Dynamic Pricing for Digital Transformation
The advancements provided by technology to B2C companies have increased their ability to make precise business decisions that boost the buoyancy of their sales. Unfortunately, these technologies were largely neglected in B2B trade until recently.
B2B companies can decrease the turnaround times of dynamic pricing, with the sophisticated technology available and have the upper hand by offering their customers instant solutions and fair prices, in real-time. B2B consumers are demanding the same kind of effortless and personalized experience that they get when transacting with B2C.
B2B and Modern Commerce
Having a website or web storefront does not constitute modern commerce. Digital business today must also offer CRM, automated sales processes and effortless digital interactions. MIT and PwC research showed that companies with mature supply chains and risk management can withstand troubled times better.
Digital Transformation brings speed
Those in charge of the purchases of technology and services, mostly millennials, demand the ability to have a self-service experience across multiple channels and they expect information and price transparency; without compromising on product quality. Strict in their options they evaluate technologies through various sources before making decisions and don’t hesitate to look elsewhere if they aren’t satisfied.
B2B Digital Transformation has eight pillars
Personalized
Manual methods do not allow for dynamic pricing or personalized service. Meeting the demands of distributors leads to strong relationships, loyalty between customers and partners, and ensures personalized recommendations that completely fulfill expectations, retaining business connection.
Transparent
Transparency and consistency in pricing increase confidence and loyalty while decreasing the risk of revenue and profit loss.
Algorithmic
Digital transformation uses big data, machine learning, and sophisticated analysis and these are all refined with algorithms. Customer databases allow the technology to draw on all the information required in real-time to immediately create the right offer and price. These algorithms can also use technology-driven insights to respond quickly to other external disruptions.
Frictionless
There is no excuse for delays in this age of everyone always being online and available.
Omnichannel
There are no walls left when it comes to communication. The points of contact in business today have melded into one channel across many points of contact; the customer chooses his preferred one.
Mobile
The internet and mobiles take business everywhere today.
Real-Time
Real-time dynamic pricing is automated and intelligent.
Dynamic
The dynamics of doing business include continual changes that need to be reflected in pricing strategy; these are calculated according to perceived value.
Dynamic pricing completes modern commerce
Pricing has relied heavily on approval cycles within companies. Many businesses used gut instincts at the detriment of their revenue and profit margin because of inconsistencies. Now, customers are in control and they don’t hesitate to look elsewhere, even using third-party channels if need be.
Where previously a salesperson would have had to navigate a whole process to give a customer a quotation, dynamic pricing does this fast and across all channels.
Successful companies do the following:
· Track and analyze customer needs from internal and external data collections.
· Create the right price at the right time for the customer.
· Deliver the quote to direct and indirect sales channels immediately.
· Dynamic pricing is embedded in all systems and business processes.
· Speed and consistency match the speed of modern commerce.
Steps to improve Pricing Strategy
1. Revenue making forecasting helps understand the customer value in business with recurring business.
2. Know what pricing strategies to apply and where to grow revenue and margins.
3. Coordinate price across channels to promote growth.
4. Machine learning empowers CRM and identifies new streams of revenue.
Other advantages of modern commerce
Besides dynamic pricing science, modern commerce strategy consists of other beneficial components.
· Guided selling – This is about offering the right product to the client through product selection.
· Cross-Sell and Upsell – This is a process that B2C buyers know well from their online shopping. Customers are targeted with the right suggestions making them understand that their unique needs are being met.
Smart CPQ and e-Commerce are using data science to make personalized offers, satisfying the needs of customers and sellers alike. They leverage both participants in a transaction by making the right offer, at the right price, terms and time.
In Conclusion
The finest example of how B2B companies can embrace and win with dynamic pricing science comes from Hewlett-Packard Company. HP improved their deal turnaround time to 80% with their quote response time reduced to 25%. This resulted in $1 billion incremental revenue and reduced time of multi-channel transactions for one contract to minutes instead of weeks. Incidences of under pricing decreased considerably and profits rose by 230 basis points.