TAKE A FRESH LOOK AT PRICING POWER

Quarterly Newsletter from
Broadley Speaking
Summer 2014
www.broadley-speaking.com
doodle
Strategic Sales and Marketing Insights
COMPLEMENTARY
MARKETING SERVICES
SUPPORT CLIENTS’
SALES GROWTH
Page 05
SHARPEN YOUR PENCIL
TAKE A FRESH
LOOK AT
PRICING POWER
Page 03
Also inside this issue...
INTELLIGENT SALES
Account wins,
extensions and returns.
Team Talk with
Nick Bailey
Page 02
Page 03
Stratophase. Sales
gold from base leads.
Page 06
MUSINGS FROM THE
CHIEF DOODLER
Long term thinking over short
term gains...
elcome to the first 2014 edition of the Doodle. I am
writing this at the end of Q1 of the 2014 financial year.
2013 was a record year for Broadley Speaking and
2014 has kicked off even more strongly. Primarily
this growth and development is down to two key factors. Firstly,
word of mouth referrals, both across different divisions of our
larger corporate clients and between unrelated organisations.
Secondly, a very high rate of client retention.
W
As a part of our “customer intimacy” value proposition, we have always prized the lifetime value of our
customers far more highly than the value of any single transaction. It means we “go the extra mile”, find
the discretionary effort and “pull out all the stops” day after day for our clients. Our belief is that it leads
to richer and more rewarding relationships for all parties. Most smart organisations have been reframing
the way they think about procurement strategies, priorities and deliverables. From our work selling into
prospects like Diageo, 02 and Starbucks on behalf of clients, we are finding that they have already begun
to focus on delivery of more than just short-term cost-down outcomes from supplier relationships. We
too have seen this thinking become apparent in our own more “corporate” clients. As a matter of course,
our services and outcomes are benchmarked against other suppliers claiming to offer similar services.
In these instances, “contenders” tend to default to very aggressive pricing tactics to attempt to win the
business. Thankfully, with the emergence of the focus on “value managed relationships” our clients are
keen to measure and appreciate “value” at all levels of the relationship. We aim to add value of every
single touch point we have with our clients so it is great to see it measured and valued!
“From our work selling
into prospects like Diageo,
02 and Starbucks on
behalf of clients, we are
finding that they have
already begun to focus
on delivery of more than
just short-term cost-down
outcomes from supplier
relationships”
There is a big feature in this issue on the significance of “pricing”. There are only three profit drivers: price, cost and volume. We most often
help our customers by generating extra “volume” – so brand new sales from cold. The Economist has recognised one of our customers,
Simon-Kucher & Partners, as the World’s leading experts on pricing strategy and learning from them about the power of pricing has been
a real revelation. The article is well worth the read particularly for our C-level readers. “Price” is one of the 4/7 marketing “P’s”, “price” also
comes up regularly as a potential sales objection – so take it seriously and get involved as a fundamental part of your role.
May I take this opportunity to wish you the very best for the rest of the 2104/15 financial year and we look forward to having the opportunity
to support you in achieving your revenue goals.
Hilary
ACCOUNT WINS, EXTENSIONS AND RETURNERS
P:2
Agents Mutual
Carousel Logistics
Clean Earth Energy
Compass Ireland
It was great to start work with Helen
Whiteley and Ian Springett again
who we last worked with 5 years
ago. They are building a great team
and taking a new property portal
product to market and it’s fantastic
to form a complementary team to
partner with them to support them
achieving their goals. The property
portal market has moved on and
with the top dogs like Rightmove
and Zoopla adopting increasingly
aggressive positions Agents
Mutual’s new mutual society offering
for the nations estate agents is
going down a storm!
A partner at Isis Equity Partners
referred us to the Sittingbourne
4PL logistics outfit. Quite often
successful outsourcing, is as much
about a mutual culture as anything
else. When we saw Carousel
held Gold Investors in People
status we knew we were in with
a good shout to win what was a
competitive pitch. They do some
amazing work in delivering critical
components for major European
players like Siemens Healthcare
and John Deere where there is high
consequence in non or late delivery.
