How are some retailers killing it with Big Data?

In my quest to find the latest innovations that are having a huge positive effect on business performance, I came across Advanced Pricing Logic. Did you know that leading retailers sell more than 90% of their products at full price? So, what about the rest of the retailers? If you’re a smaller retailer you know just how challenging it is these days to compete. The consumer has more options and the competition often leads to a race to the bottom. This isn’t good for anyone, except maybe the consumer. Fortunately for the smaller retailer it doesn’t have to be this way any more. Smaller retailers now have a tool at their disposal that will enable them to compete with the big boys thanks to Advanced Pricing Logic (APL) and their more affordable Big Data pricing optimization solution.

A large proportion of shoppers (85%) believe that price impacts where they’ll actually make purchases – not brand awareness, not slick marketing, and not convenience – but price. Previously, only the multi-billion dollar corporations could access the pricing optimization tools necessary to find the right selling price for a product. But, a new player on the market – Advanced Pricing Logic (APL) – is offering a big data software solution for price optimization to the little guys, allowing them to achieve greater profitability at 1/10th of the cost of their competitor’s models.

If you think of a large chain conglomerate like Walmart, with their “Everyday Low Prices” slogan, they’ve used price optimization software to determine what to sell their products for, and it really works. While they’ve got low prices, they still make over $100 billion in profit every year. Successful pricing strategies are more than having the lowest price on the market though, it is more about a comprehensive understanding of a product’s “price elasticity”.

Smaller companies have had a difficult time competing with these large corporations, because they couldn’t afford the price optimization tools needed to get this understanding. They weren’t able to price their products in a way that results in their best business performance and instead use manual methods of analyzing data, utilizing old-school spreadsheets that are just truly not efficient. The process becomes difficult, cumbersome and inaccurate for small and medium-sized businesses, that aren’t able to leverage expensive software in order to compete.

There are a number of factors to consider when pricing and what’s truly needed is a complicated and smart algorithm that will consider approximately 10-15 data points, including:

  • Buying trends
  • Movement
  • Days on hand
  • Supplier performance
  • Seasonality

APL transforms three to five years of raw data from each company into usable data, which then results in sustainable pricing recommendations. Companies can then price competitively, which serves to increase their profits and overall ROI. And, increasing ROI is the main goal of many organizations, as found by a recent study, which also found that only ¼ of those in the study had up-to-date pricing optimization software for their organization. Those same respondents also reported that some of their main pricing issues that had a negative impact on business performance included prices that are too high or too low, markdowns are too steep or not steep enough, and that they can’t do a cost-based price analysis. All of these factors could be avoided using pricing optimization software tools.

APL took ten years to mold their software into an innovative solution for small and medium-sized businesses that literally had no choices in terms of being competitive in the world of product pricing. Their powerful pricing tools allow these smaller organizations to generate the same predictive analytics for their products as the big corporations utilize.

How carriers can leverage the power of big data

No. 1: Take a walk in your customer’s shoes

Carriers’ previous focus on system maintenance has netted them one significant outcome: increased internal and back-end efficiencies. Unfortunately, in today’s digital world where customers can purchase food, clothing and other household goods at the click of a button but can’t yet do the same with insurance, these new carrier efficiencies do nothing to solve high-friction customer pain points.

 As a result, companies like Trov, Metromile and Lemonade have seized on this opening and begun to build in-roads with customers by leveraging big data, artificial intelligence and machine learning to streamline the user experience and offer customized products that meet the needs of their individual customers. In order to remain competitive, not to mention relevant, carriers will need to do a better job of leveraging similar technologies to solve front-end challenges. Carriers can start this process by conducting a holistic review of all client-facing interactions and subsequently identifying those that result in the most friction. Not only will this process help make a carrier’s technology transformation feel more manageable (starting piece-by-piece is often easier than jumping in head first), but it will also yield the most significant ROI.

The journey begins today

A company’s technology transformation cannot happen overnight. In fact, it can take years before the benefits are fully realized. What’s important, however, is that carriers take the necessary first steps for embracing big data, artificial intelligence and machine learning today. How will you get started?

Linking Customer Satisfaction Measurement to Financial Performance

One of the main benefits of Customer Satisfaction research is provided through the capability to observe trends on indicators that are directly tied to financial performance.  Companies can use ongoing measurement as an early warning system to monitor and detect drops in performance and to determine how to take corrective action.  When performance is stable or trending upward, market position may be considered and calculated risks may be contemplated with respect to the competitive environment.

Under the best circumstances, increased performance in service delivery should be celebrated.

