New pricing strategy, infrastructure, and skills drive 250-basis-point improvement and create new opportunities for growth.
Our client, a leading pest control company, had a largely decentralized commercial pricing organization, which was producing suboptimal results. BCG was brought in to identify key opportunity levers, create a new pricing strategy, and strengthen the client’s organization so that it could sustain these improvements.
During the first six months of the program, the BCG team identified four key areas for improvement. These included boosting net impact from an annual price increase, establishing consistent pricing targets for new accounts, optimizing account-level profitability, and refining the pricing model for national accounts. We then partnered with the client team to jointly develop a new pricing strategy and address each of the opportunity areas with both quick wins and long-term action plans.
Early in the process, we conducted a maturity assessment of the pricing organization to highlight and prioritize gaps in the client’s existing capabilities. We then developed a capability blueprint of future aspirations and secured CEO approval to form a new centralized pricing team.
As the program progressed, we piloted and rolled out key pricing improvements in the client’s price-increase process, a new account pricing model, account profitability, and national account pricing. For each of these improvements, we combined new strategic pricing moves with revised processes and tools to make the moves stick. For example, we created an iPad pricing tool that the client’s 400 salespeople were able to use to quote new business quickly and consistently.
The team made several other improvements to the client’s pricing infrastructure. We implemented a revised annual price-increase process, reached organizational alignment on decision rights surrounding future pricing decisions, and created a new centralized pricing team with the power to approve major pricing shifts. To help ensure that the changes were sustainable beyond the central headquarters, we also built an account-specific profit model for each of the client’s more than 100 regional branches. The model will help the managers at each branch monitor and improve individual customer pricing and service levels.
We placed explicit focus on equipping the team with the required knowledge and skills to maintain and sustain improvements. We built new pricing tools and trained specific client owners on how to make the most of these tools and the pricing processes associated with them. We ran coaching sessions with the central pricing-team members, sales managers, and field reps. Looking ahead to ongoing improvement goals, we assisted talent-sourcing efforts by writing job descriptions for additional team members and supporting external job searches. Finally, we created key tracking reports and visibility into the pricing strategy for the client's executives.
The program yielded bottom-line improvements of more than 250 basis points annually (and provided a roadmap for capturing up to 500 basis points). Even more important, the step change in pricing infrastructure and skills will allow the client to drive ongoing improvements and sustain pricing excellence.