Josh and the Clean Earth team
found us online. Clean Earth has
an innovative, investment-based
model to sustainable energy. We
have sold more than our fair share
of environmental products and
services over the years but never
before have we been so besieged
by farmers wanting to install wind
turbines before the government
change the subsidies! Having been
a keen supporter of the Oxford
Climate Forum in the past, it is
great to see sensible investment in
alternative technologies.
Compass Ireland represent the latest
edition to our portfolio of Compass
accounts. The challenges in Ireland
in many ways mirror those in the UK
although of course the total market
size is smaller. Our aim here is to help
our Compass colleagues in Ireland to
gain the fullest grasp of their market
by taking a proactive approach to new
business development and pipeline
management. It is great that Pauline
and her team join us after strong
recommendations from the Compass
teams we work with in the UK.
doodle SUMMER 2014
www.broadley-speaking.com
Dr.Peter Colman, Partner, Simon-Kucher & Partners
TEAM
TALK
Name: Nick Bailey
Favourite part of job: I really enjoy
completely immersing myself in the
markets that my clients operate in
and take pride in the speed it takes
to familiarise myself with a market
before then being able to consult with
clients, provide insights and assist
them in making better informed
decisions. I also enjoy having an
impact with my clients in the growth
of their business and working in
partnership to develop their business
development and marketing
strategies.
Current Spotify Top 6 Playlist:
1.R U Mine - Arctic Monkeys, A.M.
2.The Patient Ferris Wheel
- The Gaslight Anthem
3.Slow Dancing in a Burning Room - John Mayer,
4.Fugitive Motel - Elbow
5.To Build a Home
- The Cinematic Orchestra
6.Oats in the Water - Ben Howard
TAKE A FRESH LOOK
AT PRICING POWER...
THE KEY TO HIGHER PROFITS
There are only three profit
drivers: price, cost and volume.
Price typically receives less
management attention than cost
and volume, even though it has
the strongest leverage on profit. A
5% price improvement on a typical
profit & loss structure can result in
a 33% improvement in operating
income (assuming all other
variables stay constant).
Does your company have pricing power the ability to charge the prices you deserve
for the value you create for your customers?
Simon-Kucher & Partner’s latest Global Pricing
Study reveals that most companies lack pricing
power: two-thirds of companies are not able to
charge the price they deserve, giving away 25%
of their profits due to weak pricing!
Capital markets have understood the necessity
of pricing power: analyst reports are reporting on
this and for the leading investment professional
Warren Buffet it is the single most important
investment decision criteria.
Consequently, pricing is becoming a Boardroom
agenda item for senior executives. Based on the
insights from our Global Pricing Study we see
that companies with increased senior executive
involvement in pricing are:
• 35% more likely to have high pricing power
• 30% more likely to expect a (strong) increase
in EBITDA in the next three years
• 18% more likely to put through a successful
price increase.
A key leadership direction: Being a price
maker, not a price taker
A company can take two overarching strategies
when defining their pricing strategy. They can either
be a price taker by focusing on “volume before
value” or they can lead the market and be a price
maker by focusing on “value before volume”.
The automotive industry perfectly illustrates the
contrast between these two strategies. General
Motors (GM) in the early 2000’s is an example for
a price taker. Overly ambitious market share goals
and respective pricing measures led to significantly
worsened financial performance and market
capitalisation due to competitive reactions. GM in
the end acknowledged that it is better to sell fewer
cars at higher margins than more cars at lower
margins and moved away from this strategy.
continued...
CLICK HERE TO LISTEN
Last Book Read: The Monuments
Men: Allied Heroes, Nazi Thieves and
the Greatest Treasure Hunt in History
by Robert M Edsel.
Hobbies and pastimes: Love
spending time being active in the
great outdoors with the family, it
was our main motivation for moving
to Devon so we could be close to
Dartmoor and a short drive to the
North coast of Cornwall for long
beach days and surfing.
