Background and challenge
A learning management systems provider for customers comprising a variety of verticals engaged L.E.K. to optimize its pricing and packaging strategy across their product portfolio, with a particular focus on rationalizing discounting behavior.
The client requested a comprehensive review of several pricing factors, including pricing basis, levels, and discounting mechanisms, with the goal of identifying areas of improvement and quantifying the potential revenue increase that could result from implementing a structured pricing and packaging approach. Additionally, the client needed support on developing processes and discounting governance protocols to ensure successful implementation.
Approach
L.E.K. performed a range of analytical tasks to support the client’s goals:
-
Collaborated with the client’s leadership and internal stakeholders to gain a thorough understanding of their strategic objectives and the role of pricing
-
Performed an in-depth diagnosis of the client’s current price achievement and discounting behaviors, with an extensive analysis of historical sales/quotes data to uncover areas of margin leakage and opportunities for improved pricing controls/discounts
-
Conducted primary research to gather customer data to develop a robust qualitative understanding of customer needs, demand drivers, willingness to pay and price sensitivity
-
Designed a competitive benchmarking assessment to understand competitor pricing, packaging strategy, discounting, sales representative compensation structure and other key metrics to calibrate pricing derived from customer analysis
Results
-
The client was highly satisfied with the recommendations and pursued implementation of all suggestions from L.E.K.
-
These changes are estimated to drive an annual revenue uplift of approximately 35%, which reflects a nearly 50x return on project fees
