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Chemical Industry Sales: Making Data Driven Decisions

May 15th, 2024 | 10 min. read

By Garth Hoff

In the ever-evolving terrain of the chemical industry, businesses grapple with a perpetual dilemma – the inefficiency of conventional pricing methodologies to adapt swiftly to volatile commodity prices and discern the intrinsic value of end-products. The era of depending on conjecture, intuition, and unwieldy spreadsheets has concluded. A demand for a revolutionary sales and pricing strategy has emerged.

Having devoted over a decade to partnering with and supporting our clients in the chemical industry, Pricefx has been instrumental in establishing automated, real-time pricing processes tailored to individual customers. Our overarching objective is to not only optimize pricing strategies but also to serve as a guiding force for your sales departments. By leveraging data-driven decisions, our aim is to enable businesses to work smarter, not harder, fostering profitability and fortifying them for sustained success in the evolving landscape of the chemical industry.

This article stands as a roadmap for instigating data-driven sales decisions within the realm of the chemical industry, emphasizing the pivotal role of pricing software in catalyzing a transformative paradigm shift by the following four means.

1.   How Pricing Data Analytics Can Assist Targeted & Profitable Chemical Industry Sales

The Challenge: Navigating the intricacies of the chemical industry demands more than conventional data analytics tools can offer. Even sophisticated options like Tableau or Microsoft Power BI, while visually appealing, often lack the depth required for actionable insights. These tools excel at descriptive analysis but fall short when it comes to predictive and prescriptive functions.

The Solution: Step into the realm of pricing software’s Pricing Analytics—a dynamic data science solution designed to bridge the gaps left by traditional tools. Unlike Business Intelligence Software (BIS), Pricing Analytics is not just about style; it is substance. It elevates the analytics game by delving into predictive and prescriptive analysis, offering a comprehensive suite of functionalities.

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In contrast to the limited scope of BIS tools, Pricing Analytics interprets and predicts the impact of prices on strategic business goals. Its broader scope, enhanced data integration capabilities, and specialized skillset set it apart, making it an indispensable powerhouse for chemical companies seeking profound insights into their pricing dynamics.

 

The Practical Sales Application: Consider a scenario in which a chemical company manages a diverse product range, each with its own set of dynamic considerations—production costs, profit margins, and regional market nuances. Pricing Analytics transforms complexity into simplicity by seamlessly integrating these factors into a unified pricing rule. The result? Automated price calculations on a global scale that go beyond data visualization. Pricing Analytics empowers chemical companies to leverage advanced analytics for strategic, informed decision-making.

In essence, Pricing Analytics is not simply a tool; it’s a strategic ally for chemical industry professionals aiming to enhance their sales approach. By unlocking the power of predictive and prescriptive analysis, Pricing Analytics becomes the compass guiding targeted and profitable sales efforts in the dynamic landscape of the chemical sector.

2.   How KPIs and Benchmarking Gives Confidence to Your Sales Team

The are often used buzzwords – Key Performance Indicators (KPIs) and Benchmarking – but what do they really mean, particularly in the sphere of chemical pricing.

KPIs are internally facing incremental improvements – validating the success of process and margin improvement over time.

Benchmarking is external facing to see if you are best in class against others in the chemical industry.

Access industry benchmarks quickly to compare KPI metrics with other chemical industry companies, identify market trends, and make swift data-informed decisions that supply your sales team with insights never before possible with manual pricing.

If your business is doing that, you can assess opportunities for improvement promptly to inform your strategy and enhance pricing processes rapidly over time.

 

 The Challenge: In the realm of pricing, benchmarking has traditionally posed a significant challenge. Claims of comparative performance often lack substantiated data, particularly in the intricate field of pricing. For chemical companies, the need extends beyond benchmarking within their industry; there is a necessity to gauge performance against top performers in various sectors.

The Solution: Enter Pricing Software benchmarking tools like our own Pricefx Plasma—a transformative tool specifically designed to address the longstanding challenges in benchmarking, especially in the pricing domain. Pricefx Plasma emerges as a pivotal solution, offering insights not just within the industry but also across diverse sectors. For those in the chemical industry, this signifies a shift from solely understanding performance within their niche to benchmarking against industries that exhibit greater agility and responsiveness.

The Practical Sales Application: An insightful way to harness the data power of a benchmarking tool in the chemical industry might involve identifying the percentage of deals conducted outside the company’s established discount guidelines.

Consider a chemical company that has seamlessly integrated a benchmarking tool into its sales operations. Analyzing the data visualization, it becomes evident to the Sales Team that the company is achieving remarkable success with the team adhering to the pricing guidance provided by the pricing software, effectively staying within the recommended pricing corridor.

For example, if the company exhibits an exceptionally low percentage of deals outside its discount guidelines, this signifies an exemplary performance in maintaining pricing discipline. Such a scenario strongly indicates that the sales team is not overly reliant on discounting tactics to secure deals, suggesting a potential implementation of a value-based pricing strategy.

This success story goes beyond numbers; it reflects a cultural shift within the organization. The sales team’s alignment with pricing guidance implies a collaborative approach, likely extending to other departments. The Sales Team might be actively engaging with the Purchasing Department to facilitate proactive pricing adjustments in response to cost changes. Furthermore, collaborations with the Finance Department could be occurring to align pricing strategies with overarching strategic goals.