I am a member of Tamar & Tavy Gig
Rowing Club and enjoy competing
in race regattas across the Devon
and Cornish coast. I am also an
avid rugby fanatic and follow Exeter
Chiefs as well as keeping an eye on
how my old team Bath Rugby are
doing.
Ambitions: In general, it is to be
happy, get the most out of what life
has to offer and provide my young
family with the love and support to
enable them to dream big
and grow.
www.broadley-speaking.com
doodle SUMMER 2014 P:3
Porsche on the other hand viewed things differently; they are a good example of a price maker.
Porsche follows the policy of keeping prices stable to protect the brand and to prevent a drop in
prices for used cars. When demand goes down, Porsche reduces production but doesn’t lower
prices. As a result Porsche maintains high operating margins. These two examples are extremes but
these strategies apply across industry sectors.
So, what are the guiding principles for being a price maker? Based on our experience
from thousands of pricing projects across different industries we have defined six guiding
principles.
01
PICK YOUR BATTLES INTELLIGENTLY BY
UNDERSTANDING YOUR ‘FAIR SHARE’
Pursuing undeserved market share drives down
average price and invites retaliatory strikes by
competitors. No one ever really wins
a price war.
06
ESTABLISH A PRICING
FUNCTION
01
A dedicated pricing organisation
improves pricing performance by
increasing the focus, particularly on the
analysis and controlling of prices.
02
DEFINE A PRICING
STRATEGY ALIGNED WITH
YOUR COMPANY GOALS
Conflict across functions (sales, marketing,
operations etc.) when it comes to company
goals like profit, market share and volume.
Without agreement on what ‘success’ looks
like, there can be no right price.
06
02
05
03
04
05
ESTABLISH CLEAR
DISCOUNT GUIDELINES AND
TRAIN YOUR SALES FORCE
ON PRICE FOUNDATIONS
A look at the discounting behaviour of
your sales force is likely to reveal that
you are leaving money on the table. Your
best sales peoples’ performance should
set the gold standard and be built into
training courses to help to drive up
average performance.
P:4
doodle SUMMER 2014
03
CREATE A “VALUE BEFORE
VOLUME” CULTURE, REWARDING
YOUR SALES FORCE ACCORDINGLY
04
BALANCE THE VOLUME VS.
VALUE TRADE OFF VIA A
SYSTEMATIC PRICE
SETTING PROCESS
When demand falls it is far better to reduce
volume than cut prices, as shown by the
automotive case earlier. It is key to always
understand and quantify trade-offs between
price and volume; not forgetting the likely
competitor reactions
If the dominant mind-set at a senior executive level
is to focus more on market share than profits, then
this will reflect down the organisation. An inclusion
of a pricing targets can significantly improve profits
and is directly within the sales person’s control
www.broadley-speaking.com
The culture change programme to price maker
won’t happen instantly and should be viewed
as a journey, rather than a single project. In our
experience, few companies create a suitably
robust pricing foundation, which then allows
for more sophisticated measures in the future.
Trying to change everything at once is usually
detrimental to longer term success; instead
focus on a few pragmatic measures that suit
your company and market. These implemented
measures (quick wins) will create the success
stories that ensure momentum is maintained.
Therefore, to select the appropriate starting
point, senior executives should direct the
following:
•
Raise the attention on pricing: include
pricing as a topic in the next board
meeting; and gain agreement to that it is
worth further investigation
•
Diagnose the current capabilities:
commission a team to conduct an objective
assessment of the company’s pricing
competencies. This diagnostic should both
identify and ‘size’ (i.e. business case the
profit upside) the opportunities. The result
should be a clear prioritisation of measures.
•
Initiate the first tranche of measures:
select 2-3 measures and pilot them
within the business. If done correctly the
programme can be self-funded through the
‘quick wins’ returns.
Simon-Kucher’s experience from similar
programmes is that profit outcomes are
demonstrably stronger and companies can
realistically improve operating profit margins
by 1-3 percentage points, which could add up
to £3,000,000 in additional operating profit for
a £100m turnover business (or business unit).
