The 3 Data Sets You Need for Pricing Software Implementation
Have you got all your data ducks in a row in order to implement pricing software? The better prepared your data leads to a faster return on investment (ROI) and avoiding any costly delays along the way. Consider for a moment the following fictional, but very realistic scenario that could potentially happen to you.
The Sales and Transactional Data Manager of a fictional company looking to implement pricing software, (let’s call him ‘Jim’) is the only guy who had access to the company’s transactional records for the past financial year and the information is held on an Excel spreadsheet on his external hard drive. Great, however, the issue is that ‘Jim’ is currently on 3 months long-service leave, currently living off the grid on sabbatical, enjoying his well-deserved digital detox in the Amazon Rainforest. The potential result; project implementation delays, increased costs to the company and longer time to ROI.
At Pricefx, we have more than a decade of helping companies get their data ready for successful pricing software implementation projects.
In this article we examine data readiness, the 3 main data types you will need to implement your pricing software ASAP, how to integrate them, and some tips on avoiding some possible ‘Jim-like’ moments along the way.
What is Data Readiness?
Pricing software requires data.
A pricing software solution is in all essence, a calculator; it brings data in, calculates and computes, then sends data downstream to make actions to see you through to whatever your business objectives are.
If you’re not ready and prepared to get the data out of your company’s systems, don’t start the pricing software project.
Your data will need to be as squeaky clean as possible. What this means is no duplicate records, the format for the data is consistent, and that it possesses integrity as the ‘sole source of data truth’ for your company in your pricing-decision making.
Depending on what your company wants out of pricing software, there may be other data you want to incorporate in your pricing software.
Try to know what that data might be straight out of the gates of your implementation project and have an idea of where and how you want to use it. The ‘when’ is also critical.
Having your data prepared ASAP, and before the solution configuration of your pricing project begins will be of huge assistance in decreasing your project’s implementation period and time to ROI.
What 3 Types of Data Do I Need to Implement Pricing Software?
Customer data, Product data and Sales and Transactional data are the core of any pricing project from price setting to price analytics, price quoting, rebate management etc., you name it. All pricing projects will usually require ‘the big 3’ data types, however, it may depend on what you want as your business’s goal in implementing pricing software.
For example, if for some (unusual) reason you don’t care about seeing the margin, the win-loss ratios or being able to understand the effects of tweaking the price up or down that applies to the sale of your products, you might not need transactional data.
Take into consideration that your business needs and objectives may change over time, and as such, the best possible scenario is to have all 3 data types prepared to implement your pricing software project. Your company can always use these data sets to grow additional functionality and data ‘subsets’ (such as accruals, business rules, formulas etc.) further down the path of the project.
Customer data is anything at all to do with your client base and their demographics. This could include age, locations, genders, professions, and other data segments captured during the inquiry/close of sale process with your clients.
By knowing your customers better through this data, you can reach out to your clients in a highly targeted and specific fashion, not to mention customizing their user experience. You can perform price analytics on certain customer geographies or market segments that your customers are involved in and optimize your prices accordingly.
Where to find and how to use Customer Data in a Pricing Project?
Most large-scale enterprise companies will store their customer data in a Customer Relationship Management system (CRM) or Enterprise Resource Planning (ERP) system, or other proprietary programs. Some companies may have even developed their own in-house software programs, or the customer data may even be stored in something as simple as an Excel spreadsheet.
Unique rules for generating prices, rebates, or promotions can be based on customer geography, industry, age, gender, engagement, behaviors, attitudes etc. The number of possibilities are only restricted by the number of data metrics that your company captures during sales, inquiries, surveys, form completions and other touchpoints.
Long story short, product data refers to any of the attributes (basic descriptions, segmentations and details of products, technical specifications, uses, types of materials that products are made from, components of products etc.) that describe the products produced, manufactured, and sold by any business.
Understanding your products and all the different components, ingredients and processes involved in their manufacture will be critical in setting accurate prices. In the current climate where raw material costs are fluctuating wildly and economies the world over are subject to the highest inflation rates in years, reviewing product data regularly will be critical to preventing leakage and maintaining the integrity of your profit margins.
Where to find and how to use Product Data in a Pricing Project?
Like your Customer Data, your updated Product Data should rest in your ERP or can sometimes be located in your CRM system. Identify the people responsible in your firm for updating the data, storing it, and keeping it current.
In addition to the factors mentioned above, product data can also be used to make direct comparisons between your products and those of your competitors and set prices accordingly. Product data can be a company’s greatest weapon to achieving growth and market share. Use Product data to gain market knowledge, improve your business results, and beat out competitors.