In this way, the practical application of a benchmarking tool like Pricefx Plasma in the chemical industry extends beyond mere benchmarking. It becomes a catalyst for strategic collaboration and informed decision-making, empowering sales teams to navigate the complex landscape of pricing with finesse and precision.

Learn more about Pricefx Plasma and its practical applications here:

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3.  Empowering Sales with Data – Reduce Unnecessary Discounting by Evaluating Competitive Price Match Requests

The Challenge: In the intricate landscape of the chemical industry, Sales Managers and Representatives, and Pricing or Product Managers face a multifaceted challenge. The business often deals with customers priced on a market basis for a particular product, with many customers spreading their business across multiple suppliers. Competitors, seeking to lure customers away by lowering prices, pose a constant threat. The challenge lies in swiftly and effectively evaluating these situations to respond appropriately and retain valuable business.

When a customer presents a competitive price challenge, the expectation is for an immediate and knowledgeable response. However, the process currently involves the Sales team conveying the situation to the Pricing and Product teams, often resulting in delays. These delays, attributed to factors such as the lack of comparative pricing data, availability of personnel, and communication complexities, can lead to lost business opportunities. There is a pressing need for a streamlined system that can facilitate rapid responses in the face of competitive challenges.

The Solution: To overcome this challenge, the imperative is to leverage the data from a system that enables Steam across departments to submit price requests and receive automated analyses of competitive situations promptly.

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Advanced pricing software is specifically designed to address such complexities. This system leverages relevant pricing data from similar customers, ensuring an immediate response by capturing the attention of the required pricing approvers.

The Practical Sales Application and its Result: Implementing a sophisticated pricing software solution translates into tangible benefits for Sales or Pricing Analysts, Sales Representatives, and Pricing or Product Managers in the chemical industry. One of the key advantages is the retention of existing business at pricing levels that align with the market’s dynamics. The system’s prowess in delivering rapid and precise responses to competitive challenges ensures that the organization not only retains its market share but also sustains profitability in the face of fluctuating market conditions.

As organizations navigate the competitive landscape, the effectiveness of this solution is quantifiable through strategic key performance indicators (KPIs). These indicators provide a comprehensive view of the system’s impact on specific deals and cumulatively on the overall business performance. Metrics such as total volume, revenue, gross margin, or contribution margin at risk become measurable parameters, allowing for a nuanced understanding of the risks associated with each deal.

Furthermore, tracking the cumulative win/loss percentage offers valuable insights into the organization’s success in retaining business amidst competitive pricing challenges. This data-driven approach empowers the organization with actionable insights, enabling informed decision-making. By proactively addressing competitive pricing scenarios, the organization strategically safeguards its market position, reinforcing its resilience in a dynamic and evolving industry landscape.

 

4.  Using Data to Address Customer’s Product Choices Under Constrained Supply

The Challenge: In the intricate landscape of the chemical industry, conventional data analytics tools prove insufficient when faced with the complexities of navigating supply constraints arising from limitations in raw materials or production capacity. Even sophisticated options like Tableau or Microsoft Power BI, though visually appealing, often lack the depth required for actionable insights. Their strength lies in descriptive analysis, yet they falter when it comes to predictive and prescriptive functions.

The Solution: As we explained earlier when explaining using data for targeted selling, Pricing Analytics is not merely about style; it is substance. Pricing Analytics interprets and predicts the impact of prices on strategic business goals. Its broader scope, enhanced data integration capabilities, and specialized skillset distinguish it, making it an indispensable powerhouse for chemical companies in pursuit of profound insights into their pricing dynamics including navigating periods of constrained product or raw material supply.

Navigating Supply Constraints: A Practical Example: Consider the scenario where a chemical company faces raw material shortages impacting two distinct products. For the Pricing or Sales Manager, leveraging advanced pricing tools becomes paramount for swiftly assessing the economic viability of supplying each product to different customers.

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This empowers salespeople to make data-driven decisions, ensuring the allocation of constrained supply to customers yielding the highest margins, thereby maximizing revenue for the business.

Implementing Your Sales & Pricing Strategy with Pricing Software

Having explored these 4 methods to help your sales teams make more data driven decisions, the path to modernizing your chemical company’s pricing strategy becomes clearer.

The chemical industry demands sales captains who wield the compass of data-driven insight, who see opportunity in the storm, and who steer their vessels towards uncharted horizons of success. This article is more than just a map; it is a rallying cry, an invitation to join the data-driven odyssey.

Do not let your ship stagnate in the harbor of indecision. Raise the sails of exploration, equip your vessel with the arsenal of quality pricing software like Pricefx, and embark on a journey towards a future glistening with profitability and growth.

Want to learn more about engaging your sales team to follow your data-driven sales guidance? Check out this handy article below to deep dive into the topic:

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Meanwhile, happy data-driven chemical sales!

Garth Hoff

Director, Industry Strategy , Pricefx

Garth Hoff is a 15-year veteran of the pricing industry. He has real-world practitioner experience as a Director of Pricing Strategy, and also pricing software and services leadership experience leading solutions, strategy, sales, product management, and marketing teams. His experience encompasses products, services, B2B, B2C, and e-commerce functions at Ascend Performance Materials, IHS Markit, PROS Revenue Management, Orbitz.com, United Airlines, and General Motors – Delphi Automotive Systems. In his current role at Pricefx, Garth focuses on providing companies with a future vision of what is possible with pricing software while also helping them to make the best possible decision when investing in software.