Pricing

What’s a Tweet Got To Do With a Price Waterfall?

By Jennifer Maul
July 29, 2013

I have been on a mission to better understand social media, and over the past year, I have followed Charlie Peters of Emerson closely. I think it’s extraordinary what Charlie has learned and openly shared so willingly with the rest of us at http://www.theextramilewithcharlie.com/.  After reflecting on social media for the past few months, it was time to take action.  I decided that Twitter was going to be my preferred platform – this is what happened – a few weeks ago, I started building my network on Twitter and began tweeting.  Charlie is someone I follow and through his network, I (@jmaul_svp) connected to Clay Christensen (who wrote Innovator’s Dilemma) and started following him.  A reference was made to How Will you Measure Your Life, and I knew I needed to read that book ASAP.  I love how the action of getting engaged in Twitter connected me from Charlie to Clay to Clay’s latest book.  I discovered ideas in the book that helped me reflect in new ways about my own life, both personally and professionally.

Early in the book, Clay talks about the ideas of emergent and deliberate strategies, stressing that we have to test our assumptions through rigorous thinking, while at the same time, allowing ourselves enough freedom to see and grab unexpected opportunities.  This is precisely what the price waterfall can do as a powerful business construct that clearly shows where along your B2B deals you are leaving money on the table.  Surprisingly, there are still many, many businesses who have yet to leverage the power of the price waterfall to show them how their deliberate pricing strategies are working while at the same time opening up their eyes to leaks in their pricing strategies – leaks that once plugged will help them deliver millions to their companies.

I spend most of my days defining strategies and tactics to help reach and teach big business about what excellent price management practices can deliver to a company’s bottom line when done well.  So as I continued to read more, Clay challenges us to test our assumptions, to determine “what has to prove true.”  Asking what has to prove true first before enacting a new strategy is just plain smart.  It turns the notion of planning on its head because often we write our plan and just go do it.  How many times do we sit back and ask ourselves what assumptions in my plan must prove true in order for it to succeed?

The same is true in B2B pricing strategy.  There is no better tool than the price waterfall to help you answer the question “what has to prove true?”  The price waterfall brings your historical invoice transactions to life by analyzing the rich history of your data in the context of your discounting policies, your cost to serve approaches, your list price setting practices, your pricing outliers, and your margin causality.  When done well, the price waterfall is easy to use and in a matter of seconds, you can ask what has to prove true about your pricing strategy for a product, for a region, for a business, for a product line, and more.  In an instant, you can “focus on what truly matters” and take action to course correct your deliberate strategy.  At the same time, things that have gone unnoticed in your B2B pricing approach will suddenly be apparent – you can then pursue new ideas to take advantage of emergent strategies.

Clay states “I never stopped to scrutinize my own assumptions” as he reflected on his career.  As executives who have margin improvement goals for our companies, I appeal to the same logic Clay uses – question your assumptions – about your pricing strategy.  I knew my understanding and perceptions of social media were insufficient.  I knew I had to take another look at the powerful medium and get better at it.  I had to test my old assumptions.  By the same token, take a fresh look at your pricing strategy – you might be very surprised at old assumptions that need a good, strong re-examination.

  • Clay Christensen , price waterfall , twitter

    Jennifer Maul

    Jennifer holds Bachelor of Science degrees, magna cum laude, in Business Management and Management Information Systems from the University of Maryland. Follow her on Twitter: @jmaul_svp