Stephan Liozu - Intentional Pricing Strategies

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Text family to 442-22 for this free information today. Welcome to the Exit Coach Radio show, the show for baby boomer business owners who are looking for cutting edge information as they plan their 3 to 10 year business succession and exit. Every week we interview top professional advisors for. Their best tips, strategies, and precautions so you can be well planned. And don't miss our one minute exit coach tip of the day on exitcoachradio.com. And now here's your host, the exit coach Bill Black. Thanks very much for joining us. uh, great line up today and I want to get right into it with our next guest. He is Stefan Liozu from Value Interruption Advisors. Uh, that's a new word for me, value interruption advisors, but I like it a lot and uh we're going to talk about, um, designing disruptive innovation value and pricing strategies and it's so important because uh intention and formal pricing management is important for business. Owners, it's important to differentiate, get into the heads of your customers, and disrupt their way of thinking and so that you can present yourself as a solution for their problems. So Stephen, welcome to the show and thanks for joining us. Thanks for having me. I appreciate the opportunity to talk to your audience and your membership there. My, my pleasure. Tell us a little bit about how you started Valuation Interruption advisors and especially tell us about how you came up with that word because it's a great word. Yeah, well, I, I, I'm a very creative person, so I, I, I like to invent new words and um I think I'm doing quite a bit of work at the intersection of uh innovation and disruption, so, uh. So I wanted to have a new word, in Russia, and um so I put that in the uh. You know, the, the name of my company and, and, and it pretty much is everywhere, you know, all the work that I do has some type of uh innovative approach and uh looking at things different ways, disruptive thinking, disruptive strategies, etc. Now at the intersection of innovation and disruptive, I like that. So, so innovation is is obviously uh it's, it's a key and important. Why is disruption so important? Give our listeners a little bit of what you're thinking about when you say that. Well, you know, I, I've been in business for before I left the corporate world on my own. I've been in business for 25 years, and it's amazing the the number of routines and, you know, mental locks we have mental models we succumb to, and I think as a leader, it's always important to kind of bring in some fresh thinking and some innovation and look at things a different way and So you read a lot of things right now about disruption and disruption is just a, you know, learning and learning to do things differently and not succumbing to the old ways of doing the same thing over and over and over and as you know the definition of insanity, you know, nothing is going to change if you keep doing the same thing every year, year after year. So you really have to kind of um disrupt yourself and as a business owner. You know, stay on your toes, challenge yourself, you know, even if you're very successful, you know, it really self-disruptive for someone else out there disrupts your strategy or your business or your value proposition. Yeah, I agree with that very much that a lot of people, especially a lot of people in our audience, they're age 50 plus business owners, they've been doing what they've done for a long time, and they might be comfortable and that might be their enemy. That's what we're talking about, right, is you have to always be on your toes because the world is changing around you and businesses go, go out of business very quickly these days because they didn't see these things they should have seen coming. Yeah, correct, and, and most of my work, you know, a lot of companies and a lot of business owners bring me in to help them with pricing strategies. Because there is suffering out there, you know, there's a lot of negotiation, lots of discounts, margin erosion. And at the end I And this is a symptom of something that's bigger in their business. So I go in and I talk to them and I look at their innovation strategy. I look at their value proposition, how they approach the business, and you do find that it's the same thing over and over and over and actually they don't actually challenge themselves, you know, challenge the value prop enough, and at the end. You know, the outcome of this is pricing issues. So that's why I do a lot of work in the innovation value and pricing areas because it's very integrated and interrelated. And pricing with results to say things like consumer goods, certain things like technology have come down in price so much, and those aren't things that they could all of a sudden say, hey, tomorrow we're dropping the prices. These have to be thought of years in advance and how is that all going to affect the whole company if if prices are going down for our product because it's become commoditized? What do we do to become Uh, less commoditized or or how is this gonna affect everything so I can see how is that what we're talking about? Yes, exactly. So you know, if you look at the disruptive approach in pricing, you know, you're looking at Some of the areas that are right now going through some transformation, for example, in a retail environment because of the emergence of technology and dynamic pricing also in healthcare, you know, with the change in the regulation and, you know, the way the value chain is working. But at the end of the day, you know, if you're selling something in the business, whatever it is, a service, a product, an idea, you have to price it. And you'll be surprised. You know that only a few, you