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Big Data Analytics for Profit Optimization – Putting it into Practice

By September 17, 2013Article

In our blog posts over the last two weeks, we discussed the possibilities Big Data offers for transforming sales organizations. This evolution is underway and has the potential to positively impact corporate bottom lines across all industries. Last week, we highlighted manufacturing as an ideal industry to realize these benefits. Let’s now put this into perspective through a specific example. 

We recently worked with a division of a high-tech OEM with $2.5 billion in revenue, 5,000 customers and 50,000 product SKUs. Before our work with this company, it struggled with pricing products due to ineffective guidance at the field level coupled with inconsistent, unreliable price and margin reporting.

Our software evaluated hundreds of viable segments in order to capture the product mix and the effects of bundling by adjusting the recommended discount for this specific set. In other words, a discount recommendation is a function of the overall deal: the same product may receive different discounts depending on the segment or other products in the bundle. 

Through a quantitative and qualitative analysis, the company quickly realized that these challenges dramatically impacted its ability to do business. Following the implementation of a pricing optimization strategy, it soon began to see a significant return on investment. By leveraging Big Data to provide account executives with optimized target prices for every deal, establishing quick and easy reporting practices and training analysts on best practices to drive sustainable growth, this OEM gained $57 million in profit margin. 

Bringing it all together 

Big Data is a game-changer. It is rapidly impacting the way organizations operate, including sales teams. The manufacturing industry in particular is ripe for change, as evidenced by the above case study. But, Big Data will not stop at transforming the manufacturing industry. Its benefits can and will be realized across all industries. 

We see similar successes with chemical and process businesses, medical consumables and wholesale distributors. Since sales are integral to business, survival depends on the ability to optimize selling strategies. It is only a matter of time before technology transforms the status quo in sales. The only question is: will you be ready? 

Neil Lustig is CEO of Vendavo. He is an accomplished executive with over 25 years of experience in the IT industry. After joining Vendavo in 2007, he led the global commercial team for three years prior to assuming his current role. Before Vendavo, Neil successfully directed Ariba’s North American field operations for two and a half years. Follow him on Twitter @vendavo.