Shaune Jordaan | Co-founder and CEO | Hoorah Digital Consultancy | mail me |
Big data is that buzzword that explains the growing volume of data encompassing every aspect of human life. It relates to the notion that almost every human action can be quantified and logged in a bank of data that is expanding at an unusual rate.
In fact, there are nearly as many pieces of digital information as there are stars in the universe.
While old-school marketing efforts were restricted to things like tracking results on direct mail campaigns, or number of subscribers to newsletters, marketers now have data on people’s exercise habits, digital clicking behavior, time spent on different websites, purchasing history, personal choices based on social media postings, time awake, time spent in the car, caloric intake, and practically anything else you can think of.
Price optimisation using big data
Traditionally marketers relied on in-house data to price a product or service. Limited emphasis was made on customer analysis and market trends.
Due to the lack of complex tools, data scientists, and awareness in general, most of the pricing decisions were based on hunches. Another reason for not using a data-based approach was the lack of sophisticated computational power to back analysis of high-volume data.
Manual methods for setting prices make it difficult to discern the pricing patterns that can unlock value. It is just too overwhelming for large companies to get granular and manage the complexity of these pricing variables for thousands of products without pricing software.
How to turn data into profit
Listen to the data
Setting the best prices is not a data challenge, but an analysis challenge. The biggest companies know how to translate and act on the abundance of data they have, but many companies tend to manage data rather than use it to drive decisions.
Sound analytics can assist companies to identify how factors that are frequently neglected, such as the general economic situation, product preferences, and sales representative negotiations reveal what drives prices for each customer division and product.
Automate
It is extremely costly and time-consuming to analyse thousands of products manually. Automated systems can recognise narrow segments, ascertain what drives value for each one, and match that with historical transactional data.
This enables companies to set prices for groups of products and divisions based on data. Automation further makes it much simpler to replicate and tweak analyses so it’s not required to start from scratch every time.
Build skills and confidence
Implementing new prices is as much a communications challenge as an operational one. Thriving companies use change programs to help their sales forces understand and adopt new pricing decisions.
Equally significant is revealing a precise set of communications to justify the prices in order to highlight value, and then tailoring those reasons to the customer.
In conclusion
Intensive negotiation training is also important for giving sales reps the confidence and tools to make plausible arguments when speaking with clients.
Organisations today face remarkable amounts of data, organisational complexity, fast-changing customer behaviours, and elevated competitive pressures.
Having big data doesn’t automatically lead to improved marketing. We can imagine big data as a hidden ingredient, raw material and an essential element. It is not the data itself that’s so important. Rather, it is the insights obtained from big data, the choices we make, and the actions we take that make all the difference.
