It is almost the new year! We launched Ibbaka in April of this year to help companies bring new innovations to market and to make sure that companies and customers are both getting value from new products and services.
In our first year of business, we have been able to test our approach with a number of companies, helping them to segment their markets, choose target segments and set pricing strategy. Just setting strategy is not enough; of course, execution is critical. We have been helping our customers with execution in two ways. For a large medical technology company with built a pricing expertise platform (more on that below). We have also worked with customers to design and execute value-based selling programs. A bright new pricing strategy, based on a precise understanding of the economic and emotional value and aligned with company strategy, will fail if the marketing and sales team cannot communicate value.
In 2018, we will bring together the two main streams of our work, the development of performance support platforms and pricing strategy. We will do this by bringing to market our own software to help companies develop a pricing strategy, set prices, and then evolve that strategy in response to market changes. Of course, we will continue to work with companies directly on their pricing strategy.
Pricing challenges are often symptoms of deeper problems with value creation and product-market fit. Most companies lack a systematic methodology for setting and testing prices. As a result, they miss out on many opportunities to connect price to value, confuse buyers with contradictory messages and leave money on the table. Pricing problems can be a symptom of poor segmentation and targeting, a failure to communicate value or a general lack of marketing and sales discipline. Tracing through these connections to find and then fix the core problem is an Ibbaka specialty.
The performance support platform we built in 2017 is being used by a large medical technology company to activate and embed pricing excellence in its 6,000 person marketing function. The system combines learning resources with pricing tools, from a framework to understand the Matrix of Competitive Advantage and build a Value Map to a Pricing Calculator and Pricing Decision Support tool. A wealth of examples from the field makes the process real for marketers who need to devise pricing strategies and models for both innovative new offers and products they are managing across the lifecycle.
Our 2017 engagements with a variety of B2B software and Industrial Internet of Things companies gave us opportunities to test and refine our process. At a high level, it works as set out below. This is the process we will be supporting in our own performance support system.
- Create Benefit Ladder
- Develop list of emotional and economic value drivers (what is a value driver)
- Test value drivers (survey and interviews)
- Select most resonant value drivers
- Understand buying process
- Use these value drivers and buying process to build market segmentations
- Evaluate different market segmentations
- Choose a market segmentation
- Develop segment profiles
- Size target segments
- Test customer acquisition costs and cost to serve for each segment
- Sequence segments
- Choose target segments
- Deepen understanding of target segments (Barriers, Drivers, Decision Making Unit, Buying Process)
- Identify possible pricing metrics
- Choose a pricing metric
- Build a bundling and pricing architecture
- Code data model integrating value data, pricing data and usage data
- Set initial prices
- Test against financial goals
- Set up a monitoring program
The Ibbaka platform for segmentation, targeting and pricing will make our approach available to many more companies than we can reach through our consulting work. Not all companies can afford consulting companies, especially early-stage companies, and even large companies need to have their own internal expertise and cannot come to consulting companies every time they need to set prices. We will use this platform to complement our own work as well. All of our consulting clients will have access to the platform and we will use it to support their ongoing pricing work.
Let us know if you would like early access to this platform. We will be making it available to a small number of beta users who will have an opportunity to shape this solution with us. Contact firstname.lastname@example.org.