• Online distribution

Pricing Challenges

Optimizing thousands/millions of transactions

A company selling though the web typically proposes thousands of products with a variety of options and added services.
On the other hand, each customer has specific preferences driving its choice behavior. Finding the right offer, at the right price, for every customer represents a major business challenge.
In traditional sales channels (field sales and telesales), improving the transactions could be time consuming and there is a trade-off between better sales performance and higher selling costs.
For the online channel, the selling cost is much lower. Improvements in site navigation, product selection and configuration features enable to increase conversion rate. However, customer a typical search on a web site may still return an important number of possible choices and complexity is still a constraining factor.

Customer Centric Revenue Management

Sales management systems permit to collect and store for every customer transaction:

  • Customer characteristics and stated preferences
  • Offers presented/quoted to the customer and their sequence/order
  • The outcome of the transaction: offer purchased (if any) or “loss” (no choice)

The Open Pricer Suite (OP) helps companies looking for higher performance to capitalize on this transaction data:

  • Predict customer choice behavior (including price sensitivity) based on historical transaction data
  • Push the right offers to every customer (including targeted promotions, up-sell and cross-sell tactics)
  • Maximize conversion rate and yield per transaction
  • Reduce transaction time and selling costs

Impact is up to 5% of additional net margin.

Benefits delivered by Open Pricer

Higher conversion and higher revenue

OP enables to achieve higher conversion rates and higher revenue through online channels. The system ensures that the right offers are always presented to each customer, thus turning more visitors/prospects into buyers and maximizing the revenue from each transaction.

Key features (case of hotels on-line distribution)

These are the typical questions answered by OP for an online distributor of hotel products:

  • Which hotels in Paris are “best sellers” for a German mid-week business traveller? For a Spanish leisure traveller?
  • How to rank hotels in the web page to maximize expected value for these two types of customers?
  • If a requested hotel is not available, which alternative hotel should be proposed to maximize conversion and revenue?
  • What was the exposure and conversion rate of a given promotion?
  • Which up-sell options prove the most successful?
  • Which customers are most responsive to a promotional offer pushed by e-mail ?
  • How does conversion vary depending on the price of a given product?
  • How is willingness to pay related to booking lead-time?

Implementation and Integration

OP can be implemented in three stages, with tangible benefits at each stage:

  • Building the Interaction Database: customer characteristics, stated preferences, offers presented/quoted with sequence/order and customer choice (at the transaction level)
  • OP Price Analytics: using the previous information to improve sales monitoring and measurement of price sensitivity with actual sales data
  • OP Optimization: building interfaces with the sales management system to optimize transactions in real-time