Revenue Uplift Series: 3 Key Questions to Ask to Drive Pricing Success

Kaizen has helped numerous companies across a variety of sectors – from Fortune 500 giants to fast-growing small/medium sized businesses – by unlocking significant business value through the strategic application of data, analytics, and technology.

Over the years, our Pricing and Revenue practice area has helped clients across 23 industries derive an average revenue increase of 3.7% and sales volume uplift of 8% - cumulatively resulting in a margin improvement of over $1.4 billion. We’ve driven:

• 2% to 10% revenue uplift
• 5% to 10% demand/volume increases
• Up to 5% incremental annual profit boosts

Our learnings from each of these client experiences have been significant, and through this ‘Revenue Uplift Blog Series’ we want to share some of these insights with a wider audience of senior-management leaders, CXOs, and decision-makers.

In the first blog as part of this series, we’ll focus on the topic of Pricing and its impact on overall enterprise strategy, growth, and margins.

Strategic Questions

At the highest level, there are three key questions you must ask when it comes to Pricing.

1. How do I align my Pricing to company strategy, goals, and customer base?
2. How do I ensure my enterprise data structure and analytics capabilities are set up to generate best possible pricing outcomes, based on my business goals?
3. How do I balance short-term revenue and margin gains with long-term customer lifetime value?

We’ve found that answers to the questions above inform aspects of your approach to Pricing, including topics like:

• Implementing a pricing strategy that keeps customers happy - without negatively impacting margins
• Building and leveraging models for better product bundling, promotions planning and loyalty management
• Understanding what customers in specific segments are willing to pay for each offering (e.g., Willing-to-Pay Modeling)
• Ensuring product-price relationships and your overall product portfolio is not too complex

Pricing in Action: How a global freight operator and an automotive OEM benefitted from Kaizen’s Pricing expertise

For a global freight forwarder, we built a freight price optimization engine which informed automated price quotes. By leveraging advanced machine learning models and sophisticated data aggregation techniques, we optimized the price of any shipment on any lane, delivering a measured profit uplift of 3% to 4%.

For a global automotive OEM, we built a cloud-based integrated revenue management platform bringing together demand forecasting, pricing, inventory management, and incentives. It helped the company increase its annual profit margin by over $200M.

In these and other Kaizen client successes with Pricing-related solutions, we see several key, overarching themes:

• Diversity of data: Augmenting internal data with external data sets offers a richer, more comprehensive context for analysis – and ultimately better pricing decisions.
• Power of advanced analytics, AI and ML: Utilizing AI, machine learning, and natural language processing can help uncover complex patterns and predictive insights.
• Keen eye on the context: Balancing immediate results with longer-term impact, and keeping the focus on overall business goals.
• Adoption success: Ensuring organizational buy-in to new decision processes through (1) a continuous improvement-based delivery approach and (2) generation of business-reasonable output.
• Cultivating a data- and analytics-driven culture: Encouraging data literacy and an analytical mindset across the organization is key to effectively identifying and leveraging growth opportunities.

At Kaizen, we leverage a continuous improvement-based approach to help clients with the following:

• Pricing strategy and execution
• AI/ML-powered customer segmentation
• Models for automated, dynamic pricing
• Price rationalization
• Willingness-to-Pay modeling / Demand modeling
• Measurement and BI around Market Testing, Margin Impact Analysis, Pricing Trends, etc.

Give us a shout if you’d like to reevaluate your approach to pricing using the power of data & analytics: https://www.kaizenanalytix.com/contact

In our next blog, as part of this series, we’ll focus on the topic of ‘Leveraging Marketing Analytics for Growth’.