Hi everyone and welcome to another pricing podcast episode.
My name is Megan Ford with the Professional Pricing Society and
this is a Pricing podcast episode with a thought leader
from Revenue Management Labs. We are excited to interview Mr.
Avi Punwathi and the Pricing Society is also excited to bring
you this content in addition to more and an attempt to connect
our pricing community around the globe.
So check us out at pricingsociety.com and you can
get more of our resources that are readily available to
everyone around the globe to help your career further connect
everyone as well as receive online pricing training and
credits towards your Certified Pricing Professional
designation. One more announcement before we
jump into this great interview with Mr. Kunwassi.
We have a fall pricing conference coming up.
We are excited to welcome everyone this fall.
Virtually 2021 has been quite the year, but the Professional
Pricing Society maintains a connection with our community
and welcome the opportunity once again to connect thought leaders
around exciting topics around four days.
It's an event you do not want to miss.
For the full details and lineup and get your registration on as
well With your pricing teams and taking advantage of the early
bird discount, you can visit pricingsociety.com back slash
Fall Conference. You will not want to miss out on
this event. You can also follow the hashtag
on social media which is PPSF VC21 and learn more information
about our lineup, networking announcements as well as ways to
download our mobile app which also keeps you up to date on all
of this pricing news. So Speaking of that pricing
conference, one of our fabulous speakers is the Thought Leader,
a great friend of the Pricing society, Mr. Avi Kunwasi, and we
have him here today. Want to tell you a little bit
about Avi? He is the founder and power and
partner at Revenue Management Labs, specializing in strategic
pricing implementation, and he is adept at enabling companies
to make sense of their complex and diverse environments.
With over 15 years of senior revenue management experience
that spanned from pricing strategy to analytics, Avi has
helped clients understand how to capitalize opportunities through
pricing. He holds a BBA and MB A from the
Shulick School of Business at New York University and is a
certified pricing professional and member of the Professional
Pricing Society. Again, he is a warm friend and
featured speaker. We are excited to welcome him
back in this platform. Avi will be speaking this fall
around B to B pricing and inflame infla, excuse me, B to B
pricing and inflationary periods and we're excited to welcome him
today to this podcast episode. Hi Avi, how are you?
Hey, not too bad. Thanks for having me here.
Really excited to do this. Thank you so much for joining
us. So tell us a little bit more
about yourself. I gave that great bio to our
audience and those listening that may be unfamiliar with your
thought leadership in this industry.
Yeah, definitely. So thank you for that quick bio.
I think the only thing I'd add is.
Throughout my career, I've been on both sides.
I've I've stepped in on consulting and have been on the
other side. I've been pricing manager at
Ford, I've been Director of Revenue Management at a BM Bev.
So I'd like to feel that I'm very familiar with the
challenges that I know everyone who's on listening to this is
encountering and the people issues that you're getting into,
the cultural issues that you're getting into, the data issues
and challenges. So have been on both sides very
much and that's what revenue management labs is kind of all
about, not only because the insights is one thing, but how
do you take that through to execution.
I know that's where 80% of the pain and the real value is
created. That's wonderful.
And I know that our practitioners can absolutely
relate to someone who has been on both sides.
So thank you for adding that. So I've mentioned a few times
that you're a friend of the Pricing Society and you've
spoken at our conferences before.
Tell us a little bit about your upcoming presentation this fall.
And but definitely so we know that inflation has been kind of
running rampant. We're getting noise on labor
going crazy and I'm sure you guys have been seeing all those
posts out there that companies are looking for people and we
see the cost going up incredibly supply, a lot of companies can't
even get enough supply out there and store shelves are empty.
Freight costs are going up and we've also got material costs
that are going up, so. At the same time, there's been
inflation in the industry. Everyone's seeing their costs
move up and the discussion has been around, OK, how are we
going to react? How are we going to react?
I'm getting calls from my customers that they need cost
concessions, that their costs are going up, their margins are
being squeezed, we need to price, price, price.
So things are moving incredibly quickly and what this session is
designed around really to give some B to B firms, some
strategies. On how to handle that and set
prices intelligently with so many things moving at the same
time. So we're really going to focus
on four things. The first thing is refining your
value quantification in the market.
So this is all around making sure that you're looking at your
offers through your customers eyes and capitalizing on all the
value that's on the table And of course that value is going to
differ based on the customer that you're looking at.
Next will be need you to do this or that, making sure that if you
are giving those sessions that they're only temporary and also
that there's counterparts associated to that, so you're
getting customer concessions in exchange for that as well to
make sure it's a bit of tit for tap.
The third item is on addressing price leakages.
So make sure we're optimizing our investments in the customers
and we're doubling down on things that work and we're like
rationalizing things that is really unproductive to us.
And then the last element, which is often the most important, is
enabling that frontline sales execution.
So giving them the tools or the guidance necessary to make the
right decisions and hold the team accountable, that sales
team accountable to actually execute that strategy in the
market. So what we're hoping is as
participants block out is that they're going to have a high
level blueprint on how they can start to take some immediate
pricing actions within their organization.
