- Revenue DiagnosticTM
An aviation services provider wanted to explore potential avenues to improve asset utilization and command higher margins on specific services. They partnered with Revenue Analytics to uncover high-impact revenue opportunities through interviews and complex data analysis, arriving at recommendations that would result in an additional $21M in incremental revenue.
- Negotiated Deal Price Optimization
A large package shipping firm was experiencing revenue leakage through reactive pricing practices and unnecessary discounting. With the principals of Revenue Analytics, they developed a system to optimize negotiated deal prices at a granular level across their footprint, resulting in an estimated $120M in annual revenue uplift.
Specialty service providers are an eclectic mix of companies who provide a variety of services to other businesses. These B2B companies typically face intense competition and look for a competitive edge without simply lowering price.
In contrast to B2C businesses, B2B service providers generally have fewer customers and larger transactions. Typically these larger deals have individually negotiated components, making the transactions more complex. Most firms manage the complexity by giving their sales organizations pricing discretion and the flexibility to negotiate custom deals. However, the combination of complexity and flexibility often leads to costly error.
Revenue Analytics has collaborated with B2B clients in bringing the profit-generating potential of sophisticated Pricing and Revenue Management to bulk sales and negotiated deals, more effectively targeting discounts and assuring improved deal profitability while increasing share.
Critical to this capability is the skill to segment customers by willingness-to-pay. We work with our clients to scrutinize every relevant transaction, gaining predictive insight into individual customer preferences concerning price points, discounts, promotions or other incentives. By incorporating cost-to-serve and employing special-purpose optimization methodology, we enable our clients to strike the perfect balance between volume and profit.
Customer Profiling
Many service providers are moving from analyzing what their customers currently purchase to what their customers could be purchasing by using sophisticated customer profiling techniques. We collaborate with clients to devise the business processes, tools, advanced analytics, and models to:
- Understand buying patterns and trends at a customer segment and channel level
- Compare individual customer behavior to its segment to identify “at risk” customers, opportunities to sell higher volumes or additional product lines, and higher costs to serve
- Develop reports and alerts to facilitate field sales discussions at the individual customer level
Market Response Modeling
For most companies, predicting how customers will respond to price points, discounts, promotions or incentives is educated guesswork. By conducting statistical analysis at a granular level, market response models can be developed for predicting customers’ price responsiveness. Our analytical approach leverages historic sales data, product data, competitive data, customer data and other available data sources to:
- Predict how customers will respond to various price points and discount levels, and identify ways to incorporate these models into decision processes
- Leverage market response models to identify SKU level opportunities for price increases or tactical price reductions to stimulate demand
- Incorporate competitive prices and potential competitive price changes into the market response model
Price Waterfall Analysis
Many companies experience significant revenue leakage due to decentralized pricing processes, complex discounts and terms, and a significant cost-to-serve. Capturing this lost revenue has an impact on the bottom line. We collaborate with clients to:
- Identify and recommend ways to control key revenue leakage elements (cost-to-serve)
— Rebates, unearned discounts, extended payment terms, late payments, etc. - Conduct detailed pocket price analysis leading to profitability segmentation by customer or sales segment
- Create a price band analysis to quantify the variability of transaction prices and identify the underlying drivers
Service Bundling Optimization
Product value varies depending on customer needs, perception of service quality and ability to differentiate service offerings. By using detailed invoice level analysis, service bundling optimization allows our clients to:
- Package a variety of service offerings together to improve negotiated deal win probability
- Identify optimal price points to maximize customer retention and upsell
- Manage cross-product effects such as cannibalization and migration
Negotiated Deal Price Optimization
B2B pricing is a unique challenge; each pricing decision has a significant impact on the bottom line. Ultimate success depends on the ability to develop both a sophisticated approach to modeling and clear, actionable recommendations for the sales force. We help clients:
- Leverage their existing customer data to model customer behavior and predict win probability and volume based on a particular bid
- Incorporate price sensitivity, competitive offers and forecasted demand-to-come into a recommended optimal price
- Collaborate with sales force to understand key customer drivers, value proposition and current pricing practices to ensure adoption of optimal price recommendations
Strategic Segmentation
Although traditional segmentation approaches are useful for mass marketing, they often do not help describe customer behavior and consequently are not optimal for pricing decisions. We work with our clients to:
- Understand strategic, share and profitability objectives and identify key customer attributes
- Perform clustering, CHAID and regression analysis to identify commonly held traits and behavior patterns among customer groups
- Develop strategies, business processes and methodologies for optimizing pricing, discounting and inventory allocation decisions across customer segments
Pricing and Revenue Management Program Development
Leveraging our experience across multiple industries, we help clients create and enhance Pricing and Revenue Management programs that deliver sustainable results. We combine our knowledge with our clients’ insights into their own organization and culture and partner with them to:
- Collaborate with the executive team to determine roles, responsibilities, fit within the current organization and success criteria
- Develop a Pricing and Revenue Management organizational framework
- Design process flows to smoothly integrate new Pricing and Revenue Management group operations with current operations
- Build consensus throughout the organization to determine priorities, identify “Quick Wins” and ensure new Pricing and Revenue Management group acceptance