Planning your 2023 commercial strategy? Consider these 5 digital imperatives for maximizing growth & efficiency in a recession. Learn more
Price Getting covers people and process issues, but it essentially boils down to one question: How good are we at actually booking that price after we set it?
Like Frankenstein Bank in Chapter 2, many banks are discovering they can’t just “out-math” the competition. It does no good to be really great at setting prices if we end up having to discount to get deals on the books, or losing deals because we couldn’t find a creative way to make it meet our targets. So, what is Price Getting and how do banks get better at it in a way that builds relationships and positively affects the bank’s brand? That is the focus of the rest of this book, but in this chapter we will introduce some of the big concepts.
Price Getting covers all the people and processes issues involved in actually booking the price that is set. We describe these two functions with the terms “back of the bank” and “front of the bank.” The back of the bank focuses on Price Setting, and typically includes all of the finance, credit, and risk management inputs that go into calculating an acceptable risk-based price. The front of the bank is the sales and production staff that “gets” the customers to agree to those prices. The act of balancing Price Setting with Price Getting can be difficult, but it is an absolutely vital task for banks.
As we’ve noted, pricing is an inherently cross-functional task, and bridging the gap between Price Setting and Price Getting (or the back of the bank and the front of the bank) is really hard. We’ve pointed out that there are a lot of resources to fix Price Setting, as it is the foundation upon which we build everything else. But once the math is in place, how important is the Price Getting part?
We put it pretty bluntly when talking to our clients, telling them that “effective pricing is at least 90% effective selling.” That effective selling component is far reaching, but here are the biggest components to get you started.
The first step to successful Price Getting is the proper alignment of pricing within the bank’s overall strategy. This may seem like an obvious first step, but we often see a huge disconnect between marketing and reality. In other words, we try to price like the Ritz but our customer base and our service levels are more like Motel 6. Or vice versa, as a miss either way is a problem.
This is an excerpt from the book, Earn It Book