- Data extracted from customer interfaces can help businesses in appropriate pricing.
It is needless to talk about the importance of right pricing. Generally, price increase of 1% becomes 8.7% by the time it meets the operational profits. It is estimated that 30% of pricing decisions made every year do not provide best price. However, the huge data flood available now provides an opportunity for the businesses to make pricing decisions better.
With the growth in multichannel complexity customer-related touch points are continuously exploding making data harnessing and interpretation tougher. Profits close to millions of dollars are lost without acting on huge opportunities presented by big data. Harnessing big data to determine the best price at product level rather than category level can certainly increase the profit margins.
How Can You Succeed?
Manual practices used for price setting are highly time consuming and do not give a clear picture of the pricing patterns, which unlock value. Most of the marketers bury their head in sand with hassle-some approaches for pricing.
Finding optimal price for the products, which the customers are ready to pay, can provide specific insights that can positively influence the pricing process. For instance, the value of a particular product to a consumer versus the price of the next best competitive product is then estimated.
How Can You Use Big Data for Making Pricing decisions Better?
Thoroughly understanding the data at the organization’s disposal is the key for better pricing. Effective pricing requires zooming in and not zooming out, this involves considering granular data that is specific to product, packaging and consumer. With the help of big data, B2B businesses can touch various aspects of commercial engine of a company and transcend pricing. To understand more, visit free resource articles of simplilearn.
Organizations can consider the following four steps while harnessing big data for effective pricing:
- 1. Listening to Data
B2C businesses riding on top are those who have efficiently interpreted and made optimum utilization of their data wealth. However, B2B companies have always tried to manage the data rather than using it to drive decisions. Good analytics help businesses in identifying several significant factors such as product preferences, wider economic situation and sales-related negotiations, which drive prices for every product as well as customer segment.
- 2. Automation
Analyzing several products manually can be time consuming and too expensive. Automated systems help businesses identify various narrow segments, determine what brings value for every segment and matches it with old transactional data. This allows organizations in setting right prices for the product clusters. Furthermore, automation makes it easier for the company to tweak and replicate data from existing analyses.
3. Communicating is as important as Operating
Implementing the change in prices is as challenging as operations. Top companies invest in rewarding change programs, which help sales forces in understanding and embracing novel pricing approaches. Working closely with the sales representatives and explaining them about the reasons behind price hike helps them in selling products to their customers in a better manner.
Another important aspect is developing clear communication for highlighting the value of the product while communicating price hike to customers.
Companies in various industry sectors such as construction materials, software, telecommunications, chemicals and more have achieved great results by effectively using big data for making better pricing decisions. Businesses that used big data for pricing decisions witnessed approximately 3-8% lifts in their profit margins by setting prices at product levels. In order to get the prices right, businesses should make effective use of big data and also invest in having enough resources for supporting sales, and thereby avoid paying high prices of lost profits.