While most executives suggest pricing is a high priority, the survey shows that, on average, large capability gaps exist in price and discount structure, sales incentives, use of tools and tracking, and structuring cross-functional pricing teams and forums. To understand which capabilities matter most, we studied a subset of top-performing companies, as defined by increased market share, self-described excellent pricing decisions and execution of regular price increases. While different pricing capabilities may be important for a particular situation, the analysis showed that top performers exceed their peers primarily in three areas (see Figure 1). Among the companies that excel at all three areas, 78% are top performers (see Figure 2). Let's explore why these three areas have such a strong effect on pricing.
This, as has always been the case, can be achieved by continuing to challenge ourselves as an industry to focus on developing the "right" products (that meet customer needs) and by accessing customers in their preferred approach. Increased customer engagement provides product and pricing teams with information to tailor and target products more effectively. While traditional insurers have limited interactions with customers, innovative InsurTechs have through the use of technologies, such as wearables, shown that it is possible to boost the number of touchpoints to more than a hundred a year.
New analytical capabilities have the potential to transform the way banks and other payment providers price products and services. Obtaining fair compensation for complex payment products, such as corporate cards, merchant acquisitions, and treasury-management services, has long been a major challenge. This is primarily because these products tend to be intricate, offered in myriad forms, and implemented across diverse markets. Treasury services, for instance, might have 1,000 or more different fees, and prices are often embedded in private contracts not shared within the organization. Throughout the payment industry, these problems are further complicated by ever-changing payment methods and platforms created by the rapid evolution of payment technologies.
It is almost universally accepted throughout the business world that artificial intelligence (AI) will transform things. A PWC survey confirmed as much, with 85 percent of CEOs feeling AI will "significantly" alter how they do business in the next five years. In B2B pricing, the challenges AI can address for the CEO are twofold: first, there's the matter of reducing lost opportunity, simply because the wrong price was presented and the customer took their business elsewhere. Increased responsiveness--with the right information--means increased revenue. The second challenge is more insidious – and though it's very easy to intuit the trouble, it is much tougher to measure. Too often, the C-suite is drawn into an ad hoc review and approval process--consuming valuable executive bandwidth as every negotiated deal becomes "strategic."