Purpose of functional area
Role of pricing function is to create a pricing architecture that balances the existing and new customer price levels, and positions the offering on a price that is competitive in the market and delivers adequate return for the business.
Inputs: How it impacts CVM
- Provides the core pricing architecture within which CVM and Acquisition teams work
- Overall pricing level severely impacts revenue and profitability KPIs
- Ensures that actual price implementation in IT systems meets the requirements specification
- Mistakes in pricing can produce bill shock which results in customer complaints and churn
Impact of collaboration quality on CVM team results
Lack of alignment with Pricing team has drastic negative impact on core CVM KPIs achievement.
CVM work related to function
- Collaborating with pricing team to ensure that pricing architecture supports customer segmentation and that multiple price points are available for trial, customer retention, upselling, premium capabilities, etc.
- Providing feedback on the performance of different price points in the customer base
- Introducing price increases into the customer base
- Introducing temporary price reductions into the customer base
- Validation of CVM offers with the overall pricing architecture
Outputs: How CVM impacts this area
- Insights on customer preferences inform pricing strategies
- Provides crucial feedback about performance of price points in the customer base
Key handshakes to consider
For CVM to be effective, it’s crucial that there is close work with the pricing team. A core handshake area is to ensure that CVM is enabled to customize offers based on detailed customer segmentation and behavior analysis.
- Utilizing dynamic and flexible pricing tools for personalized customer offers.
- Balancing discounts and profitability, especially in bundle pricing scenarios.
- Employing price elasticity principles to inform strategic pricing decisions.