Marketers have a wide choice of new software solutions that can help them be more productive, including automated lead-generation systems, customer tracking and social media tools. However, when it comes to leveraging big data to enhance revenue and profits, marketing professionals often overlook one of the classic four pillars of the marketing mix—price. Yet those marketing executives who learn to harness the wealth of big data they already possess can gain substantial advantages and outperform their markets.
While the marketing function in global businesses is often responsible for setting list prices for products and services, few marketers excel at the task. For distributors and retailers, this can mean a constant struggle to manage prices for thousands of SKUs, as well as associated discounts and promotions. Those suggested list prices can also be discounted during the sales process to close deals and maintain customer relationships.
Unfortunately, there is an unequal balance of power in the battle to maintain prices and margins in today’s highly competitive global marketplace. That’s because marketing and sales teams frequently don’t utilise the kind of big data tools and insights their customers’ procurement departments possess when negotiating prices and contracts.
By adopting big data solutions to look across internal ERP and CRM data, as well as external marketplace information, you can free your marketing and sales functions from time-consuming, manual spreadsheet updates and other inefficient pricing practices. Analytical tools can efficiently process vast amounts of data to identify customer segments and provide insights into specific customer buying behaviours. Using information this way can also identify the key drivers or variables that influence buyers, and determine their willingness to pay a certain price for a given set of products and services.
As a result, you can begin to harmonise pricing practices across your organisation and align marketing and sales resources to achieve strategic as well as tactical goals. Instead of constantly reacting to price changes in the marketplace, you can test various marketing scenarios and take a more proactive approach to decisions. Harnessing the knowledge locked in your big data translates into the power to price more efficiently and profitably.
Let me offer an example. A global chemical company based in Europe was able to analyse and interpret available internal data, as well as external marketing information. With these combined resources, the organisation integrated pricing and competitive and transactional data in one centralised location.
The chemical company gained immediate value. By allowing the company to organise incoming data and identify key customer segments, they found 10 key value-based customer-behaviour drivers. Collecting this vast amount of data from various sources and putting it together meant that the company could determine list prices, which they could adjust to help achieve strategic margin goals. In addition, big data enables the company to execute more informed pricing decisions in conjunction with field sales operations, providing specific pricing guidance during contract negotiations. None of this would be possible using traditional pricing and sales methods that frequently rely on outdated, manual spreadsheets.
Today, marketing and sales executives can use pricing technology solutions to simulate pricing and promotion campaigns as a predictive tool. Exploring and then choosing optimum pricing strategies, marketing and sales professionals can execute their campaigns then monitor and measure the results by regional markets, individual sales people and customer accounts.
In the case of our global chemical company, a pricing initiative led by marketing and sales executives established a new process for setting prices that incorporated a wide range of variables, including product bundling, freight and handling costs, payment terms, discounts and rebates, and exchange rates across global markets. The pricing project identified more than USD $20 million of potential revenue uplift within the first quarter of implementing its big data analysis.
Given the growing complexity and competitive nature of global markets today, marketing and sales executives owe it to themselves and their companies to learn how to exploit the potential of big data in making better pricing and business decisions. The right tools and opportunities exist today. Those who act now will reap the rewards.
Click here to see more blogs and research from IDG Connect