November 20, 2014
We’ve all heard the saying that “knowledge is power” and admittedly, it’s somewhat a cliché. However, it still has great merit when it comes to running businesses that remain competitive and continue to grow now and in the future. As data becomes more available and the demand for deeper insight continues to increase, the tools for collecting data have become simpler, cheaper and more powerful. A free app, for example, like Google Analytics has completely revolutionized our attitude towards the once obscure metrics of site visitors and their behavior, enabling us to not only acquire data and knowledge but also act on it.
Which then leads to, “knowledge without action is powerless” and essentially without a plan of action regarding how you’re going to use acquired data to grow your business, you’re wasting time. To grow, you will need to understand how this data affects all areas of your business, from marketing, sales and pricing, to customer behavior and finances.
Here are some good starting points for making sense of the data you’ll acquire and how to put it into action.
Analyzing Client Data to Tweak Marketing & Product Offerings
We’re now more aware of the fact that no metric, marketing plan or customer segment is isolated and everything is connected in some way and affects the big picture. For example, successfully setting appropriate pricing for your products does not rest solely on competitors and what their price points may be. Simply assuming that your product will perform and sell based on lower pricing is somewhat shortsighted. Additional factors such as customer perception and trust, spending power and even location, for example, need to be taken into account. One powerful example of pricing being a non-issue is in the case of the success of Apple’s products. Apple devices are not necessarily the best performing or the fastest devices available on the market and yet they’ve continued to sell millions of their products at high price points almost on auto pilot. Apple has appealed to a market of users who weigh prestige, trust and loyalty higher than pricing as a determining and influencing metric for purchasing.
As you develop the perfect pricing model for your products and decide what to sell to whom, here’s what you need to consider when gathering and using data:
Past & future topical trends – As a start, simply using a free tool like Google Trends can help you identify the history of global product trends by analyzing what people are searching for and talking about; therefore, helping to predict future demand and interest.
Target market behavior – Keep track of research and reports that provide insight on behavior trends as our generations become more mixed, segmented and active. For example, this Mashable article offers clues regarding the fact that generalizing marketing efforts towards particular groups of people based on stereotypes is clearly a mistake and requires a more diverse approach.
Potential spending power – In addition to behavior, determine the typical spending power of your target niche. For example, surprisingly, setting pricing too low can be a turnoff when approaching large enterprise customers. In some niches, they perceive low pricing as an indication of low value and therefore opt for more premium providers.
Keyword search trends – Keyword monitoring and planning tools will help to identify underutilized and low competition keywords that could hold potential for boosting discoverability in search engines. This therefore, helps you determine the best products to promote and anticipate the next online trend.
Competitor analysis and identifying opportunities – Monitor your competition and identify the things they’re doing both correctly and what they’re failing at. Use this knowledge to identify areas where you can fill a need or deliver a better product or experience.
By drilling down deeper, you’ll begin to see the relationship between the data points you acquire and how they’ll affect your business if you incorporate them in your decision making. A pricing or marketing strategy tweaked and executed based on real data is vital for helping to reduce your customer cost per acquisition rate and even shorten your sales cycle as your efforts are more optimized specifically for your target audience profile.
Conquering the Pricing Metric & Simplifying Data
While it’s not always possible to guarantee the success of businesses solely on the topic of pricing, getting it wrong still has the potential to destroy companies since it’s so closely related to cash flow. Competitive pricing requires deep analysis into one’s own profit margins with the goal of maintaining profitability while also balancing market influence and demand.
Detailed pricing analysis is not something you should try to monitor manually, especially for larger businesses operating in vast markets with large inventories. There’s simply too much data to keep track of and you would need to hire a data scientist to make perfect sense of it all. Thankfully there are easier methods for dissecting market pricing information and tying it with your internal strategy. One noteworthy product is WisePricer which through an algorithmic dynamic pricing engine helps companies track competition and adjust pricing in their online stores in real-time. WisePricer removes the manual labor, and oftentimes guess work, in re-pricing products within vast inventories based on daily shifts and market influence. Their algorithmic engine monitors price changes based on rules you specify and integrates seamlessly in your ecommerce site or third-party site such as on eBay or Amazon to automatically adjust your prices in real-time. This not only helps to achieve maximum competitiveness but also takes into account your internal business to maintain profitability based on your business’ specific financial requirements.
The service takes into account all factors that contribute to successful price modelling and is designed to help your business achieve profitability and not solely price competitiveness. Through detailed reporting and analytics you’re able to instantly determine which products are worth investing in and marketing, how your pricing strategy impacts your bottom line as well as other clues regarding inventory management.
Using pricing analytics software is the most intelligent option for businesses serious about making sense of data. A manual approach will put you and your business at a significant disadvantage through time, money and opportunities wasted.
As you work to acquire and understand more about your market and business ensure that you have an end goal regarding all the information you’re gathering. The data on its own is pointless without a clear relationship identified with how you work, run your business, satisfy customers and make money.
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