set competitive and profitable prices. For instance, in the hospitality industry, a commercial manager might adjust room rates based on seasonal demand to maximise revenue while ensuring high occupancy rates.
Market analysis is a continuous process for commercial managers. They closely monitor market trends, competitors’ pricing strategies, and customer preferences. This keen market awareness enables them to make data-driven pricing decisions promptly. For example, a commercial manager in the software industry may regularly review pricing strategies to align with changing customer needs and market conditions.
Negotiation skills are essential in securing favourable pricing agreements with suppliers, distributors, and partners. A commercial manager is adept at negotiation and can secure discounts, bulk purchase advantages, and favourable terms. Consider a commercial manager in the retail sector skillfully bargaining with suppliers to obtain cost-effective inventory, enabling the business to offer competitive pricing to customers.
Risk management in pricing is crucial. Commercial managers identify and mitigate potential pricing risks, such as price wars, market fluctuations, or changes in customer demand. They develop contingency plans to adapt pricing strategies swiftly to changing market conditions, ensuring sustainable profitability.
In addition, commercial managers build and maintain strong client relationships through transparent and effective communication. This fosters customer loyalty, helping companies to sustain premium pricing and secure long-term revenue streams.
What are the challenges faced by a commercial manager?
Market Volatility: Commercial managers face the constant fluctuation of market conditions, which can impact pricing decisions. For instance, an unexpected shift in supply and demand can disrupt pricing models, making it challenging to maintain profitability.
Competitive Pressures: Staying competitive is paramount. Competitors often alter their pricing strategies, prompting commercial managers to adjust their own pricing to maintain market share. As an example, a commercial manager in the telecommunications industry may need to quickly respond to a competitor’s price reduction to prevent customer churn.
Cost Management: Balancing pricing with cost structures is complex. Rising operational costs can squeeze profit margins, and commercial managers must find ways to maintain competitiveness without sacrificing profitability. Imagine a commercial manager in the manufacturing sector facing increased raw material costs and needing to reevaluate pricing strategies.
Customer Price Sensitivity: Understanding customer price sensitivity is crucial. Overpricing can lead to a loss of market share, while underpricing can erode profitability. A commercial manager in the consumer goods sector must navigate these dynamics while ensuring the right pricing strategy for a diverse customer base.
Regulatory Compliance: Pricing often intersects with regulatory issues. Staying compliant with price-related regulations is essential. For instance, a commercial manager in the pharmaceutical industry must navigate complex pricing regulations while ensuring revenue goals are met.
Commercial managers grapple with challenges related to market volatility, competitive pressures, cost management, customer price sensitivity, and regulatory compliance when setting pricing strategies. Overcoming these challenges requires a strategic, data-driven approach to pricing that adapts to dynamic market conditions while maintaining profitability and customer satisfaction.
Table of Contents:
I. Commercial Manager: 10 most sought-after skills in ASX businesses
II. Commercial Skills: Why Traditional Talent Management Doesn’t Work For Pricing Teams
Commercial Manager: 10 most sought-after skills in ASX businesses
“Our data strongly suggests that price analysis, modelling and data interpretation skills will continue to be most in demand for commercial manager roles.
However, technical skills are not enough. Sales, marketing, pricing and commercial manager teams need a combination of technical and soft skills to succeed in B2B and B2C pricing organisations.
The problem is, though, many employees lack the technical pricing skills required to develop new price models and frameworks for their business. The people that do have strong technical pricing skills tend to lack the teamwork and/or interpersonal skills to create buy-in and trust.”
Employers are now keen to find well-rounded skill sets to create buy-in for price analytics, optimisation or price rise implementation programmes.
Independent analysis of sales, pricing & commercial manager recruiting activity on job boards – including Indeed, Seek and LinkedIn – since September 2014 shows several trends in the Australian job market.
There is a high demand for advanced pricing strategies and analytics, as well as pricing managers and analysts who can work well with sales to implement market strategies to capture margin.
