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Monday, 17 May 2021 09:11

Dynamic Pricing in B2B: 4 case studies

Dynamic pricing cases in B2B Dynamic pricing cases in B2B

How to select a pricing optimization software and then implement dynamic pricing is art and science combined.

Each of the following case studies will help you understand how the specific needs of each industry were satisfied, resulting in a decisive advantage for each company. They will expand your horizon, beyond the widely known cases of B2C in retail business.

This article presents the practical side of my recent analysis (here) on how Dynamic Pricing will upgrade Leading an Effective Salesforce in the oost-covid era.

1. Construction industry
Dynamic Pricing integrated a dedicated user App

In constructions reliability is key because delays immediately translate in higher costs. When implementing Dynamic Pricing, Caterpillar decided to combine it with easiness to do business with them and less effort from the users.

They developed and introduced a mobile app which enabled customers to access real time inventory combined with dynamic rental rates which are published online, eliminating the need to request a quote. The rental transaction, along with payments and transport schedule, is completed in a matter of minutes.

This price and service transparency, where the customer who wants a machine on Monday can order it on Friday and know exactly what it will cost him and what to expect, is what sets them apart. They rely on a complex change of rent rates according to time, weather, existing inventory, and demand.

This model has become closer to booking an airline ticket for the customer. This fast and friction-less experience is available thanks to the coordination between its Cat dealer network and its analytical team.

2. Eye health products
Pricing intelligence when configuring Quotes

The worlds largest supplier has simplified the quote to contract process to reduce turnaround time from days to hours.

The solution chosen replaced its manual tools with a centralized deal management platform. This solution also features intelligent analytics to monitor and measure quote performance and opportunities.

Sales reps can quickly configure products with the right pricing and then create quotes and proposals with ease. No more bottlenecks for approvals.

The company implemented the module of Configure Price and Quote (CPQ) of PROS was implemented and is based on integrated artificial intelligence price optimization science and is adapted to work with SAP and Salesforce CRM.

3. Specialty chemicals
Predict and adjust to supply fluctuations as well as to demand factors

B2B firms in the chemical industry face reality when prices are volatile (as currently) due to oil prices, shift in the supply and demand balance and supply chain disruptions.

Best in class price setting must include a whole host of inputs: fixed and variable cost, supply-side production elasticity, market volatility, and trading implications such as hedging, potential channel differences, customer value, and cost to serve.

The best approach to maintaining margins in volatile markets and achieve significant price premiums, is by incorporating the customers willingness to pay within the price algorithm.
Factors like how much they value supply security and willingness to switch vendors should be included.

It seems imperative to establish a pricing unit which gather market intelligence, make market price projections and implement dynamic price actions in sync with the sales force.
Such a team will work out the best pricing framework and algorithms for the business. They will deep dive on the value of tens of thousands of key product-customer combinations, across hundreds of thousands of transactions. They will also include long term repeated orders.

Successful companies will overcome the barrier of changing old habits and behaviors by setting a series of training sessions across all levels of the organization. In effect, this includes sessions for top management on how to be influential change leaders. For the sales force, going to learning sessions followed by supervised out-in-the-field sales calls.

Swedish group Persptorp recovered $1 million in monthly margin leakage with improved Pricing Discipline implementing PROS solutions.

4. Wine whole-selling
Monitor items without EAN codes

In Ho.Re.Ca, (Hotel, Restaurant and Cafe), in other words in the food service and hotel industries, sellers must monitor products offered by their competitors with unspecific or not well-defined characteristics for comparison. They must find ways of matching products of their competitors via product attributes other than EAN codes.
Competition is fierce and prices must be adjusted in a fast and agile way.

The largest Italian wine shop combines a high-quality catalog of products with a delivery service tailored to the needs of restaurants, pubs and hotels, allowing them to reduce their stock costs. Tannico is directly competing in 19 countries.

The solution chosen was able to scan the products in the distribution channels: it searches for titles, images and references in the multiple e-commerce pages, market places and comparison engines to evaluate other potential connections at the level of title, image and references.

It is not only price competitiveness which is monitored but also a wide product assortment analysis. Therefore, it was also the purchase department that benefited with a complete analysis of competitors catalogs and critical market information to achieve greater negotiation power and exclusivity.

Tannico chose Netrivals solution, capitalizing on its Automatch system, also known as the Smart Connections system.

In order to choose the best solution for your industry and your company specificities and size, it is advisable to employ a business consultancy which will review all the relevant processes and needs. In some cases overhauling the existing processes simplifies end elevates customer interactions. Therefore it’s not only the margin that improves but also customer satisfaction and retention.