However it requires courage and commitment
as well as expertise. Courage and commitment
from the senior executives to facilitate the
cultural change and expertise to know where to
look and what questions to ask.
“Trying to change
everything at once is
usually detrimental to
longer term success;
instead focus on a few
pragmatic measures
that suit your company
and market”.
If you would like
to discuss these
issues further Peter
can be contacted on
+44(0)207 832 6700
www.broadley-speaking.com
doodle SUMMER 2014 P:5
Complementary marketing
services support clients’
sales growth
Although the biggest proportion
of our work for our clients is
direct sales and brand advocacy
using the telephone Broadley
Speaking also offers a full range
of complementary marketing
services to support the
achievement of clients revenue
goals. (you may have seen
features in earlier Doodles about
our “full court press approach” –
if not ask and we’ll happily give
you chapter and verse)
David Conn is Head of Client Marketing.
In March, David was welcomed by the Chartered
Institute of Marketing as a member by being
able to clearly demonstrate his considerable
marketing experience at a senior marketing level
or consultancy and at the time of the application
holding an appointment at board level.
David is a highly experienced marketer with 30
years experience across the full range of business
to business marketing sectors. He has held senior
marketing positions, to Director level since 1995.
He has a background in trade publishing at EMAP
and subsequently the fledgling UK trade show
industry. He was instrumental in changing the
face of information technology conferences and
exhibitions in the late 1980s in the UK and across
Europe. His roles included marketing and sales to
both exhibitors (to generate direct revenue) and to
visitor and conference delegates. Of particular note
was his work around the Networks series of events
whilst at Blenheim plc. The UK event grew from
being a cabling event at Wembley in 1998 with
revenues of under £1,000,000 and attracting 4,000
attendees to the position in 1992 when the event
turned over £7,000,000 and brought in 24,000
attendees.
David was directly responsible for both the direct
marketing and sales efforts that created the
Networks brand. These included multiple complex
direct mail campaigns for both exhibition attendees
and (paid) conference delegates. These topped a
total of 1,000,000 pieces across a 4 month period
to computer network professionals and senior
managers in Times Top 500 companies.
In tandem with this UK success David directed
marketing for the launch and development of
P:6
doodle SUMMER 2014
Networks events across Europe and
Scandinavia. This included direction across
the full marketing mix of product, price,
place and promotion.
Subsequently David was Marketing
Director with SoftBank Expos in the UK and
pioneered some of the very first email and
digital marketing in the UK in 1996.( This
was when email addresses were generally
numbers and sending emails meant a
buzzing modem!). It worked and earned a
feature in The Times.
In 1997 David moved to Devon to be
Managing Director of Trident Exhibitions.
This role included marketing direction and
sales management across the portfolio of
products. Amongst this he also developed
a new exhibition and conference from
scratch, Cellexpo. Cellexpo launched in
Johannesburg in 1999.
Since 2000 David has been a Director and
shareholder of Broadley Speaking.
Broadley Speaking is widely recognised as
one of the leading business development
agencies in the UK. Its clients range
from world leading B2B brands such as
FORTUNE magazine, Compass Group and
World Fuel Services to small innovative,
VC backed, start ups. David not only is
Marketing Director for Broadley Speaking
but provides the marketing direction and
consultancy for clients.
Consultancy includes new market analysis,
product and service offering development
as well as marketing and sales strategy
and tactical implementation and leading
bespoke workshops covering value
discipline and proposition and pricing.
Broadley Speaking helps even the largest
companies to focus and develop their
marketing and sales strategies and tactics.
This work instructs high impact new
business development interventions
absolutely focused on generating new
revenue for clients.
David commented: “I was hugely
impressed by the thoroughness of the
Chartered Institute of Marketing’s approach
to granting professional membership.
