Page 98 - GLOBAL STRATEGIC MARKETING

or product price levels various customers in various segments would accept and
which would reject them. We learned how they valued our various services, so we
started to structure our services differently.

Some large customers, for example, just wanted a reliable supply of gas but did not
need technical support. So we could not charge for it. Smaller businesses wanted the
technical support. Some companies, such as the metallurgical ones, needed more
application knowledge, which we could provide. We worked hard on communicating
our value that was relevant to the given segment we were targeting.

"We learned which fees or price levels customers in various segments
would accept or reject."

When times were good, our customers accepted price adjustments without too many
problems. But in tough times, we had to defend our prices and faced significant
competitive pressures. We just defended our volumes, not our prices. But we knew
we had to change this situation, because sooner or later we would lose profits. We
had to change our behavior and ask for compensation from our customers for the
products and services we provided that they valued. We knew we would have some
losses, but we maintained our profit level, and from the revenue point of view, we
stabilized our market share.

It’s all about people

It was hard to convince our colleagues to go with this more rigorous approach to
pricing. So we showed them models of what would happen if we did not change and
how our profits would evaporate. We became much more sophisticated with our
segmentation. We even differentiated by region as well by the different level of
competition in segments or regions. But we had to overcome many objections based
on “experience.” Many of our salespeople, for example, were not convinced it was
possible to charge different prices by region, because the Czech Republic is small.
Or they did not believe big customers would accept an increase in prices when their
consumption levels were low. So when the data provided a suggestion for prices, we
discussed them row by row, product by product, and customer by customer to
convince our people to try it.

Most importantly, we had to have a couple of success cases. I and my managers
participated in meetings where prices were planned, listened carefully to reasons
from salesmen why some changes were dangerous, why some price increases are
too big. We took responsibility for what happened with customers. We helped our
customers see that prices were going up, that we’d invested in technology and
infrastructure to make them reliable. When they understood this, they did not want to
switch. And our salespeople saw this too and became braver in how they talked
about prices with customers. We spent hours and days with our people to explain,
train, support, and then explain again.