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Use Price Waterfall to Beat the Industry Average
In the competitive landscape of the business world, companies are constantly seeking ways to gain a competitive edge. One effective strategy is to leverage the price waterfall against industry averages. By understanding and manipulating the various components of the price waterfall, businesses can position themselves strategically and achieve a sustainable advantage over their peers.
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After considering these points along with the calculations provided in Plasma, you can adjust your strategies and realize that you can close the 400 bps industry gap by addressing the unreimbursed freight.
Benchmarking
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Deal Velocity and Approval Steps Against the Industry Average
The next business scenario we are looking at deal with a company’s deal approval process. In this case, the approval process is slower and more complex than the industry average. This cumbersome process not only causes profit erosion but also incurs hidden costs that affect sales productivity and add unnecessary overhead.
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•How can you automate your approval workflow?
The only way in which you can gain insights on these points is by primarily knowing where you rank in your industry. Plasma will help you get this insight to allow you to make better decisions and leverage your processes.
Price Uplift Ineffectiveness for Customers
Businesses often face the challenge of managing price increases in response to rising costs or market fluctuations so it is essential that you can effectively pass through price increases to your customers. if you are unable to communicate and implement price adjustments, it can have detrimental effects on the company's profitability and competitiveness.
One consequence of not effectively passing through price increases is a direct impact on the company's profitability. If costs rise but prices remain stagnant, profit margins shrink, leading to reduced financial performance.
Furthermore, failing to implement price increases can create a perception of low value in the market. Customers may associate unchanged prices with stagnant or inferior products or services. This can erode trust and loyalty, potentially driving customers towards competitors who have effectively communicated and justified their price adjustments.
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To address these challenges, the company in our scenario needs to reassess its pricing strategy and develop effective communication channels with its customers. This would be improving the company’s yield from price increases will drive +% in revenue.
Transparent and timely communication is crucial to help customers understand the reasons behind price increases and the value they will receive in return. This requires proactive efforts to educate and support sales teams from certain regions, equipping them with the knowledge and skills to effectively convey the value proposition to customers.
Knowing how you position against peers in your industry, brings up other aspects that should be considered to tackle this issue:
•Potentially setting more aggressive margin realization targets
•Clear distinctions between products where price increases work and where they do not, for whatever reason
•Whether governance and tracking is rigorous enough to ensure follow through with key customer account teams
Moreover, the implementation of pricing technology and data analytics, as Pricefx Plasma, can support the pricing process, enabling you to analyze market trends, competitor pricing strategies, and customer behavior. This data-driven approach empowers you to make informed pricing decisions and adjust prices accordingly, justify them, maintain profitability, and foster stronger customer relationships in the competitive marketplace.