20-30% is the typical percentage of customer and product portfolios that are losing money.
Let’s have you avoid being a company that worries about that percentage.
Say you have an unprofitable product or customer segment. What action do you take? Fear of risk tends to be the biggest roadblock to action.
We understand those risks.
- Concerns about fixed cost shifting if the product is removed
- Risk of customer reactions
There’s good news - You can eliminate the uncertainty!
Leverage Predictive Analytics to Answer Concerns in Pricing and Product/Customer Mix.
Here’s a scenario where Predictive Analytics can make an impact.
Consider your sales executive that is trying the close a new, large deal. He or she knows business is down and the plant has capacity, but how should that affect his/her pricing decisions? What is the true incremental cost for the incremental volume he/she is selling? In making a “simple” pricing decision, your sales executive has a host of considerations and constraints, such as:
- Is the pricing consistent with the overall company’s value proposition?
- What implications does this transaction have on the brand in future deals?
- What is the “win probability” at a given price?
- What impacts will there be across other products?
- What is the churn of our customer base and probability of new sales that could be predictive for filling that capacity at higher prices?
- Are there product substitutes with higher margins to consider, and can we predict customer acceptance of these alternatives?
These “unknowns” result in:
- using human intuition to make these choices (with risks of making mistakes), or
- put static thresholds and policies that leaves money on the table. However, Predictive Analytics is your third option. Companies can intelligently price their products in a more dynamic way across the portfolio, using Predictive Analytics.