Thank you, Avi. Those are really clear takeaways
and I know that our practitioners are going to
benefit from that knowledge. They can put that practice to
where you know and hit the ground running.
So as a both a practitioner and a thought leader, what
challenges would you say people are facing or you can share your
personal challenges when pricing amongst B to B and versus B to
C? Yeah, it's it's funny because
often in B to C it's A. It's a little bit easier because
you have a ton of data. Available and this is the number
one issue that we run into when we're dealing with B to B's that
we hear. The problem is I don't have the
data, I don't have the syndicated data like I RI or
Nielsen. I don't know what my market
share is. I don't have good competitive
data. Sometimes I don't even have an
idea on where my prices position versus where the competitions
prices position or I don't know if I'm selling it to someone,
they're reselling it, what they're reselling it at.
Or we don't have good win loss data from bids.
The list goes on and on and on. And it it's a challenge within B
to B's on how with with operating in the state of
acting, how do you go ahead and get good pricing insights on
where we should need to, where we need to move there, There's
tools around it. It's not a good enough excuse to
say you don't have the data. So I I can't do very much.
I think that's one of the main challenges is around the data.
And we've seen the opposite end of it.
We've come into B to B's that have more data than they know
what to do with and they're kind of in the analysis paralysis
space. They're building a bunch of
dashboards and reports, but not taking a bunch of actions out
there, right? Not making any real traction.
Exactly. The second item is that we find
a unique challenge is B to B's. Sometimes it's tough to get
close to the customer depending on what type of offer they're
selling, how niche it is, how specialized it is.
So getting close to the buyer, understanding what they truly
value, what they see as a relevant competition within your
portfolio, within competitors within them doing it themselves.
So thinking about how you get close to that customer in a
meaningful way and not only making it a one shot.
Experience, but that you have that ongoing relationship with
that customer that you're pulling in that information.
But it's critical to overcome and there's lots of ways to do
it. The other thing that we we
challenge companies with is if you can't get close to your
customer, it really calls into question the offers.
That you're putting out into the market.
How do you know that your offers isn't even fit what they need?
And then I think the last challenge that makes B to BA
little bit more or one of the complexities that we here with B
to B is that B to B often has lots of offers.
We're talking 10s of thousands of different products or
services that they're pricing out and it's neat.
One customer's buying this and this other customer's buying
this and this product hasn't been sold for five years, but
we've got an offer for it right now.
So there's a lot of complexity that comes along with that and
how you manage that complexity in a structured manner.
So you're not kind of doing that one off 1 by 1.
So there's there's a lot of challenges in B to B, but I
think the key thing is whenever there's challenges, there's a
tons of upward opportunity around it as well.
And that's a great point. And Speaking of we've heard a
lot about the popularity of cost based pricing and B to B.
So why do you think people are gravitating more towards that?
I think there's a couple things. One, we we know that 60% of
organizations that try to implement a revenue management
function with within the first two years, they actually don't
hit the growth targets that they have.
They have this aspiration around.
And why do companies gravitate towards cost based pricing?
You've got a ton of offers, there's a ton of complexity.
I don't have data. I'm not close to my customer.
So it's easy, right? It's easy if if we've got a good
finance team that's doing activity based costing and we
can kind of cost out what goes to each product or to each
service, I can take a price. I can put a margin on it and we
can run that math really quickly.
It's quick and it's easy. That's why companies gravitate
towards it. The only problem and you're
always well hopefully, you're always sure kind of knock on
wind that you're covering your cost with it as well.
So you've got that, you're locking in your profit.
It's funny because we run into a lot of companies that have cost
based pricing in place, but somehow they're still managing
to lose money on it. But the problem is, is that with
this cost based pricing kind of needle gazing, right, it does up
in terms of how you're receiving a truck in the back end of your
dock and how many people it takes for the value you're
creating for your customer at the at the end of the day has
nothing to do with your value in the market.
What the cost of copper's doing has nothing to do with what kind
of bearing you're putting out there and the machine it's kind
of going into. So you're always going to be
overpriced or underpriced within the market because you're not
focused on the customer. Also it's starts to focus the
organization on how do I get better.
That predicting costs, how do we get better at attributing costs?
So how much time does someone spend on this customer versus
that customer or how much time? How much resources did we
actually consume for this customer?
When? It should really be the opposite
way around and going external and then moving internal.
How do they see us? Where do we create value for
them, which is really the critical aspect and it gets you
away from how do we get smarter at predicting all these
commodities or labor or freight that we're always going to be
playing catch up on great points.
Well, knowing the gaps within cost based pricing, how would
you advise B to B businesses transition to value pricing or
what are your best thoughts there?
That's a really big question and I think there's some
preconditions. Firstly, the organizational has,
you have to have some cross functional alignment in that.
This is going to be a team sport if we're going to value based
pricing. Sales team, your marketing team,
your finance team, your OPS team, they have to be working
together because you're going to start to move towards more of an
insight based organization. And how do we take these
consumer insights that we're getting from all elements from
our customer service team, from our warranty team and bring that
to leverage on how we're creating value.
Secondly, you need to have executive buy in.
