The nature and pace of business is changing quickly and many great pricing and commercial teams are struggling to keep up: Overestimating the ability of consultants or algorithms to fix your problems can be disempowering for teams and deliver underwhelming results. Relying on training courses and workshops to build commercial capability across your teams is often a fruitless and expensive exercise. Building great teams and making them work within broken organisational structures sets them up for failure. But the worse mistake of all is inaction. Not ignorance; not incompetence. Inaction. Indeed, we believe inaction is the no.1 driver of profit loss.
Through the Taylor Wells Optimised Commercial System, you can cut out painful change processes and align teams to action in the best way possible. No matter how complex the commercial challenge or how challenging the business culture.
TAYLOR WELLS VALUE CULTURE
Taylor Wells Value Culture
Our optimised commercial system covers the whole pricing transformation journey. So whether you need to design organisation team structure, define pricing strategy, update new salary and reward programs, make smarter decisions about whether to hire or develop talent from within your organisation, get the right people on board, or even hear feedback on how engaged your employees really are, right across your pricing, marketing, sales, finance teams and customer services teams – Taylor Wells provides the answers.
Pricing College Podcast Series: Discussing Best In Class Pricing To Solve Commercial Challenges
HOW AN ASX WHOLESALE / DISTRIBUTION PACKAGING BUSINESS BASED IN MELBOURNE GENERATED AN ADDITIONAL 9.5 PER CENT MARGIN IN UNDER 6 MONTHS WITH NEW TARGET PRICING
Taylor Wells was engaged to assist a leading ASX wholesale / distribution packaging business to improve its pricing capability as it transitioned from cost plus to a strategic customer-focused pricing and operational model.
This ASX-listed business was experiencing a significant earnings decline with EBIT margins of less than 5%. There was no standard cost measurement to estimate operational expenses. There was no consideration of market pricing, willingness to pay or margin potential.
Legacy pricing habits were also deeply engrained in the culture of the business – ‘set and forget’ and ‘discounting to win business’ was the modus operandi.
Teams were tired and frustrated of working within broken systems. The general sentiment was there was no way out of the chaos. There was also significant talent churn and performance issues. Company culture was a liability to profitability and organisational health.
Taylor Wells started the commercial optimisation process from the top, focusing initially on drafting and planning pricing strategy.
To begin, we supported the executive team to identify key objectives and agreed scope for the roadmap.
We then devised an execution roadmap, including an organisational-wide communications plan to share with the whole business; and set up optimal team and committee structures – including taskforces, governance and steering committees – to oversee and drive multiple projects, deliverables and outcomes.
We devised a system and structure of reviews, checkpoints, meetings, stand-ups, 1-2-1 sessions and feedback loops to ensure all information was captured and actioned and problems addressed.
All meetings had structured agendas with time to debate concepts and discuss project risks, challenges or changes. There were also regular team catch-ups and stand-ups to overcome daily obstacles.
The value of structuring projects like this was that it provided absolute clarity and agreement on direction, purpose and vision from the top down. It gave leaders and their management teams a starting point; a place to forge ahead and forums to steer and guide the projects.
It also gave teams the structure they required to avoid working at cross purposes. Everyone knew what they were doing, and why and when. It cut out the red tape. It gave teams a fluid and open system of communicating, capturing learning from multiple tests and trials across numerous workstreams.
The business did not have a strategic pricing function and required detailed guidelines on how to set up and integrate a pricing function in the business.
Our first step in the integration process was designing and building optimal team structure and team roles.
Next, we utilised our pricing recruitment service to help the business appoint a high calibre pricing manager.
As the commercial requirements of the business needed a pricing manager with a special mix of skills, capability and potential, we utilised our unique pricing manager assessment framework, datasets and talent pools.
Our Pricing Manager Assessment framework was the basis upon which executives in this business made their selection decision for this appointment.
Within 1 month we found a high-performing pricing manager with the capabilities we needed. The pricing manager has since been promoted in the business and the pricing function is a highly regarded and growing function.
From week 1 of the pricing manager joining the business, we began a structured onboarding process.
The onboarding had two main objectives: To align pricing to commercial strategy according to the Pricing Roadmap. To deliver $1.5M in EBIT by the end of the year with incremental margin growth present from at least month 3 of the roadmap.
With these objectives and targets in mind, we designed an onboarding programme and workflows to deliver results in the first 3 months, 6, 9 and 12 months.
We developed customised pricing plans to support the pricing manager build a strategic price architecture.
We co-created and developed strategies and analytics using a range of methods – value-based pricing, competitive pricing, attribute-based pricing to optimise revenues and prices.
We developed pricing communication plans, stakeholder engagement initiatives and then technical ERP price structure designs for a new ERP system.
To accelerate the implementation of these plans, we designed a system of structured coaching and communication.
All plans were actioned, implemented and delivered the required EBIT results.
When we were sure our pricing plans were capturing value; we initiated plans for the sales and category management teams to bolster the results we were getting from the pricing project.
We built customised plans and workflows and aligned plans and workflows to the new pricing roadmap, strategy and mission.
All team interdependencies were mapped out. All tasks were identified, prioritised and categorised within workstreams and all workstreams and projects were given project owners and sponsors.
There were regular steering committee meetings that we helped to facilitate. There were also frequent stakeholder and project meetings set up to ensure delivery from the line managers’ teams.
All of these meetings were all project managed and aligned to the roadmap and tracked using dashboards. All ideas and actions were captured and given to owners.
Once team plans were designed and issued, we allocated a series of structured tests and trials to project stakeholders in sales, HR, category, marketing, IT, executive team, procurement, and finance.
Structured learning in this requirement was underpinned by testing, scientific investigation and subject matter expertise. If there were gaps in knowledge, they were filled in a timely manner with targeted coaching to ensure delivery and decision-making were effective and speedy.
Taking the pricing manager function as an example. We worked with the new pricing manager to test if target pricing could be applied to uncontracted revenue. We then set up a trial, combing through 21,ooo lines of data and established via testing new target pricing for over 6,000 individual line items.
Within 4 months, the business was generating an additional 9.5 per cent margin on the newly priced items. Within 6 months, new and proven pricing processes were documented and embedded in the business. All tasks, decisions and workflows were set up.
Many of the tests and trials set up during this time were ideas from the team as well as us.
This new way of capturing ideas and then turning them into real $ value brought about a cross-functional way of optimising sales, product innovation and pricing that was not dependent on us or any one person in the business.
What’s more, the new system highlighted all the great work the teams were doing. Teams were finally recognised for their positive contributions to margin generation, as the business finally had visibility of all the workflows, ideas and value capture being achieved on a daily basis.
Commercial optimisation is a continuous process. It involves all departments, not just pricing. Take HR, for example:
Do HR recruit and train people that are really in line with the business or its pricing strategy?
Are commercial teams incentivised, rewarded and recognised in a way that truly motivates people with unique pricing skills to deliver more complex business outcomes?
Are the pricing and sales teams set up properly to implement the commercial strategy – tool kits, training, resourcing?
If the answer is no across the board, unsuitable people are being employed. Training is less than effective. Salary, reward and talent management structures are driving talent away. Great sales teams are missing out on sales through no fault of their own.