jirafe and wiser present: 7 tips to drive higher revenue and profit
TRANSCRIPT
Jirafe and Wiser Present: 7 Tips to Drive Higher
Revenue and Profit
Luke Lin Head of Pricing and Analytics
Wiser [email protected]
Meet Our Presenters: Luke Lin
As Wiser’s Head of Pricing and Analytics, Luke pioneers new innovations in the realm of e-commerce pricing intelligence and automation. He is a former pricing leader at GE Intelligent Platforms with several years of experience in Software automation and intelligence, and a graduate of GE's prestigious Financial Management Program with deep experience in developing automated solutions for complex organizations.
He graduated from the University of North Carolina at Chapel Hill and is an avid college basketball fan.
Laura Sankowich Head of Marketing
Jirafe [email protected]
Meet Our Presenters: Laura Sankowich
Laura has more than 15+ years of experience in the technology space, and also co-founded a women’s apparel brand which she helped run and advise for 5 years.As Jirafe’s Head of Marketing, Laura looks for ways that she can use her experience in both technology and commerce to connect with brands and help them understand how to better use their data to grow.
What Makes Your Customers Buy?
of ecommerce customers say price is the biggest motivator when it comes to making an online purchase.
The way your products are priced, and how that matches up to the competition, is crucial for sales.
Price products too high and you could lose customers to competitors. Price products too low and you run the risk of leaving money on the table.
84%
Is Your Customer Pricing Strategy A Guessing Game?
Do you know which products need a price adjustment? Do you know what price points will send them to your competitions?
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Market Intelligence & Price Strategy
What Is Wiser?
Retail price intelligence, automation, and analytics to help drive profitable pricing strategies.
Leverage Market Intelligence
Market Intelligence can help you manage your competitive price position.
Competition is fierce, and your customers are more demanding than ever
● 84% of customers cite price as the largest influence on purchase
● 73.3% of retailers cite competitive pressure as one of the most important factors that impacts price changes
The Competitive Landscape
Say No to Price Wars!
Competitive Intelligence
Retailers:
❏ Do you react when your competitors run out of stock?
❏ Do you perform inventory overlap and gap analysis?
❏ Are you monitoring and taking relative price into account?
Competitive Intelligence Checklist
Brands and Manufacturers
❏ How do you monitor MAP?
❏ How do you enforce MAP?
❏ How do you plan for MAP violations on an organizational structure level?
Market Intelligence Checklist
Because this isn’t how it works...
Easily Identify Products for Price Adjustment
Different products require different pricing strategies
All Products Are Not Created Equal
● Identify products for price adjustment based on market intelligence
○ competitor pricing and inventory data
○ your own traffic and conversion data
● Reprice to find the sweet spots where you can maximize sales and profit
You Don’t Know Until You Mine
❏ Automatically monitor competitor assortment
❏ Perform an inventory overlap and gap analysis
❏ Stock up on the products you’re missing and price in common products competitively
❏ Increase prices on your unique products within reason
Assortment Intelligence Checklist
Conquer A/B Testing to Fine Tune Pricing
Strong monitoring and evaluation of data is key.
Step 1: Collect competitive pricing and assortment data
Step 2: Identify and prioritize where you aren’t competitive
Step 3: Set your pricing strategy and evaluate results
Retailers using this approach
have seen:
7% 22% 18%Revenue Conversion
RateProfit
Taking a Data-driven Approach to Price Optimization
❏ Know thy competitor❏ Look for time-of week and time of
day patterns ❏ Manage supply and demand❏ Model consumer price elasticity &
cross-price elasticity❏ Use historical data to forecast and
optimize❏ Automate repricing in real-time
Recommended Strategy: Dynamic Pricing
Use integrated data
to optimize for profit instead of limiting yourself to competition-based pricing.
Methodology:
Wiser’s machine-learning repricing algorithm follows 3 steps:
1. Regression model leverages historic sales data to create a demand estimation engine
1. Dynamic Algorithm aggregates pricing variables to set an optimal price by SKU where profit is maximized
1. Self-learning algorithm continuously recalculates variables to adjust to a dynamic marketplace
Dynamic Pricing: A Case Study
Wiser conducted a 3-month dynamic pricing test with a retailer with the following results vs. normalized control group data.
+15% Revenue
+8.6% Profit
How we measure impact
✓ Track a control group of similar SKUs
✓ Normalize results with control group data
✓ Accurate results factor out seasonality and promos
Dynamic Pricing: Case Study Results
● Pricing is elusive, painful, constantly changing and based on hundreds of different factors
● Competitive Intelligence is a major piece of the pricing and merchandising puzzle
● Dynamic Pricing - The Future o Real-time pricing responsiveness o Data-driven, multivariate pricing strategy
Key Takeaways
What’s Selling & Which Customers Pay Full Price?
Do You Know Who Your Customers Are and What They’re Buying?
Why Is Understanding Your Product and Customer Behavior Such a Tough Nut to Crack?
Merchants need answers. . . not more data!
You Can Also Use Your Store’s Data to Support Decisions About Price
With the right data, you can:
• Master your store's demand curves, and price accordingly
• Map your prices to your buyers by customer segment
• Create laser focused campaigns for the right buyers
• Use trending data to make decisions on the fly and increase
the profitability of your promotions
Your most visited, best converting products might represent an additional revenue opportunity.
What Products Might Be Due For A Long Term Price Increase?
What Products Might Be Due for a Temporary Increase?
Products that are trending in your portfolio could make ideal candidates for a slight price increase to see if your customers are will to pay more.
What Products Are Due For A Discount?
Downward trends in the sales of certain products could indicate competitive pressure or seasonality.
Improve your product conversion rates by A/B testing price.
When Should You A/B Test Price?
Some products just don’t sell, and could be ideal candidates for a discount plan.
When Is A Product Ready For The Bargain Bin?
Products that only sell on discount could be due for a price reduction.
What Should You Do With Products That Are Primarily Purchased on Discount?
A change in price could encourage customers who view products, but don’t buy to pull the trigger.
Your Browsers Aren’t Turning Into Buyers
Segment Your Customer Base To Test New Pricing Strategies
Pinpoint your best full-price customers and test new pricing schemas on them.
Test Price Reductions on Low AOV Customers
Customers with low average order value are ideal candidates to test price reductions.
80,000+ Merchants Use Jirafe
Jirafe turns your data into answers so everyone on your team can:
• Reach more customers & keep them loyal
• Sell more stuff your customers want
• Promote the right products to the right customers
• Personalize your marketing
Just A Few Of Our Customers
To learn more visit jirafe.com & wiser.com.
Questions?