Being such a technology driven industry, the importance of Big Data Analytics is more than clear and also illustrated by the fact that their survey scores reveal a strong need to further develop thesystems and tools to complement their pricing initiatives.

1. European Pricing Maturity
2013
Results and key findings - Telecommunications Industry

2. Results and key findings - Telecommunications Industry
Telecommunications industry – observations
“most experienced”
industry in pricing
With 80% of respondents having more than 5 years of experience in
a pricing function, that makes this sector the “most experienced” in
pricing.
We also notice that 80% of the respondents have pricing departments
worldwide that comprise more than 15 people.
Not hard to imagine that this is necessary if we take into account the
profound changes that this industry has experienced in the last 20+
years with the move of revenue streams from fixed to mobile. Just
as a matter of interest, did you know that the mobile penetration rate
in Europe in 2010 was already at 128%? (Whitehead, Phillips, Page,
& Molina, 2011).
Being such a technology driven industry, the importance of Big Data
Analytics is more than clear and is also illustrated by the fact that
their survey scores reveal a strong need to further develop the
systems and tools to complement their pricing initiatives.
Figure 1: Distribution of respondents within the Telecommunications
industry
Perception
Reality
Ambition
0%
40%
0%
40%
40%
40%
60%
20%
60%
0%
0%
0%
Level 1: Price list
maintenance
Level 2: Transactional
control
Level 3: Full value
capturing
Level 4: Full profit
optimisation
Source : EPP European Pricing Maturity Study – 2013
Figure 2: Distribution of respondents within the Telecommunications
industry
perception
reality
ambition
Perceived pricing maturity
2,60 = LEVEL 2
60%
60%
0% 0% 0%
Actual pricing maturity
2,24 = LEVEL 2
20%
40% 40% 40%
Ambition within 12 months
3,27 = LEVEL 3
40%
Level 2:
Gain transactional control
and optimize
0%
0%
Level 1:
Price List Maintenance
You sell the right products
to the right cutomers at the
right prices
Level 3:
Full Value Capturing
C
H
A
S
M
Level 4:
Profit Optimisation
You develop end-user
solutions with different
revenue models
You sell segmented
solutions at value based
prices
You try to sell anything to
anyone at all prices
Source : EPP European Pricing Maturity Study – 2013
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3. Results and key findings - Telecommunications Industry
Telecommunications industry – gap analysis
On the right, we highlight a number of attention points and possible
actions which arise from the gap analysis in Figure 3.
Tools & Systems
Price execution
Price policy & setting
Urgent attention to pricing tools & systems needed: Improve
availability of cost price info amongst pricing decision makers.
Trigger automatic signal for sales price updates to avoid realising too
late that there were serious cost price fluctuations.
Actively enforce systematic win/loss analysis by the sales team and
analyses plus feedback by the pricing/analytics team – use as input
for action plans. Better prepare price increases and equip sales
force with value argumentations. Link sales force’s incentive scheme
to price realisation and margin optimisation targets.
Establish clear value components per segment and use them for
guiding value pricing. Review pricing policy minimum twice per year
and follow up deviations with corrective actions. Investigate the price
elasticity of offerings and use it to anticipate and prepare for the
outcome of pricing initiatives.
Figure 3: Gap analysis: Telecommunications industry
Actual PMI score
Gap with Ambition
Tendering
0.93
Governance & Org.
System & Tools
0.92
1.40
Monitoring
Price Execution
0.95
1.33
Discount Strategy
Price Policy Setting
1.00
1.23
Price Strategy
0.70
0.00
1.00
2.00
3.00
4.00
Source : EPP European Pricing Maturity Study – 2013
Figure 4: Distribution of maturity scores across components of
the pricing framework
Reality
Ambition
Price Strategy
2,45
3,15
Price Policy & Setting
1,93
3,17
Discounting strategy
1,80
2,80
Price Execution
1,93
3,27
Monitoring
2,55
3,50
System & Tools
1,90
3,30
Governance & Org.
2,56
3,48
Tendering
2,21
3,14
Source : EPP European Pricing Maturity Study – 2013
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4. Results and key findings - Telecommunications Industry
Telecommunications industry – Tendering
Price to win vs.
optimise margin
While the percentage of respondents who make use of tendering is
rather small in the Telecom industry, half of the respondents find that it
is sufficient to maintain a philosophy of winning the tender first (price
to win) and then looking at opportunities to increase the margin within
the agreed price. The other half is more in favour of moving to the best
practice of having a margin improvement plan per tender in place with
regular account reviews taking to check the life time value of the tender.
Other areas they have identified for improvement are:
Thorough evaluation
of info
Item selection
Life time value
calculation
How tender information is obtained: Information should be collected
well before the tender. It should be checked and critically assessed
by the commercial team and then actively used in pricing the tender.
How item selection for a tender takes place: Margin improvement
alternatives should be identified and offered whenever possible.
Calculate the total amount of sales revenue the tender customer
contributes to the company over the life of the relationship, taking all
possible factors (e.g. account year-end rebates and bonuses of sales
team, etc.) into account.
If you would like more information or to arrange an informal discussion
on the issues raised in the EPP European Pricing Benchmark
Study and how they affect your organisation, please contact:
Project Manager:
Nicolene Barnard
Nicolene.Barnard@pricingplatform.eu
President & Founder of EPP:
Pol Vanaerde
pva@pricingplatform.eu
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