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Author: Brendan Kavaney |10/17/19

Revenue Management & Pricing: How One Informs the Other

Possibilities Podcast Episode: 13

Ask any analyst and they’ll tell you.

Data is king.

If you want to create real momentum at your company, if you want to press forward and really take your organizational effectiveness to the next level, you’re going to need quality data.

It doesn’t matter how great a plan you have, how great a sales team you have, or how out-of-this-world your marketing team is. If your data is sub-par, your results will be as well.

On this episode of the Possibilities podcast, we sat down with Armin Kakas, VP of Data Science Commercialization at American Tire Distributors to talk about revenue management, growing your COE, and bringing more data driven modeling into the culture of your organization.

Revenue Management

When we asked Armin what the biggest challenges or factors facing his industry were, he was quick to respond.

Revenue management.

For Armin, there are two or three huge opportunities for revenue management to be aware of and pay attention to.

Process Automation

If you look across the entirety of the industry, there is a tremendous opportunity for process automation when it comes to the administrative tasks and price setting.

If you can nail your price setting, things will start to fall into place.

And if you can automate that price setting so that it’s less manual and requires less man hours and busy work to get right? That’s a win-win for everyone involved.

Price Optimization

Price optimization is all about creating a suite of products that do a couple of key things.

They look across historical transactional data, consider marketplace dynamics, the goals of your particular categories, and then they recommend the prices that your products need to be in order to maximize revenue, efficient, and market share.

Trade Promo Effectiveness/Optimization

An important piece that is unfortunately far too immature in the tire industry, TPE/TPO is a key component for revenue management, and one that a company like Mindtree can help your company dial in.

Building a COE

If your company is in the beginning stages of building internal cases to grow your COE to bring a more data driven mindset and modeling into the culture of your organization, there are three places you can start.

Pricing Impact

Price optimization is always the number one

Those who know what they’re doing will tell you that a 1% pricing impact is FAR more beneficial to your organization than a 1% decrease in operations costs or expenses.

This is why pricing is the first place to start.

Operating Expenses

Armin and his team will look at a company’s income statements and ask, “Where does the majority of your operating expense go?”

Then they attack those functions, and supply chain is almost always at the top of the list. If you can get pricing in line, and then really figure out your supply chain, you’re well on your way to success.

But the problem is that supply chain covers SO many different facets.

Network optimization, warehouse efficiency, placement of products, inactive inventory, clearing out dead inventory, these are just a few of the pieces of the supply chain that a company has to hone in on to make a difference.

Sales Effectiveness

How do you make the sales processes within your company more efficient through data driven solutions?

Answer that question, then combine it with the other two (price impact and supply chain) and you’ll be unstoppable.

Focus on the Client

Aim to do two things.

First, size the impact. Sit down and figure out exactly what impact your client is going to see as you implement these changes.

If you don’t actually bring the client along on the journey

And secondly, bring them along on the journey.

You can find this interview, and many more, by subscribing to Possibilities podcast on Apple Podcasts, on Spotify, or here. Looking for additional content? Check out our blog.

To listen to this episode, click here

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