Do You Have Normalized Margin and Revenue Loss in Your Business?

This article first appeared on Coruzant.

In my role, I commonly hear the anecdotal evidence that significant margin and revenue loss is occurring under the surface of an otherwise booming and bustling company. How various company leaders express the evidence can vary greatly, but it typically it sounds something like this:

“My sales team struggles to spot when customers begin to drop purchase volume on products or when customers show signs of defection.” “A large percentage of my sales team behaves like order takers as opposed to order makers.” “My company struggles to provide relevant eCommerce pricing.” “When costs increase, attempts to increase prices are typically slow, unsuccessful and fail to recapture the desired margin.” “My quote response time is far longer than my customers expect.”

While these may sound like discrete issues that should be toppled one by one, they are symptoms of a broader issue. Most companies, through these examples and many more, are experiencing significant margin and revenue loss due to one core issue:  Sub-par pricing and sales practices that cannot adequately adapt to the complexity and speed of change within the business and their markets.

Evidence of Normalized Pain

Annually, my company conducts a global analysis of more than 1 billion B2B transactions to glean insights into the state of B2B pricing and sales practices. The findings of the 2020 benchmark analysis are staggering:  On an annual basis, companies are experiencing up to 17.1% in margin loss and 31.8% in revenue loss annually.

What’s most interesting to me about these findings, is that in the four years of running this analysis, the figures have remained relatively constant. Meaning, B2B companies are operating with a type of normalized pain with respect to these suboptimal practices.

Business leaders are constantly challenged to navigate increasingly turbulent waters to find the best, most reliable paths to profit and revenue growth. A global recession, unpredictable tariffs, fierce competitors, dramatically fluctuating demand, and volatile costs are just a handful of factors contributing to the growing storm.

What those at the helm cannot fully articulate and quantify is that their companies, the vessels in this analogy, are riddled with margin and revenue leaks. Each transaction is leaking profit margin with inconsistent and misaligned pricing. Revenue goes unrealized when products are not effectively cross sold. Revenue is lost as competitors slowly poach customers, one product category at a time. Inefficient processes to update pricing with manual tools and calculations results in internal costs and poor customer satisfaction in terms of quote response time.

Each of these missteps are deceptively small when evaluated individually; it is the combined effect that results in significant, pervasive margin and revenue cost, year after year. Most company leaders have a gnawing instinct that pricing and sales could be improved, and thus, lead to financial gains. Knowing precisely which processes are defective, how to measure the loss, and most importantly, how to recapture this value is impossible with manual means.

Why More Manual Calculations & Analysis Are not the Answer

For decades now, manual analysis utilizing complicated spreadsheets has been the go-to solution for generating pricing and sales insights. This method, however sophisticated, is no longer adequate to handle a complex and dynamic business landscape.

The reason? In short, complexity. In addition to the proliferation of products and customers, companies must contend with new, disruptive competitors, conducting more business than ever before through digital channels, and reacting to disruptive swings in market demand and costs. Holding the line on margin and revenue requires that each transaction be priced appropriately and consistently for each channel while retaining each dollar of market share and simultaneously growing wallet-share within accounts.

Even with an army of analysts, arriving at the appropriate guidance for each unique scenario is an impossible task. Fold in the need to make that guidance immediately available across many channels such as CRM, ERP, CPQ, eCommerce, etc., and the urgency for a modern solution is apparent.

Today’s companies need the help of pricing software and predictive sales analytics to truly be proactive versus reactive to swiftly changing market conditions and competitive intrusions. By doing so, they stand to retain and grow more customer accounts, shorten backlogged pricing exception queues and spend more time on pricing strategy.

Companies need capabilities that can turn a massive stream of market, customer and product information into actionable pricing intelligence and sales guidance that results in measurable margin and revenue improvement. The only way to do that is with AI and data science-driven pricing and sales software. When these solutions are configured to meet the needs of your unique company’s dynamics, paired with leading REST-based APIs to deliver data and insights faster, you can do more than just topple challenges one by one. You can completely reimagine what it takes to compete and win in your business.