Here are the 10 price management skills for a commercial manager that are most sought-after among Australian employers, according to Taylor Wells advisory firm:
1. Customer value driver analysis
2. Price strategy & risk management
3. Customer trading terms
4. Price & statistical modelling
5. Price Software & systems
6. Competitive/ market analytics
7. Dashboard development
8. Performance reporting
9. Pricing offers/construct development
10. Tactical pricing/discounting
In a price management diagnostic, Taylor Wells firm assessed 384 sales, pricing and commercial employees – leaders, managers and analysts – in Australia.
Individual pricing capability was measured across all 10 pricing competencies (listed above) and 5 soft skills (gaining trust, commitment to strategy, managing conflict, accountability, and achieving results):
The study finds serious capability gaps in both technical and soft skills:
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- 56% did not pass the screening on basic price and sales management scenarios
- 26% of employees could not accept or learn from feedback.
- 68% had difficulty with conflict and/or handling change.
- 62% did not feel it was their role to coach and mentor others or work well with sales teams or customers
- 23% could not understand and manage emotions, including managing destructive introverted tendencies
Finding people with the right mix of soft skills technical pricing skills and commercial knowledge is very difficult.
Leaders and line managers are struggling to balance the skills requirements required to drive more profitable decision making.
Many managers say that they can find good technical people. However, very few with the soft skills required to lead or implement better market strategies and pricing practices.
Furthermore, most managers believe, pricing teams without the right level of soft skills are limiting productivity and accelerating team underperformance.
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Conversely, 88% of pricing teams believe that they are not set up for success in the first place. For instance, they are under-resourced or do not have the right leadership in place to deliver complex pricing outcomes.
Human resources decision-makers in Australia are working hard to build a culture of collaboration. However, I found it very difficult to break down siloed decision-making and inter-departmental rivalry. Many teams can be resistant to changing legacy pricing. Others merely comply and very little actually gets done. It can require multiple sign-offs to make even the simplest price change. In addition, many businesses do not know where to start prioritising their current price management. Oftentimes, delay making any changes or fixing any issues.
“Substantial capability gaps in Australian organisations are impacting organisational health and prosperity,” Taylor Wells said in its study, Pricing Management Talent Challenges in Australia and New Zealand.
Critical soft skills are missing or underdeveloped: empathy, problem-solving and creativity, and fostering collaboration and innovation with sales.
Commercial Skills: Why Traditional Talent Management Doesn’t Work For Pricing Teams
Did you know that 40% of internal job moves to pricing and commercial teams fail? Too many people are assigned to pricing manager roles without the necessary commercial skills.
Many new hires fail and are asked to leave. Others are moved, retrenched or re-assigned to different departments. Why is this happening? In particular, why are the wrong people without the necessary commercial skills consistently being moved into the right function?
Or, if you look at this problem another way: Why are the right people consistently being assigned to the wrong roles and wrong functions?
At face value, the shortfall of talent in pricing and commercial teams seems nonsensical. There is an abundance of talented people out there. Everyone can see the appeal of tapping into other people’s commercial skills and identifying high-quality candidates from within the business for current and future roles. However, talent management is not happening all that well.
We have met a countless number of promising analysts and managers attracted to pricing roles. Likewise, we work with many executives eager to find talented people to drive price improvement programs. But why then, does there continue to be a shortfall of good pricing talent?
It seems that building talent pipelines for pricing and commercial teams is not easy for many executives to do. This is due to pricing being an emerging discipline, many executives are unclear about what good pricing and commercial skills look like. Some just don’t know the best way to utilise their top performers; while others are prepared to struggle along with the wrong people longer than is wise.
In this article, we will look at the top 3 derailing commercial executive habits creating less-than-outstanding pricing teams and commercial skills issues in many Australian-based businesses.
1. Being unclear on what you need
Most business leaders are using the wrong data to determine the candidate’s fit and suitability for pricing roles without even realising it.
Our research shows, for example, that one of the most critical commercial skills a leader can have is identifying talent quickly and effectively. However, too many executives are making the wrong selection decisions because they base their decisions on CVs and generic aptitude tests.
Pricing, commercial skills, competencies, and potential were never meant to be measured by generic aptitude tests. They do not measure and identify the characteristics of high-performing pricing teams. So why do companies continue to use them?
