Pricing Strategies and Promotion Best Practices

By: Jeff Smith, EVP and Founder, Revionics, Inc

Don’t be embarrassed…You may think that everyone else in the retail industry is using advanced pricing tools and that you are still in the era of the dinosaurs; the fact it: you are in the land of the dinosaurs, but so is the majority of retailers!

Many retailers that I talk to appear to be somewhat embarrassed, and reluctant to admit that they still do their everyday and promotional pricing in Excel. The truth of the matter is, there really hasn’t been a better tool until recently. Advanced price optimization tools have recently been introduced into the retail arena, before that, margin management and competitive positioning was about all that could be leveraged to determine the best price point.

The first generation pricing technologies have gone through a typical technology introduction life cycle. Initially there was great excitement from the early adopters in the industry for this magical ‘cure all’. A few brave souls ventured into the promised land, only to find that it wasn’t all that it was hyped up to be; there were issues with the first generation solutions. Some of the early adopters got burned and had a bad experience, but there was still optimism that something was there to help price products and services better.

As the first generation solutions lost some of the sizzle, the technologists went away and tried to figure out how to make this promising invention usable by the people that would need to adopt it. These technologists appear to have accomplished their mission, because we are now seeing a significant renewed interest in what is now called “full lifecycle pricing”, and the industry appears to be moving this technology into the “must have” category instead of the “that’s interesting” category.  With many successful installations now in place for several years, across many different retail verticals, the “second generation” technology is now becoming mainstream.

So, you may currently still have a lot of company in the land of the dinosaurs, but it doesn’t appear retailers will stay there long.  Revionics is seeing significant interest in adoption – not just from one department at a retailer, but as a collaborative decision between business users and the IT team.   If you haven’t looked at a price optimization solution demonstration in the last 12 months – it’s a great time to look and see if it’s time to leave the land of Excel.

By: Todd P. Michaud, President and CEO, Revionics, Inc

Looking back, when Revionics first developed the Promotional Planning module, we really did not know the exact capabilities we were going to be featuring. However, Revionics truly has cultivated a distinct Promotion Planning modeling module. In all reality, we were hoping to help customers take the guess work out of determining which items to promote and at which price to promote them at. Conversely, Revionics’ Promotion tool possesses more than that.

The great thing about the Revionics Planning tool that really sets it apart from the competition is that it not only offers assistance in establishing which products should be promoted at what price, but it also aids in distinguishing which are the best offers to feature in addition to where placement would be most beneficial for these products within the ads.

Our promotion optimization not only takes the risk out of running a promotion, but our customers are better able to reach their goals by planning their own events and having the ability and flexibility to make their own recommendations for the right price, right offer, as well as the right time to promote before the ad even goes out!

Revionics has the best promotional planning module in the industry! Our competitors simply do not have this capability. There is no question about it that our Planning tool sets us apart from our competition. Our goal at Revionics is to offer a unique, incredible, one of a kind service that takes the services we offer for pricing one step further in not only bettering us as a company, but in our customers efforts as well.

By: Christie Frazier-Coleman, VP Consulting, Revionics, Inc

In my retail career, I have had the opportunity to implement many types of software.  Each and every selection and installation had the intent of assisting the business to improve processes, implement new strategies, and increase efficiencies.  Companies today are looking for tools to squeeze extra margins, reduce costs, and help make better decisions.  How do the great companies succeed in capturing the changes and efficiencies needed from those investments?

The Pricing and Project team at Revionics combined their expertise to offer some thoughts on what has worked well in their experiences.  These ideas come from the great partnerships we have had the opportunity to build over the years.   We thought it would be beneficial to put all of these best practices in one good list and we hope you agree.  I am sure there are plenty more and we would welcome any comments or suggestions that we can publish next quarter.

So where are you on the successful project scale?  Measure yourself.  Pat yourself on the back if you are doing them all!

1. Begin with the end in mind.  Implementing software is not a goal. Using software to solve a problem or achieve a measurable improvement is a goal.  Ask yourself and the team what is it you want to accomplish?  What will that measurement look like in terms of success? Decisions become very simple.   All decisions must assure that the goal and measurement can be accomplished above all else.  For example:

Question: Why do I need to capture a separate sales type in my data to indicate base sales versus promotional sales?

Answer: In order to measure the effectiveness of my promotional dollars those designations are critical.

2. Protect your data integrity fiercely from inventory purchase to point-of-sale purchase. Benefitting from technology enhancements requires good data.  Clients with clean data complete projects on time and produce results much quicker in every case.  Above all else, your data is the lifeline to understanding your customer, measuring success, capturing efficiencies effectively, and setting strategies for the future.  Not being able to trust your data breeds “by the gut” decisions.

3. Executive support is a must from both sides. Executives should make impromptu visits to project meetings.  They need to ask the tough questions and expect executive updates and feedback on successes and barriers from project teams both internal and external.  They must be able to hear the truth and help solve problems when needed.

4. Do not put old practices into new tools. Test those paradigms with a review.  Perform a business analysis to look at old processes and make improvements.  The reviewer should be skilled at asking the right questions to identify the root of the problem or opportunity before a project begins.

5. Set realistic but aggressive goals for completion in each stage. Projects will always slip.  What are the critical junctures in a project?  Push to do it right but meet deadlines.  Teams need to understand that when you agree to a date it means something.  Hold everyone accountable and keep the project moving forward.  Lack of momentum will de-motivate the team.

6. If a project is slipping expose the cause. The longer it drags on the less effective the result will be.  The team will be de-motivated and begin to compromise.  User embracement and excitement will suffer.  Demand complete honesty and professionalism from your project managers.  You need level-headed and forthright project management on both sides.

7. Implement and rollout in stages. Successful projects are implemented in stages with clear objectives. Expectations and measurements should be set for each stage.  Risks are then kept to a minimum and lessons learned along the way are captured and improvements made.

8. Balance project demand with resource capacity in order to maintain momentum. Work backward into the timeline to make sure it is realistic in time and resources.  Successful projects are completed in stages without stressing resources.

9. Expect the unexpected. As you move through implementations, you will always discover multiple opportunities for improvement.  Each new request needs to be evaluated against the goals, timelines, and resources.  Make sure those new requests are placed into a “parking lot” for a future stage.  Manage the scope!

10. There will always be a function or a feature that is not yet available. A good partner will work to address your needs in the future and ask for feedback in order to maintain a forward-thinking roadmap for development.

11. Train, Train, and Train. Your teams need as much training as possible.  Identify each role that will be impacted by the project and get them trained on the appropriate skills.  Schedule one-on-one sessions.  Do not let a user return to their desk confused and flustered by what they cannot recall or understand.  People learn at different paces and some are afraid to raise their hand.  Make sure that materials are provided and measure their proficiency and progress.

12. Count on change management challenges. Within every organization there are individuals who need more convincing that they can and need to learn new ways of doing things.  There are a few key steps to keeping resistance from stalling or compromising a project.  Identify and include “strugglers” in relevant decisions, conduct extra training, talk about the benefits of the new process,  and, as a last resort, make a change.

13. Learn and practice the art of communication up and down. Encourage open dialogue and honesty among the project team, the departments that will be affected, and partner company.  All of the ideas stated above are a function of listening and learning.

14. Celebrate each stage with the team. They deserve the recognition.