As there are many external factors affecting a company’s financial performance, the capability to observe ongoing performance allows a perspective into the customer viewpoint that can be used to increase awareness regarding overall financial performance.  A key benefit is reduced risk.  While planning matters require a stable environment, the measurement can provides an additional perspective and increased confidence to determine if the time for change is right or wrong.  Customer satisfaction is sensitive to changes in the market place and can warn of a competitive threats and pressures.

In addition to a perspective into key service indicators, a view into the basic health of customer relationships is provided through customer retention and loyalty measures.  These are the early warning measures that are important to track.  Valuable insights pointing to the cause and effect of altering these measures often indicate market shifts or other economic impacts which can be anticipated.

The key is to know when and how to react.  Of course, the business climate is also important.

Science – First, there needs to be recognition of the fact that Customer Satisfaction research relies on scientific methodology.  The research methodology requires reliability to predict the degree of sample representation compared to the total population measured.  Statistical reliability and confidence levels are the key components of research findings when significant differences are reported between distinct populations.  From a practical standpoint, the overall reliability of the data collected is fully dependent upon specific procedures to ensure validity.

 

Benefits – Remember that the outcome of a successful program is more than just a measure of Customer satisfaction.  The results can also be tied to Brand Equity and an assessment of standing within the competitive environment.  It is also recommended to be sure to evaluate findings against competitive benchmark data for a comparative viewpoint.

How Fit is your Factory?

In an ongoing effort to highlight companies that are implementing innovative solutions that increase efficiency, I recently spoke with Dennis Cocco, owner and founder of 10in6, a software company that offers a unique manufacturing solution that will increase a plant’s efficiency by 10% in just six months.

Like the abundance of people who say they want to get in shape, Cocco theorizes that manufacturing plants also want to get in shape, but both parties either don’t know how or don’t want to make the effort. They blame other factors for their lack of productivity and there is little transparency as to what really is at fault. Plant inefficiency is rampant, costing manufacturing companies time, money and affecting their overall ROI.

To increase ROI, businesses either need to increase profits or reduce costs. 10in6 is a software solution that will reduce your plant’s costs, by effectively measuring where your plant is lagging, mainly in terms of labor costs. Cocco says that most manufacturing organizations have established processes and technology to track their revenue, inventory and shipping, but on the shop floor, most are at the mercy of their management team, as there is truly a lack of technology that will track labor inefficiencies. That was until 10in6 came onto the scene.

The manufacturing world in North America is tenuous, with businesses thinking they can cut costs, mainly their labor costs, by going overseas. But with the rising cost of transportation, plus a call to businesses to stay within North America, and raw materials costing the same here as they do elsewhere, more and more businesses are deciding to run their plants here. What they do lack, says Cocco, is the information they need to increase their plant’s efficiency and reduce labor costs.

Many high-profit world-class manufacturing plants in the world can be likened to “gym rats” – those who have the discipline to get in shape, who figure out their weak spots and utilize their time the most efficiently. The ones who run the least efficiently are the ones who sit on the couch, want to get better, but just keep allowing things to run as they are, making excuses and letting it impact their overall health (or ROI).

If there is one factor that gets both unfit people and plants working more efficiently, it is accountability. Just like a personal trainer, the 10in6 software recognizes where your plant is running least resourcefully, so you can make the requisite changes and successfully increase your ROI. Because the software measures everything, you’ll also know where you are improving and why, so you can continue to get better.

In most plants, lines are staffed for either 40 hours or 80 hours. If the work isn’t getting done during those weekly shifts, weekends come into play, which significantly increase labor costs. Not only are you paying for the work to be done during the regular shift, you are paying double for overtime for it to be done on the weekend.

If plants can more effectively use their time during that 40 hours, their ROI will increase substantially. 10in6’s primary driver is to account for lost time. Their software solution will measure the weakest spots on the line and your overall equipment effectiveness (OEE). World-class plants have about an 80% OEE, while many other less-efficient plants are in the 40 – 50% range. With the 10in6 software solution, plants can double their output and go from the bottom of the pack, right to the top, simply by knowing where they need to improve and then doing it.

When Cocco started in the business, every plant had industrial engineers whose job it was to track performance in the plant, but those jobs no longer exist. With electronic auditing software like 10in6, it gives management more transparency and visibility to see what needs to be improved on the line. Ironically, reducing a plant’s manpower could actually make it more efficient. Cocco says that his software “tackles the last unmeasured frontier in the manufacturing world” in terms of measuring accurately what’s happening on the plant floor.

At Executive Outlook, we’re always on the lookout for examples of smarter solutions such as robotics, artificial intelligence, and Big Data that are being leveraged today to create a better world of tomorrow. We hope these stories will inform, enlighten, and maybe even inspire you with ideas that will help your business. If you have a story you would like to share, please message me at rmorris@feedbacksystems.com.