Similarly, CVs dilute a pricing team’s commercial skills and slow the recruiting process down. CVs, for instance, take a lot of time to screen and verify. Many CVs are outdated by the time they are submitted or forwarded to you. Other CVs are embellished and do not show you the real person behind it. What’s more, crawlers can have a hard time with titles and keywords when CVs are uploaded into your HR databases. Furthermore, new titles and skills are being used every day that didn’t exist prior. In addition, they don’t always give a clear picture of someone’s real commercial skills.
Today, the ability to perform is the most common way to judge employees and candidates. This is something that doesn’t easily come across on a CV. Focusing on their real commercial skills provides a fuller understanding of the candidate’s experience and capabilities. Also, this opens up more opportunities.
Being unclear on the characteristics of high-performance pricing teams and individuals, however, means you will inevitably put staff forward for pricing roles which often turns out to be entirely unsuitable for the role or team.
2. Making do
We find many executives ‘make do’ with the wrong pricing team and leader when they really shouldn’t. Some hope things will work out for the best even though they know they haven’t got the right people – this almost never works out well.
One of the top commercial skills for executives is to ensure the bar on talent remains high. If you are not willing to make tough staffing calls and difficult talent management decisions, you will inevitably build a sub-par pricing team and commercial function. Hence, not a surprise if an undesirable pricing culture soon follows.
Not looking hard enough for the right person during recruitment or settling on the first good CV does not deliver excellence. Settling for a mediocre manager simply because there’s no one else in the business willing or able is a recipe for disaster. Expecting people to make informed pricing decisions when they have neither the commercial skills nor experience will lead to costly mistakes and productivity declines. Believing that your commercial skills and leadership qualities will outperform a lousy team is unrealistic. Confidence is high, but hubris and self-awareness issues will derail your team and career.
Alternatively, you may have to ‘make do’ with your current team because of tight constraints on your ability to make changes. If so, we strongly advise that you make it clear to your team that your full intention is to build their commercial skills, capability, and competency. Your team needs to work to high standards, not work down to low standards. This will only dilute their commercial skills and the business’ overall talent benchmark.
3. I can do it all myself
Given the challenges and mix of commercial skills involved in restructuring a business, we find it surprising that many executives continue to undertake restructures on their own.
The wrong team structure will defeat high performers every time.
Our research shows that when a business experiences a series of implementation mistakes or new hires repeatedly fail in their role, it’s a sign of structural imbalance rather than bad hires. Legacy team structures are often misaligned to strategy or execution, creating confusion among teams and roles. Price decision-making bottlenecks within power structures or slows implementation all around.
An excellent way to develop your commercial skills is to give yourself more room to determine the right team structure, processes, and people before a restructuring. Get advice to support you and help you chart a talent strategy for your pricing team. The support of a good HR person or talent advisor can be indispensable to any effort to restructure a team.
Another way to improve your commercial skills is to find out what tools and resources would help you to build an excellent pricing team.
For example, start by rigorously assessing the people you inherited. Plan to evolve the team into what you need it to be. Then, when you know the situation with your people, begin to align organisational design activities with your team restructuring activities.
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Bottom Line
40% of internal job moves to pricing and commercial teams end in failure.
Businesses like to say that people are their most important asset. If this is the case, then it’s your duty as a leader to build your commercial skills. Improve how you identify and manage pricing and commercial talent.
You have likely inherited some outstanding performers (A players), some good ones (B players) and some core performers (C players). Start to improve your commercial skills now by sorting out who’s who and what roles people have played. Who is capable of making informed pricing decisions and who’s not, and how the group has worked in the past?
You can do this by asking them or other people, but 360 feedback is unreliable and flawed. Alternatively, do what you always do. Form your subjective judgement or impressions as you meet them and digest your gut feelings about them.
Or you could cut through the bias. Make more objective and accurate team decisions using a little bit more science.
There are excellent tools now available to find talented pricing people for your business instead of wading through resumes.
Click here for a free guide to developing a winning pricing culture in your business.
For a comprehensive view on building a great pricing team to prevent loss in revenue, Download a complimentary whitepaper on How to Build Hiring Capability To Get The Best Pricing Team.
Are you a business in need of help to align your pricing strategy, people and operations to deliver an immediate impact on profit?
If so, please call (+61) 2 9000 1115.
You can also email us at team@taylorwells.com.au if you have any further questions.
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