KCRA: What does your firm do?
Cross: Revenue Analytics is a consulting firm with a focus on driving organic revenue growth for Fortune 500 companies. We leverage large volumes of transactional data to derive insights into customer behavior as a basis for optimizing pricing, product mix, inventory, and availability. Our analytical models leverage sales, product, competitive, customer and other relevant data to provide dynamic recommendations based on demand, price sensitivity and competition. Our solutions are often used to help clients manage pricing, merchandising, inventory and marketing decisions.
KCRA: Is your firm being impacted by Big Data?
Cross: We feel like we’ve been doing big data for years, it just wasn’t called that. We are able to collect point-of-sale transaction data on tens of millions of products for national scale retailers with thousands of store locations and then use this data to build actionable insights. Big Data is becoming more actionable. For example, we can now produce a dynamic pricing analysis on real time web traffic to provide tactical pricing that drives demand toward our client’s products. Click stream data can be leveraged as a leading demand indicator in our pricing and promotional frameworks, so if a product is getting traffic, but the traffic is not resulting in transactions, there is a possibility that the product may be mispriced relative to the competition.
KCRA: What trends do you see among your clients?
Cross: Clients vary greatly in their use of pricing analytics, but we see growing adoption. When a client has thousands of products at thousands of locations, it is difficult to understand underlying dynamics without data analytics. More people are seeking analytical assistance, rather than resisting it. While travel and hospitality are among the most advanced users of pricing analytics, other sectors such as retail, automotive, entertainment and amusement, are coming around. With pricing more transparent on the web, companies realize they need to get a handle on their web data and become more dynamic in pricing.
We find that even really sophisticated companies need help in finding new ways of doing things to get better. For example, we never thought we would be doing as much work as we do in the travel and hospitality space as they were already far ahead of the curve, but we find they are always looking to do more.
KCRA: Do other firms have pricing practices?
Cross: As with clients, consultants vary in their degree of sophistication toward pricing. When a firm says they have a pricing practice, it means something different at each firm. Many of our competitors still focus on doing a one-time, static study of historic data in developing a pricing strategy. We feel what we do is far more sophisticated; our business model consists of strategy consultants, PhD mathematicians and software engineers in close collaboration with the client to develop true decision support capabilities, which often include complex linear programs with price optimization models. We then spend a great deal of time building the business intelligence capabilities and facilitating change management at the client site.
KCRA: What do you see in the future?
Cross: It can be a big investment by the client to build a proprietary system and an analytics team to support it. As such, many clients have asked us to run and manage their revenue data and analytics as a managed service. While there is scope to use some pre-figured platforms, frameworks and tool kits to accelerate the process, thus far, we find that each project is unique and requires a high degree of customization to reflect different available data, different systems, or even different strategies among clients in the same industry. That being said, we have invested heavily recently in developing more tools and accelerators that can meet this growing client need.