3 Lessons for Building a Pricing-Fluent Organization
For retailers, creating a pricing strategy is an art and a science. A pricing team must balance customer focus, the competition, and a number of moving factors. And just like learning a new language, it takes dedication to develop the skill and confidently become fluent.
Presently, retailers have an opportunity to become pricing-fluent organizations by aligning their strategy, people, processes and technology. This will increase agility, drive continual improvements and, ultimately, grow profit margins. By paying attention to these key areas, retailers can develop their pricing strategies with dynamic, data-informed fluidity that's able to adapt to evolving market changes and unexpected events. In fact, Revionics has found that pricing-fluent retailers get a 2 percent to 4 percent profit lift above their competition.
To truly become a pricing-fluent organization, retailers must learn three key lessons that will help them master the skill and develop successful pricing strategies:
Lesson No. 1: Build Sustainable Strategies
Pricing-fluent organizations must have sustainable strategies that can be implemented and carried out not only for the next three months, but also have the ability to evolve dynamically as trends change over numerous quarters and seasons. They can’t focus on the tactical little tweaks or one-off corner cases. Instead, retailers must be able to strategically move quickly to take advantage of opportunities, both long term and short term.
Artificial intelligence (AI) and predictive analytics allow retailers to build sustainable strategies by providing informative and accurate data that reflects both consumers and market drivers. At any given time, retailers will be able to obtain the best information in real time to inform a product lifecycle strategy while also considering all different channels and platforms.
Retailers should also ensure that they have consistent processes in place that will maximize efficiency. This means implementing a centralized strategy that's fully adopted across the organization. With full support, pricing teams can drive meaningful results in the marketplace — now and in the future.
Lesson No. 2: Become Dynamic, Agile and Efficient
The pandemic has taught retailers how important it is to be prepared for unforeseen disruptions. To become flexible with their pricing strategies in an unknown landscape, retailers must ensure that their organizations are dynamic, agile and efficient in order to win share of market.
The more dynamic the organization is, the more pricing teams can evolve for changing market conditions and drive pricing and merchant collaboration. Focusing on these key characteristics will allow retailers to respond strategically and anticipate constant changes in consumer behavior and demand with accuracy.
Lesson No. 3: Continuously Look for Ways to Improve
A retailer must be able to learn, measure, adapt and continuously improve the business to truly become a pricing-fluent organization. This can only be done if the whole organization is on board and willing to grow and improve. Businesses must have the right people from the top-down to drive meaningful changes that produce results.
Teams must also quickly adapt to change and seize new opportunities, ensuring that decisions align with overall strategy. No one will ever become perfectly fluent, but winning retailers will capitalize on new opportunities and continuously evolve and improve to drive strong results.
Proficiency is Key for Pricing-Fluent Organizations
By applying these three lessons to their pricing strategies, retailers can create a successful pricing organization — one that helps drive sustainable results and boosts bottom- and top-line performance. Furthermore, utilizing technology-driven data and analytics will elevate retailers to grasp the concept with clarity and confidence.
Now that retailers know what it takes to become a pricing-fluent organization, they can be well on their way to becoming “native speakers,” unlocking profit and market share potential with strategic pricing decisions and, ultimately, delighting their customers.
Matthew Pavich is the managing director of global strategic consulting for Revionics, an Aptos company. Revionics is an AI-powered price optimization software.
Matthew Pavich is the managing director of global strategic consulting for Revionics, an Aptos company, where he develops data-informed, industry-leading pricing strategies, processes, analytics and organizational fluency to help retailers meet the challenges of today’s increasingly dynamic and competitive landscape.