To get the most out of a dynamic pricing software, you need to look beyond your pricing department.
As part of a bigger organizational transformation to a more agile way of working, dynamic pricing will affect several different departments in your company, from logistics, to merchandising and marketing, and more.
But since dynamic pricing touches so many different elements in your company, how are you supposed to maintain organizational clarity around the tool? How can you make sure that every part of your company gets the most out of dynamic pricing without major conflicts?
Keeping all parts of your organization aligned on dynamic pricing is crucial for the project’s long term success. Each of these teams can effectively use a part of the tool to make their own jobs easier - and move your organization forward to a new plane of strategic operations.
In this post, we’ll explain why this organizational clarity and alignment is so important, then give you some tips on how to achieve harmonious alignment.
What does lack of organizational clarity look like?
Organizational clarity is an internal alignment on your goals and how you will implement and use the dynamic pricing tool. It goes far beyond alignment between the business and I.T., but also reaches down deep into various departments to make sure everyone understands the direction you are headed with dynamic pricing.
When you don’t have internal alignment, two things happen within an organization.
First, you will miss the full potential of the dynamic pricing tool. If the tool gets stuck in a silo, any changes that happen within your strategy will not be understood by your colleagues. The other departments won’t be able to harness the power of dynamic pricing, and your overall return on investment will be smaller.
Second, you’ll also experience internal resistance to the changes around the tool. As Gijs Schuringa, our onboarding manager says,
“For example, if you are an omnichannel retailer and the online department want to implement dynamic pricing, you can then stumble across the fact that you won't be able to update your prices in the physical shops as often as [your online shops]. This could lead to a lot of resistance within the offline departments which, in traditional retailers, are often also the powerful departments. This can really hinder the process of implementing dynamic pricing.”
As another example, you might be an organization with a well-defined pricing department and a clear pricing strategy. And if that’s the case, you might feel that the dynamic pricing tool should be owned by the pricing team alone.
But if you fail to include the marketing team in the conversations around dynamic pricing, for example, you can end up wasting marketing money. If the marketing team doesn’t know your pricing team is raising prices on a certain part of your assortment, they might bid aggressively on that product, just to display that you are outpriced.
Multiply this mistake by thousands of products in your assortment, and you can quickly see how costly this misalignment can be.
Marketing is just one example of many where organizational alignment can cost you money in unexpected ways. But just as misalignment comes with a cost, alignment creates new opportunities for growth that you didn’t know existed.
The beauty of organizational alignment
When you have internal alignment about dynamic pricing, you can easily overcome the internal resistance to the practice and give each department the tools it needs to succeed. And when you add in other areas of the organization, you can quickly see that dynamic pricing software can give an increased ROI in other ways.
For example, if you include procurement and category management in the dynamic pricing strategies, you can ensure that your product’s purchase price is factored into the pricing strategy...and never dip below a healthy price margin as a result. You can also do the same with logistics costs and marketing costs. Each of these teams will help you set a price that’s better for your overall business, not just the pricing team.
But adding these teams to the conversation also helps the other departments. If marketing knows your prices, they can make better bids. If procurement knows the performance of a product, they can led better negotiations.
How to align your internal goals around dynamic pricing
So you know that you need to have organizational alignment. But how do you know who to bring to the conversation?
Within an e-commerce pure player, it’s usually easy to get everyone together who needs to be involved. These companies typically have more clarity on who owns which aspects of the business operations.
However if we look at more traditional retailers, it’s sometimes harder to determine which departments need to be involved.
As a starting point, include your pricing, marketing, category, and IT teams. As you go through the implementation process you will discover who else needs to be at the table, whether that’s logistics, . You might even be surprised about the reach of dynamic pricing!
Tips for getting the right people involved
If you need more than your pricing department in the room, how do you know who to invite? Here are our top 4 tips for bringing the right people into the conversation.
1. Use your commercial objective as a compass
As with anything related to dynamic pricing setup, we always encourage you to start with your commercial objective. Your commercial strategy should be the basis of any major decision you make as a company.
Ask yourself how dynamic pricing will help you achieve your goals. What are your goals for your company, and how will dynamic pricing help you achieve those goals?
Make sure that this is communicated clearly across your organization, not just to the teams you think might be impacted by dynamic pricing. The commercial objective should be a compass for all teams across every discipline, not just pricing.
Read more → How to Define Your Commercial Objective by Omnia Partner Johan Maessen
2. Get external help
There’s nothing wrong with getting help from a fresh pair of eyes. And in many cases, consultants and external help can totally transform your business. As long as the consultant understands dynamic pricing and your commercial objective, they can help you understand who in the company should be involved.
Take a look at our Partners page to see who we have worked with in the past to successfully implement dynamic pricing.
At Omnia, this external help is included as part of your onboarding program. For the first 90 days of your dynamic pricing journey you get a dedicated onboarding manager who will help you identify the gaps in your dynamic pricing strategies. The onboarding manager can also help you understand who should be part of the conversation.
3. Continue alignment outside of workshops
Dynamic pricing is a tool that your organization controls. And most of the time you spend getting used to that tool will happen outside of a workshop with a consultant.
To keep the alignment, we suggest you have internal sessions and workshops where you can test the tool and learn what is happening within it. You can then use these internal meetings to help you better prepare for the workshops with your consultants.
4. Test your ideas before Go-Live
Testing is an important part of dynamic pricing, both before you go-live with the tool and after it’s fully implemented in your workflow.
Pre-testing serves as an excellent opportunity to learn more about who needs to be involved in the process. As you test, you’ll often stumble upon things that affect different departments which you never would have thought of before. When this happens, you can then ask that department to be more involved in the dynamic pricing process.
With the new department involved, you can more easily adjust your strategy to match your shared goals.
Organizational clarity and alignment is key to the long-term success of your dynamic pricing solution. And making sure you have the right people in the conversations is crucial to reducing the internal friction around the practice.