Ibbaka has been working with the skill management firm TeamFit to get a deeper understanding of the skills needed for pricing expertise. Ibbaka is interested in this as we are scaling up our own pricing practice and deepening our skills base. We need to know what is coming and what skills we need. We are also interested in supporting the general growth of pricing expertise as ‘the best customer is a well informed customer.’
The results of this research will be presented at the Professional Pricing Society Spring Workshops and Conference in Chicago May 1 through 4.
We have also partnered with Chris Herbert of the pricing recruiting firm SV Pricing in San Francisco. Chris knows more about the demand for pricing experts from corporate America, and what skills people are actually looking for, than just about anyone in the world. In a recent blog post, he talked about some of the skill requirements he is seeing. Chris has helped us push out the survey (which now has well over 100 responses) and we interviewed him to get a deeper perspective on the skills needed for pricing expertise. To widen our perspective, we also spoke with top sales coach Reg Nordman of Rocket Builders.
Ibbaka: What are the main trends you are seeing in the skills needed for pricing expertise?
Chris: I think about this in two ways. First, there are two camps in pricing, the people who do B2B (Business-to-Business) and those who do B2C (Business-to-Consumer). The skills required for B2B are quite different from those for B2C, although with the growth in SaaS and subscription models there is beginning to be more of an overlap.
Ibbaka: What is the other way you look at pricing skills?
Chris: In pricing, as in many disciplines, the skills needed at the junior level are quite different from those needed by pricing leaders.
Ibbaka: OK, let’s start with the skills needed for B2B vs. B2C and then talk about how SaaS is changing this.
Chris: B2C pricing experts are very analytical. They need to be able to pull together and interpret a lot of data and then present that data in meaningful ways. We have also seen pricing reports with lots of graphs and tables that go nowhere. These days the data analysis skills need to be complemented with the languages used for this purpose, primarily R and Python.
On the B2B side, pricing experts tend to work a lot more with sales and sales operations. So even at a junior level they need to understand sales and sales people, and be able to communicate effectively. They also need to be able to communicate with product management, product marketing and finance. This is not easy.
SaaS is changing this up a bit, especially SaaS offerings for small and medium businesses (SMBs) which are increasingly self serve and the role of sales, even inside sales, is diminishing. This has become just as data intensive as B2C and all the data marshalling, analysis and interpretation skills are important. We are seeing B2B SaaS companies looking for pricing experts with A/B testing skills. These are not easy to find.
Ibbaka: How do the skill requirements change as people become more senior?
Chris: What some people call soft skills become much more important. Pricing leaders must above all be great communicators. They have to be able to build and manage relationships with all of the stakeholders. In many companies, what is really needed is change management skills, as pricing practices and governance often need transformation.
Ibbaka: What career paths are open to senior pricing people?
Chris: That is an issue. There is something of a glass ceiling for pricing managers at the ‘director’ level. This is because for many companies pricing is tactic and not strategy and it does not provide a path to the top executive positions. That is not true of all companies or all people of course. But companies need to work more on the career paths for people in pricing who show strategic and leadership skills.
Ibbaka: Where are pricing people coming from?
Chris: It is pretty diverse. Some people come from a financial analysis background. They are good at working with numbers and understanding how changes can cascade through a spreadsheet. There are also people from marketing and product marketing, who have had to set prices themselves and became interested in the challenge. Given the needs to use software to build tools, including machine learning tools, I expect to see more people from software development come into the field, but I am not seeing a lot of that yet.
Companies like Amazon are forcing the pace of innovation and are tough competitors. But they are also providing new tools like Amazon machine learning and can be studied to understand trends at the intersection of consumer and B2B.
Ibbaka: Got it. Given this innovation, how are the skills needed for pricing changing and what skill gaps could emerge?
Chris: The obvious answer is around data science. Just as important though, are social skills. Communication, relationship building and teamwork are becoming more and more important, and people with strong analytical or programming skills sometimes lack these skills.
Ibbaka: Our partner in this work, TeamFit, pays a lot of attention to team composition, and how pricing teams are built. Is this changing?
Chris: The composition of pricing teams is changing. In the past you might have had a team leader who handled a lot of the communications, and a few analysts, all of whom were using basically the same tools, with a spreadsheet holding the most important position.
In the future, teams are going to need more diverse skill sets. I have mentioned that programmers, people who can develop software and use languages like R or Python will be critical. Data visualization and communication will also be important. As will the ability to guide and communicate decision making.
Domain or industry knowledge has always been important for pricing and that will not change.
Ibbaka: Are there new software platforms coming on line that will require new skills?
Chris: There need to be. We are not going to be able to find the people we need with the right combinations of skills to address all the pricing challenges out there. Software will need to step in to help with some of these shortcomings.
The traditional pricing software platforms are complex and not cheap. They require a lot of expertise to configure and integrate and then they are not all that easy to use. They increase the skill requirements.
A new generation of software will be lighter, less expensive and will help cover skill gaps while supporting skill development (without being learning software).
Ibbaka: Thank you Chris. There are a lot of important insights here, and they will certainly shape how we think about developing our own expertise.