If the executives aren't behind you on this and the C-Suite and
aren't going to reinforce the messaging, it's going to be a
real tough battle on when you when you get to execution with
that executive buy in, it's translating into that customer
first mentality and data-driven decision making.
Every decision you're going to make is always going to have
three Proms. One you're going to be looking
at. What does this mean for my
customer or how is my customer see this?
Number two, how would I see this from a competitive standpoint?
And #3 from a financial standpoint?
Does this make sense for us? So you're always going to have
these three elements that you're looking at.
Some of the other preconditions, just you know you're going to
have to have people that have the proper skills to do this
work. You're going to have to have
clear processes in place. And along with that clear
process, you're going to have accountability around this whole
thing. So what's going on with our
budgeting, our planning, our targets, our compensation.
So it's really heavy, but a lot of it is the people and the
culture and getting getting that up and running in the buy in.
So that that's kind of critical to getting this started.
Excellent points of you, that's X, those are excellent points.
And then it's the great teaser for people to learn more when
they come to our fall conference and to follow you on LinkedIn
too. I'm sure you share your more of
your thought leadership there, your thoughts there.
One of my final questions for you.
Thank you for your time today. Are there standard tools or
methods to help your sales force focus on value selling and not
price negotiation? Very specific.
Yeah, fair. You know what?
It's funny when we talk about things that people are
uncomfortable to talk about. People would rather talk about
sex than their salary, right? Cuz it's more comfortable.
And sales people are the exact same way more.
It was around 70% of sales people when they were tested.
They're uncomfortable when they talk.
When the discussion goes to money or pricing, they get very
uncomfortable. And it's even natural In our own
personal lives, we try to avoid those discussions around money.
So it's. It's natural for them when those
discussions come up, I mean, even you know in your
relationship when you're talking about who's going to pay for
what, you don't want to have that discussion.
So you make it go away as quickly as possible.
And what that ends up with is price concessions or commitments
because the customer is going to ask for what they want.
You want to maintain your relationship and you're going to
give in. So where you need to go towards
is you not need to start thinking about making sure.
As a pricing team or revenue management team, make sure you
know what value you have, how that, what value you're creating
for the customer #2. You need to have a templated way
that the sales team can deliver that and it has to be a
consistent message, because if you don't have a consistent
message for your large sales team, they're going to find
their own things that they want to deliver.
I kind of assess you say, these three points.
But you honestly need to give them a script and almost needs
to be templated into joint business plans for customers
that's, you know, you have them going in there on 1/4 on a
quarterly basis. And that they're presenting the
360 of the offer, not just, hey, I'm here to show you what your
pricing is. Here's your one pager and then
it goes straight back to price, and they're kind of back on
their heels and they're not in a good space to negotiate.
The other thing is, which is really underserved or
underutilized is often we go in and we say, hey, this is the
price. You can't give anything back.
But we know there's going to be discussion.
You need to develop playbooks on what, hey, you're going to get
this, this is allowed. This is not allowed.
If they ask for this, this is what you need to ask for and
this will be allowed, not allowed.
So that is so templated out there.
That you're not getting surprised and you're never gonna
get any of these commitments that are made to customers.
Because it's funny, I've been in so many discussions where sales
people have come back and said, sorry, we're locked.
Now I made that, I made that concession or I had to make a
decision on the spot cuz they were offering me this.
But if you have that all templated out, it's a much
different discussion. That you're having with the
sales team, you're walking them through that, you're helping
them think of objections. You're training them on it.
And if they have issues on how that decision tree works, you're
having that discussion in advance.
It's not happening on the tail end and you're really arming
them. I think the key is, is that your
sales team, they're busy and they're focused on selling more.
You're trying to get your tons of pricing initiatives executed?
You need to make sure that you've got the proper game plan
in the proper place so you can get it executed.
Because if you leave it in their hands, they have the best
interests of the company at heart.
They also have their best interests at heart too.
But it's not necessarily going to go the way that you want it
to go. So it's critical that you focus
and you really have that implementation plan because that
really is 80% of where the rubber is going to hit the road
at the end of the day. Now that it was such a gem for
all business, businesses and industries, I really, I even
wrote a note about that one. You got to prepare to avoid and
limit those surprises. That's key, Avi.
That's excellent work that you shared.
We want to thank you for your time today.
Any final thoughts before we share with our listeners how we
can better connect with you after this episode airs?
I want to thank you guys for being here and listening.
Please feel free connect with me on link Revenue Management Labs
website at revenueml.com. We've got a ton of content there
and a lot of it's on the PPS website too.
We're really excited to be participating.
Thank you so much, Avi. We want to thank you for your
continued partnership and we're going to leave all of that
contact information in the description bar as well as we'll
have access for that for contacting you on our social
media pages as well. We can't wait to feature you
this fall. Thank you again.
It's going to be an exciting time.
In October, all of our listeners again, you can visit
pricingsociety.com to register for our fall pricing conference.
It is a virtual event open to everyone around the world.
And of course, Mr. Avi Pumwassi will have a featured workshop.
So we're excited. Thank you so very much, Avi.
Thank you. We'll see you in October.
Take care. See you in October.