I love data! Executives love having data to help make decisions. As a pricing geek, there is nothing better (almost) than watching an ASP trend go up and to the right while being able to describe which actions and segments drive these results.
Most pricing people are probably like me. After all, price is a number. Give us numbers!
However … (and you knew that was coming), data doesn’t give us the answers. Data allows us to test hypotheses. Data mining provides interesting correlations between variables. But somewhere we need to get the ideas.
The ultimate purpose of pricing data analytics is to increase ASPs (Average Selling Price). We will likely find a negative correlation between price and demand, so does that mean we must lose sales to increase ASP? Not necessarily.
Regardless of what our data tells us, in the end, we need buyers to be willing to pay more. Maybe they don’t pay more because we don’t ask. Maybe because they have a reference price. Maybe because they don’t know how good our product is. Who knows? You should! Your company should!
Yes, the data might point us to certain geographies or industries with a higher willingness to pay, but that doesn’t tell us why. The answer to why revolves around how our customers perceive value. You, or somebody in your company, need to be listening to your customers to understand how they perceive value and how much value they perceive. How do they make a purchase decision? Data doesn’t tell you that.
My advice, use data to find anomalies that you explore with value conversations. Then, as you learn more about how your buyers use value to make decisions, use data to quantify it.
Data is awesome. It just doesn’t tell you what’s in your buyer’s mind. If you want to win more business at higher prices, you need to have value conversations with your buyers. Listen to your market.