What is AI’s place when it comes to pricing?
Will Lovatt, General Manager at PROS informs us on how AI is being used to streamline sales and decision making efficiency.
With trade wars, changes in tariffs and unexpected global events becoming almost business as usual, the potential for impact on operating costs and margins is forcing businesses to act differently. Responding to those challenges, businesses want to optimise the existing revenue generating processes without introducing unnecessary risk. This is shaping the strategy of a business that is ultimately expressed through a vision defined only by the CEO.
In this instance, the CFO rarely knows if the organisation is selling the right things at the right price for the right margin. And without that information, it is extremely difficult to gain a comprehensive view on how the business is running. During times where there is a lot of change or disruption, previously-held assumptions must be frequently updated to prevent poor decision-making.
Using AI technology to drive a better sales process
Using AI-powered technology that takes on the heavy lifting of data analysis a business can significantly improve its visibility and directly impact sales. Providing that insight means the business can focus on customer satisfaction and retention, and serving customers, who increasingly expect in the B2B space, a fast, frictionless, and personalised engagement when buying a product or service. Lessons learned in sophisticated consumer relationship management are now required in order to maintain B2B relationships – otherwise customers will go to a competitor that can deliver on that promise.
Through interrogation of customer and transactional data, AI can be used to understand the customer’s needs, their willingness to pay, and help create polished proposals supporting the Chief Revenue Office (CRO) and Chief Finance Officer (CFO) to drive more efficient and profitable sales team.
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Inconsistent pricing and reactive discounting loses revenue and accelerates price erosion. Those investing in a centralised AI-based pricing management solution can offer controlled dynamic pricing that automatically calculates and updates based on changing conditions, such as new tariffs and global trade fluctuations. This ensures that every B2B transaction is optimised for the unique circumstances of the deal.
A race to the bottom is not a strategy
For many CFOs there lies a frustration that even the most painstakingly calculated price and discount strategies are abandoned by their sales teams in the face of a deal. The rationale is so often that the unique and immediately different circumstances of the customer deal and potentially even dynamic raw material changes mean that no price list can cater for every event. The implication is that the pricing strategy however finely crafted is not implemented into day-to-day execution. By introducing a real time pricing engine built on the defined strategy but responsive to changing factors both internal and external, the decision-makers are back in control.
As businesses embrace the transformative power of digital technology, this also opens the opportunity to gain much deeper visibility into real-time efficiency of the business. That visibility should form part of the tool kit for key decision makers such as the CFO.
The modern CFOs’ toolkit
The increasingly time-poor CFO is being pulled in multiple directions. Which means access to data mined by AI is critical to the efficiency of decision making. They need – at all times – to have access to full customer transactional and behavioural data, as well as the financial analysis of its business impact. They then need the capacity to perform a range of analytics on that data to model likely behaviour for the future, with risk-based financial decisions, made by modelling the impact of changes on current business operations.
Finally, the CFO needs to be able to augment decision-making through the analytical capabilities of AI. It is transformative for finance leaders to be able to take advantage of a tool that performs complex segmentation and turns prescriptive insights into decisions that will ultimately optimise the right business outcome.
CFOs rarely have detailed visibility into their current sales process and therefore do not have the ability to understand all the opportunities to improve revenue and increase efficiency. With greater AI-powered visibility, the CFO can see through the noise. They’re able to optimise the current processes far more effectively and lay out the strategy for business transformation to more rapidly and reliably embrace new markets, new business models and respond to new competitive landscapes.