Sales and Transactional Data
Sales and transactional data refers to any information that is being generated (and tracked) during the sales of your products such as invoice records, receipts, sales order information, currency of transactions, sales quantities/ units of measures. freight and distribution costs etc.
Sales and transactional data tracking will enable your company to perform useful customer satisfaction and loyalty analytics, cost-cutting initiatives, track discounts and rebates offered, optimized pricing, and improved compliance to business operations. Furthermore, building a database of your historical sales will enable your business to make similar successful deals in the future, or alternatively, to learn from any errors
Where to find and how to use Sales and Transactional Data in a Pricing Project?
Sales and transactional data should rest in your ERP, or any other dedicated in-house system where your sales orders are created and tracked. Occasionally, the data can even be located in your CRM system.This data usually captures the time of the transaction, the place where it occurred, the price points of the items bought, quantities purchased, the payment method used, discounts or rebates applied if any, and other factors associated with the transaction.
Documenting all sales activities that have occurred in any business will empower any pricing initiative. Knowing occasions when your margins were realized (or not) and how and why is the final third leg of the data stool to enable pricing analytics and optimize pricing for the future.
How Can the ‘Big 3’ Data Sets be integrated into your Pricing Software?
Regardless of the data type, (Customer, Sales and Transactional or Product Data) integrating them into use in a pricing software project is usually undertaken by one of three different methods;
1. ‘File-based ’ (or sometimes referred to as ‘Manual’) Integration
A ‘so-called’ ‘manual’ or file-based integration uses a straightforward text file such as a CSV, XML, JSN or other type of data file, and uploading the specific file on a server into your chosen pricing software. It is not actually manual, but an upload of a text file that has been manually created. Double and triple check that the data you have in your manually produced spreadsheet, CSV, XML file etc. is free of any duplicate information. These are the simplest forms of integration and the easiest to manage and maintain. If your pricing software can read your data files, it can usually integrate it to your pricing software without any issues.
2. Dedicated Connector Integration – Purpose-built customized connectors
A dedicated connector to integrate your data to your pricing software is a purpose-built connector to facilitate information flow between your CRM or ERP and the software itself. Usually created in co-operation with a developer, these types of unique connectors are custom-built for tailor-made business requirements.
Connect your data from your CRM or ERP to your pricing software in a one-of-a-kind method that only your organization may need or require with direct connector integration. A dedicated connector integration process can potentially save you time, money, and expensive IT resources by eliminating the need to spend money on a full ‘connector set’ that may make up a superfluous API ‘package deal’ offered by a vendor.
3. Application Programming Interface (API) Integration
An Application Program Interface (API) is the most efficient way to integrate your data with your pricing software. APIs are most often built either by your pricing software provider and/or ERP or CRM system to transfer and share information between one another.
An API receives the request from your pricing software (like a waiter taking your order and sending it to the kitchen for preparation) and your ERP or CRM returns the data (your data ‘meal’ being delivered to your table) to enable your pricing requests in your software. As a neat security feature, APIs also act as a ‘data gatekeeper,’ managing what data is permitted for request and how it is received for process by your pricing software.
Different Industry Approaches to the 3 Main Data Sets
Different industries can have different approaches to data. For example, a retail business that is not involved in manufacturing products may have no reason at all to track raw materials indices and price shifts (other than for fuel and distribution costs of course), while a chemical or process manufacturing business will be all about tracking the costs of raw materials.
Fortunately, most modern pricing software is flexible and able to cope with the data demands of different industries. However, some pricing software vendors specialize in providing their services to certain industries, whilst others are great ‘all-rounders’ across all industries. Some pricing software is better at interpreting sales and transactional data to provide pricing insights, while other software brands may be potentially stronger in analyzing product data for example.
Whichever is the case, your data will need to be as clean as possible to implement pricing software and ready as soon as possible before the configuration begins. The wonderful thing is that usually your pricing software provider will work with you throughout the entire implementation process. Starting at the C or VP level of the organization and continuing to work with the entire team eventually drilling down to more granular information, meeting key personnel on what the design will look like and capturing that information. Usually in this process, the pricing software professionals will get increasingly granular into the data requirements that your business has and provide constant feedback and advice.
Have Your Data Ducks In A Row? – Time to Implement
Now you know what data you need to get ready to implement pricing software, why the distinct types of data are important and where to find them. Remember, that critical data should not be sitting on Jim’s external hard drive when he is on sabbatical rediscovering himself with a Peruvian shaman at Machu Picchu, and meanwhile, your company’s pricing software implementation is grinding to a halt.
If you’re interested in reading more from our experienced pricing professional team at Pricefx on data readiness and other factors that can affect your pricing software implementation time, check out this article now: