If you have a sibling, you may be familiar with this “game” as a child. The older child takes control of the younger sibling’s hand and starts to flog them playfully all the while barking “Stop hitting yourself! Stop hitting yourself!”
That must be what many executives feel like when they look at their portfolios and realize that, on average, 25% of the customer and product portfolios are actually losing money.
There must be a reason for inaction – and there is. It’s the most powerful human emotion known to man: fear. Specifically, the fear of the unknown. Often there are concerns about fixed cost shifting if the product is removed, risk of customer reactions to portfolio changes or price increases and the most human of reactions of just not having done something before.
Fear is rational – but does it have to exist?
Thanks to data-driven predictive analytics, the answer is no.
Imagine for a moment your sales executive attempting to close a new, large deal. He or she knows business is down and the plant has capacity, but how should that affect their pricing decisions? What is the true incremental cost for the incremental volume potentially sold?
Sales isn’t as easy as it seems, and here is a glimpse into just why. Think of all of the concerns the sales executive must account for:
- 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?
- Feel a little fear of uncertainty creeping in?
Now, imagine that same scenario where the sales team all had access to a powerful predictive analytics solution, leveraging your actual customer data to accurately answer all of these uncertainties.
Once there’s no more uncertainty, there are no more excuses.