As someone who has been using computers since I was seven years old, received a degree in Computer Science, and worked in the software and consulting industry for almost 20 years, it’s easy to forget that not everyone has the same exposure and industry experience. Knowledge that I take for granted is often completely foreign to some of our clients and business users. A recent Pew Research Center poll echoes this, showing that only 15% of Americans have ever used a ride hailing app like Uber or Lyft, and over 30% have never even heard of these apps.
On the other hand, when it comes to doing handyman work around the house, I’m generally useless at best and actively dangerous at worst. If something goes wrong, I’m going to call a carpenter, plumber or electrician so that I don’t accidentally burn the house down.
In the same manner, it’s important to recognize that there are many industries and companies that haven’t heard of, or don’t understand, the power of analytically driven Pricing and Revenue Management techniques. Rather than focusing on analytics, these companies have worked to manage costs, increase operational efficiency, and invest in making their products or services the best they can be. They use their knowledge and resources to improve management of their supply chain, production processes, or functions critical to their specific business.
Imagine then, the possibility of being the first company in an industry to implement a Pricing and Revenue Management system. Your business suddenly achieves 3-7 percent in additional, organic revenue growth and profitability, without taking potentially destructive cost cutting or business altering actions. This advantage may accrue over several years, as the first mover advantage can be powerful and decisive, especially in competitive industries. Even as competitors awaken to similar strategies, it may be years before they are able to position themselves to effectively compete with similar capabilities.
So how does a company without experience in complex pricing analytics get started? The first instinct may be to buy an off-the-shelf product and adapt it to the business. While this can be a good option in some instances, it should be carefully considered as the modifications and customizations needed can drag on for years. Almost every experienced IT group can describe a litany of standard ERP or off-the-shelf projects that spiraled into years of work once they realized all the customization that was required to make it work for their business. Even worse, the business can see the implementation as a total failure if the off-the-shelf product doesn’t provide the expected impact, even after huge costs were created trying to make a square peg fit in a round hole.
Alternately, the initial thought may be to design and build a solution in house. However, building a team of experienced and dedicated specialists needed to implement such a system can be a significant undertaking. The problem also arises that, since these functions aren’t typically part of the core business, retaining and replacing these specialists long term can be a huge challenge.
What a company looking to implement a business or industry first Pricing and Revenue Management system should really look for is a true partner who can provide feedback and guide changes in the best interests of the company. For example, one client initially came to us requesting a simulation tool, but when we looked at the problem in detail it became clear that the simulation tool would be meaningless without first improving their forecasting and price sensitivity capabilities. Without this kind of partnership, the company could have spent huge sums trying to implement a simulation tool and never understood why it didn’t provide the value they expected.
For companies looking to lead their industries in utilizing Pricing and Revenue Management, finding and working with a great partner can mean the difference between a successful project that drives years of organic revenue growth vs a project that becomes a frustrating exercise in lost opportunities. In the same way that it makes sense for me to hire a skilled technician to work on my house, partner with a team that can help you create a dynamic and growth-driving new capability for your organization.