Isn’t More Analytics the Answer to Solve Your Pricing Challenges?
Analytics promises to deliver more data-based insights to pricing decision-makers. Is that all you need?
Pricing has always been perceived to be a numbers game. So it’s not surprising that, encouraged by new technologies, a lot of companies are pushing for advanced analytical tools to help take their pricing strategies to the next level. But, at the same time, some are wondering whether more analytics is really the answer to their problems. After all, they’re already swimming in numbers. In fact, they could probably rely on intuition alone to identify the obstacles in their way today. Right?
Here’s the debate:
|We don’t need more analysis because data doesn’t tell the whole story.
Analytics may give us facts, but there are other circumstances that need to be factored in with pricing. It’s not all about numbers.
|Opinions are good. Evidence is better.
Analytics gives us the facts so we can make better pricing decisions. The data can validate a hunch and tell us where we need to go.
|If we need numbers to tell us what to do, we’re in trouble.
Hard conversations are part of business. If our pricing strategy needs to change, our people shouldn’t need a numbers security blanket to make it happen.
|Solid facts make the hard conversations easier.
We already know what needs to change. But without cold, hard numbers, getting our people to change their ways will be an uphill battle. Analytics is our secret weapon.
|Analytics software = major headaches.
While resources to execute pricing analytics are more readily available than ever before, the process changes and people required can be immense. While the resulting analysis may be faster, it’s not really more sophisticated than what we do today.
|Pricing analytics tools are finally within reach.
Haven’t we been waiting for this?
Five years ago we were dreaming of the tools we have within reach today. Today, analytics software is faster and easier to install and many packages have out-of-the-box configurations. We should be using them.
|Let our competitors take on analytics.
We have better things to do.
If our competition is investing a whole lot of time and money into analytics, let them. There are plenty of more immediate, fundamental improvements we can make that will deliver even greater benefits.
|If we don’t put analytics to work in our pricing strategy, our competitors will.
We can’t afford for our competitors to get the jump on us when it comes to data and analytics. Competitors across many industries are discovering the value of pricing analytics and are raising the bar for everyone.
|More analysis will leave us buried even more deeply in numbers.
We don’t have time for analysis paralysis. We already have plenty of data, numbers, and insights, and we’re not even doing enough with them today. Analytics would just add to the pile.
|Analytics is the best way to identify margin improvement opportunities.
We need to know exactly where margin leakage is occurring before we start fixing the business, and data analytics can tell us. From there, we can take decisive action.
Today we’re seeing an explosion in analytics technology packages that claim to solve nearly every business challenge under the sun, including pricing. Considering the data- and numbers-heavy nature of pricing, it’s not a stretch to think these packages may live up to the hype.
But we still run into plenty of pricing leaders who remain skeptical and don’t rely heavily on analytics to help improve their growth and profitability. Most feel that their primary challenge isn’t diagnosing or analyzing a pricing problem, but their organization’s ability to take the right action to address the problem. They have an instinctive feel for what needs to happen and no amount of new data analysis is likely to tell them what they don’t already know. In their view, “softer” aspects of the business – cultural issues in sales and marketing, for example – may pay bigger dividends than data-driven insights. At worst, many business leaders believe more analytics might get in the way of action.
Here’s what we tell clients who are on the fence. If you’re looking at it as nothing more than a technology investment, you probably won’t get the results you’re looking for. Pricing analytics works when it’s executed within the context of the entire pricing ecosystem – from corporate, competitive and product strategy to branding and beyond. Just as important, it depends on rock-solid fundamentals. Don’t go after conjoint-based segmentation if you haven’t first focused on making sure your data is clean and accurate.
In the end, this isn’t about finding a better math equation. It’s about accessing and visualizing data in new ways that are directly connected to other parts of the pricing ecosystem. If that’s not something you can get behind, just make sure you’re taking good notes when your competitors put it to work.
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