know, a fraction of companies, whether they're small or big or medium, actually pay attention to pricing. And so what happens then and the price based on experience, legacy pricing models, a price based on what the competition is doing. They let the market dictate their pricing, where at the end they don't have an intentional approach to a pricing strategy linking value pro innovation, business strategy to pricing, because pricing is what you show to the customer. Here is the value I delivered to you, and this is how much price you're going to give to me, whatever, whatever industry you're in. And, and you have to be aware of what what emerging competition is coming up because they, they might be out to price you out of business because they can for a little while so you really have to, you really have to have a global look at this, don't you? Yes, it's, it's, you know, really, uh, it's not new, you know, pricing has been part of the marketing mix for uh for a long time, but at the end of the day right now complexity is increasing the speed of business is accelerating. Competitive pressures are increasing because of the, you know, the lack of demand and, you know, the stagnation effect. So the chances of being disrupted are greater now than before. So if you manage your own business, if you have a small business, you owe it to your, you know, your, your business, to your employees and your shareholders, or, you know, to really challenge yourself and to look at, oh, here is, you know, here is the change in landscape. This is how we're going to be even better in the future. This is how we're going to package our value proposition, and this is a new pricing strategy and we're going to go out there and try to get the value. We, you know, we get, you know, the price we deserve for the value we deliver. Mm there's a lot that goes into that now what do you do if you're already very successful things are working, your prices are fine, um, what's one of the first things that you do with business owners that say hey we're we're we're OK right now, um. What do you tell them? Well, I, I would challenge that a little bit, you know, and, and unfortunately in the field of pricing, you know, there is a, a mis misconception that, you know, yeah, I'm paying attention to pricing, we're doing good, but you know, a lot of companies do cost based pricing, for example, and they look at their cost and they put a premium on on their cost and then go out there and price and well it could be 60%. And at the end of the day it's very good, right? 60% margin is very good. But then if you study the value side of your offering and actually try to extract how much value you, economic value you bring to your customers and you try to, you know, capture a little bit more of that. You could actually get 80% or 100% margin. Most of the time that's what happens. So don't be complacent and and don't stop at 60% if you could make 90% margin. So a lot of successful companies are actually successful because they're differentiated. They have great strategy, and then they use what's called formulaic pricing, cost-based or competition-based pricing. And then try to bring that customer value dimension and say, you know, like you said before, get, get in the head of your customers and try to find out how much value you deliver to them and then capture a little bit more. So there's always more to be done. There's more innovation in pricing. You look at the emergence of dynamic pricing, what's happening in, you know, with Uber or all the companies. The models are changing. Can you innovate in your pricing strategy as well? So there's a lot to be done. It's a good point and a lot of businesses these days are service-based businesses, and it can be very competitive. That can be that can be the big difference between making it and not making it. So there's a lot of factors to consider. What's the first thing that I should do tomorrow with my team if I'm, if I'm thinking, you know what, we have to look at this. We have to start thinking about pricing. What, what would you say the first thing we should do? Well, the fir the first thing you should do is to be, uh, to make a decision, you know, and to become moving from a, a reactive. Pricing approach to a proactive pricing approach and the first thing is to put everybody in the room, the most, you know, the most relevant functions in your organization, usually the, the sales manager, finance person, if you have a marketing, you know, manager or even better, and to start discussing pricing, but only pricing. And to take it down and move away from the margin discussion but into the pricing discussion. So that's the first step, and you pay attention and you really look at, look at your offering and say, hey, are we differentiated enough? What are the trends in our pricing strategy? So it's kind of a what I would call a pricing assessment, an internal pricing assessment, and you and you say, well, I want to investigate a little bit more. So once you've met and you decided that, you know, collectively. You, the business owner, and your key staff employees will pay attention to it, then you say, well, let's investigate. Let's set, uh, maybe set set a project together so that we can uh we can look at how we're doing and what else we could do better. That's the first step, I would say. OK, so just really focusing deeply on pricing and you've written books and you put on workshops about this, and those can be a great help for people to come up with their ideas and questions with regards to that. So how would you describe your workshop that you put on for Visage International in uh in a minute or so? Yeah, so I have several workshops. One of them is, you know, it's called Is it time to rethink your pricing strategies, which is, you know, for