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Should Strategic Pricing Be More Tactical?

If you’ve been paying attention to our missives for any length of time, you’ll know that we’re always beating the drum about fixing strategic root causes rather than merely applying tactical Band-Aids. You’ll also recognize how we’re continually extolling the virtues of achieving greater strategic effectiveness, rather than just eking out a little more tactical efficiency.

And you’ll know that we’re constantly encouraging… chiding… haranguing…and even nagging… Pricing teams to commit themselves to finally getting beyond the tactical firefights to truly become a more strategic business function.

Given our persistent and rather vociferous “strategic” advocacy over the years, it might seem like a major contradiction at this point to suggest that you make strategic pricing more tactical. Wait…what? Become more strategic than tactical by making the strategic more tactical? Huh?

Stay with me…I haven’t lost my mind…not entirely, anyway…

The reality is that most of the people in any business function…Pricing included…will be fairly tactical. In fact, most of the people in any group setting or situation will be fairly tactical. This is neither good nor bad; it’s just how the Bell Curve plays out with any group of human beings.

Once you recognize and acknowledge this particular aspect of human behavior and group dynamics, you can leverage it to your advantage…

Instead of expecting the tactically-oriented 75-85% of your team to go against their natural proclivities to think and act “more strategically,” you can turn your strategic intentions into tactical deliverables and processes that anyone can execute. And by doing so, you can significantly increase the odds that the right strategic things will actually be happening, in the right ways, and at the right times.

In essence, you can use these more tactical processes and deliverables as the “spoonful of sugar” that helps the strategic “medicine” go down.

For example, targeting is a strategic decision that affects nearly every aspect of your pricing performance, for better or worse. And by targeting prospects and customers who are inherently “better” than others, you can produce huge performance improvements, while changing very little else about your operation.

Now, converting strategic intentions around “better targeting” into tactical processes and deliverables is fairly straightforward. In fact, we’ve covered the basic, step-by-step tactical processes for targeting a better mix of customers in a number of PricingBrew Journal training webinars. It’s just a matter of codifying the steps, actions, and analytical sequences into standard operating procedures, or SOPs, that anyone capable of following directions can execute.

You can do the same sort of thing with any other strategic intention you may have, from identifying valuable capability gaps or gaining a better understanding of your differential value to gathering useful pricing intelligence or developing more robust segmentation models. Any and all of these things can be codified in step-by-step SOPs that require almost no strategic proclivity to execute. And for most of these things, the Journal has resources that can give you a big head start.

Of course, your team will still have to know when to execute the strategic SOPs you’ve developed. But here again, you can even make those strategic decisions more tactical by simply creating a schedule for when each SOP will be executed or revisited—some monthly, some quarterly, a few annually, and so on.

So…it’s not a major contradiction to suggest that you make strategic pricing more tactical. It’s just an acknowledgement of the organizational realities and a way to ensure that your whole team can deliver on your strategic intentions.

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