The Missing Element of Automation in Pricing Strategies

⇨ There is a natural tension between corporate pricing teams and branch managers, with the former seeking cohesive pricing strategies while the latter value autonomy.

⇨ Automation, particularly in cost pass-through, plays a crucial role in empowering sales reps with price intelligence, enabling them to make informed pricing decisions in real-time.

⇨ Effective communication and storytelling around data can enhance branch independence and foster a collaborative environment, allowing teams to achieve goals without bureaucratic constraints.

A natural tension exists between corporate pricing teams and branch managers that value autonomy. Branch managers value independence for their counter staff and field sellers, whilst a corporate pricing team seeks to set a cohesive pricing strategy across the business.

As Barrett Thompson, VP Customer and Industry Relations at Zilliant noted in a recent roundtable on the issue, salespeople are inadvertently making “sub-optimal decisions because they don’t know what the consequence of a particular pricing action might be, nor what the possibility could be for an alternate pricing action or cross-sell opportunity given the data.”

In this first of a multi-part series we look at solutions to this tension as discussed by Thompson alongside Magnus Meier, Global Head, SAP Wholesale Distribution Business Unit, and Gonzalo Benitez, Director of Pricing & Data Management for commercial vehicle retailer Rush Enterprises.

In their conversation, one element that is flagged as missing from the strategic approach is automating cost pass-through. SAP’s Magnus Meier notes that intelligent technologies such as automation can help companies with decision making when it comes to price optimization. He adds that automation can be especially helpful in the current talent crunch, which has impacted companies like Rush Enterprises amongst its sales personnel.

Specifically, automation has helped Rush Enterprises to be more agile on cost pass-through so reps have better price intelligence on hand the moment a quote is in production. 

“Cost changes are the best time for making a price adjustment at the same time,” elaborated Benitez. “We’re going to get a 2% increase but know we’re under performing in a category – so that’s the time to get the additional point we think we can get. So how can we adjust that with cost changes?”

Benitez notes this is why sales reps work best when equipped with analytics and AI tools, which it has developed both with Zilliant and in-house. Insiders should note that such tools can be implemented by Zilliant into SAP CPQ, ERP and Commerce Cloud.

For Rush Enterprises, automation has helped the company keep their branches independent using statistical information and without a “lot of red tape” stifling them. The company’s reporting is now of a more helpful bent, advising branches on how to achieve their goals without pointing fingers.

“So we have also been changing how we present the data and how we tell the story,” said Benitez. “It’s not just about the pricing but also the storytelling part of it – the governance of the data and how you make everybody feel that they can be part of the data journey that we are on.”

Stay tuned to SAPinsider for the second part in this series as we look at tackling further missing elements which can help SAP Insiders work better with their pricing strategies.