business owners start paying attention and look at, you know, really how you do pricing, and we go through some of the basic components, some of the basic dimension of pricing. We look at assessment tools that we can use to see how they stand on pricing power. You know, how are we doing on the orientation for pricing and, you know, some of the critical dimensions and then we're going into practical steps. This is what you can do starting tomorrow and for the next 90 days practical recommendations, you know, that you can deploy in the organization and again size doesn't matter, you know, that you can start really capturing a little bit more of your value in the market and you'll be surprised or, you know, sometimes a one hour discussion can really make a difference in your bottom line. One or two decisions in the following couple of weeks can make a 1 or 2 or 3% profit difference right there. So we got, yeah, sorry. No, please, I'm sorry continue. Oh, so I, you know, the, the business presentations are half day workshops looking at all these components, and then from there we can do a 1 day workshop or no more than 2 days because it's probably follow up work. Um, and I also work with small business owners in a coach capacity where I help them really capture the low hanging fruits because at the end we don't have 2 years to wait. If there is something to be taken from the market, increased profitability, then it could be done in a matter of 3 to 6 months. And how often should businesses look have these in depth discussions and and uh meetings about pricing? I always recommend After you get started with an intentional approach to pricing to form what's called the pricing council, and the pricing council is no more than 60 to 90 minutes per month with the business owner and a multifunctional group of people to focus only on pricing. The 1st 20 minutes will become looking at the key performance indicators on pricing. That you set up in advance. Then you look at strategic pricing projects, maybe new products that get introduced, new service that get introduced, and then maybe the rest of the 20 minutes of, you know, become more what's happening in the market, what is competition doing, you know, how, how are the customers doing, you know, if you do a price increase, you can track your price increase. So it's really, it's not a meeting just to review APIs. It's a meeting to discuss APIs but also strategy and what's happening in the market. And it's multifunctional, which is excellent to bring sales, marketing, finance, and maybe supply chain together to discuss these pricing dimensions. So the world is ever changing. Your pricing models need to be looked at periodically just to, just to keep up with things. Don't be complacent and sit back and think everything's fine because tomorrow things could not be so good. Yeah, there's so many dynamics at work. I mean, you have technology, global competition, big companies getting in looking to get into your market space. These are very important issues. So how do people, first of all, let's talk about your book and then we'll talk about how people can get in touch with you. So um you have a couple books on Amazon, right? Yes, correct. The first one is called Innovation in Pricing, which is really a a collection of papers on what can be done in the pricing area which is innovative and new and And can bring, uh, you know, advance the uh not only the practice and the theories of pricing. The second one is called the ROI or pricing, and really it's like how do you measure the impact of what you're doing, your pricing actions, how do you get started, how do you measure the scope, and then really there's a couple of chapters on really what you should expect from your pricing actions. And in general is for every $1 you invest in pricing, you should get $7 to $10 in incremental profit. And then I have 2 more books coming out this year. Later. Great, so you're continuing this uh as you learn more you're you're giving information back to people to to learn more about this and then of course the workshops if you're a visage chair or if you just are a uh organizer of other business owners uh this is a fantastic uh topic it's it's obviously universal and needed. Stefan, how do people get in touch with you to learn more? Well, if, if there is a member, I'm on the website as a resource, obviously, if not, then my website is uh Stefan Leozu.com, S T E P H A N L I O Z U.com. Um and in there there is many papers, blogs, and access to the books and also uh uh it's a very rich website, I would say. And then I'm also, you know, you can find me on LinkedIn and Twitter. I do quite a bit of posting and activities on social media around the field of pricing, innovation and value management. So this is something everybody should be aware of because we talked to a lot of different speakers for Visage, but I haven't come across anybody on this particular focused on this topic like Stefan is. So thanks very much for joining us, and we really appreciate you sharing your wealth of information with us. And I, you know, I'd like to talk to you again at a future date just to get deeper into some of the mechanics of of what goes into some of these issues. So I really appreciate you joining us today. Thanks for your time. Thank you. We're gonna take a short break and come back to close the show, so please stay with us for just a minute. You're listening to Exitcoachradio.com, the show for age 50 plus business owners. We're interviewing professional advisors for their tips, ideas, and precautions so you can be well planned. We upload new 20 minute interviews and 1 minute highlights every day at exitcoachradio.com. Come listen for a minute. Thanks very much for joining us today. 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