They required in depth case studies of
the marketing and sales work we do with
clients, references, full curriculum vitae,
and copies of qualification certificates. The
process took some time but it benchmarks
our marketing strategy and planning work
against professional industry standards so
its great to pass with flying colours”
To talk through possible
marketing campaigns
and requirements call
David on 01822 813050
As it is a dedicated business development
business the marketing strategy and
consultancy offered to clients is necessarily
pragmatic, high impact and results driven
and measured.
www.broadley-speaking.com
Sales gold from base leads
Every working day at Broadley Speaking involves the curious alchemy that transforms raw data into brand
new business opportunities but some projects are tougher than others to crack. When Stratophase contacted
Broadley Speaking to help them sell a ground breaking new technology into the global biopharmaceutical sector
the gauntlet was well and truly thrown down!
BACKGROUND
Stratophase is an
innovative, VC backed,
technical business born
out of research from the optoelectronics
department of the University of Southampton
targeting the global biopharmaceutical
industry.
The pharmaceutical industry is characterised by a high level of concentration with
fifteen multinational companies dominating the industry. Stratophase needed to map
out the architecture of these notoriously ‘private’ and conservative organisations and
amidst their many tens of thousand employees across the globe establish who would
be the key decision makers to embrace new technology and catalyse change. Once
established they needed a team with the intellectual and technical capabilities to
engage with PhD qualified potential prospects.
THE SOLUTION
A well-controlled manufacturing process is the key
to success in production of biopharmaceuticals.
The design and optimization of the process must
manage feeding to ensure high cell densities and
production rates. However, all common feeding
protocols largely depend on off-line sampling
and assay techniques, which limit the ability to
carefully and optimally control the process in
real time due to the prohibitive operating costs.
The consequence is that, often, the feeding rate
does not match the consumption rate of nutrients
and feedstocks resulting in well-recognised
complications and negative impacts on yield and
product quality due to over or underfeeding the
process.
The Broadley Speaking team spent time with the senior management team at
Stratophase to gain a full understanding of the products heritage, its features,
advantages and benefits.
The Stratophase team worked out that a ‘game
changing’ approach was required to enable cost
effective automated, non-extractive feed control.
The Stratophase Ranger System provides such
capability.
Having carefully profiled the industry and the players in it the big conversations could
begin. Working across a global industry and unearthing new sales opportunities in
pharmaceutical giants calling reflected this scope and range. Calling covered the UK,
across Europe and North America.
Broadley Speaking began working with the
Stratophase team in the Autumn of 2012. At
that time Stratophase had a limited number
of evaluations in place with UK based biotech
manufacturers.
THE NEED
Stratophase needed to start a big conversation
with the technical teams of the World’s largest
pharmaceutical companies. The goal to challenge
their preconception and long established
processes of biopharmaceutical production and
propose the Stratophase Ranger System as an
innovative new technology that could radically
reduce time and cost within their processes that
they should evaluate and adopt.
www.broadley-speaking.com
From a data list that merely contained names of target companies Broadley Speaking
set about profiling corporate structures and locating likely buying groups and their
locations, the buying group dynamics and the individuals involved. This in a market
characterised by “no names policy” as standard and paucity of available data to
purchase was no mean feat.
Broadley Speaking Senior Account Manager said: “We had to use the full gamut of
social media to try and match possible relevant contacts to the facilities we had found
that were likely to house manufacturing or research and development teams. We also
hunted around delegate lists from industry conferences and academic white papers to
find the names of key decision makers involved in the bio pharmaceutical fermentation
process.”
The Broadley Speaking team worked hand in glove with the Stratophase team, both in
the UK and North America, to continually refine focus and relentlessly hunt down new
sales opportunities.
THE RESULT
“After 18 months of hard, collaborative work we now have a clear and measurable
pipeline of sales opportunities with market suspects, active prospects, identified and
confirmed projects and live evaluations.
We recognise the global pharmaceutical industry as being one of the most difficult
sales nuts to crack. We are making great strides in achieving our goals.
In 2012 I knew this was no straightforward ‘telemarketing’ project. I needed to find
a business development company who could work at the highest level and in the
toughest markets – I am pleased to say in Broadley Speaking I found them.”
Bill Campbell, CEO , Stratophase
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2013 P:7
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