Data Analytics makes up the foundation of the pyramid because it is at the core of pricing. Whether you are a $15k small business or a $150B Fortune 500 company, Data is created with every transaction and customer interaction. Client, Product, Financial data is collected at the transactional level and stored in the system that runs the business be it QuickBooks or an Oracle/SAP system. Competitive Data, Market Data and Industry Data can be gleaned by talking to customers and suppliers. It is critical that the data is organized in a way that makes it easy to extract and analyze. We will break data into 2 categories; Internal Data and External Data.
Extracting and organizing Internal Data takes skill. It could mean sifting through between hundreds, hundreds of thousands or millions of individual data points. Excel is the most common analysis tool. With some training, an Excel spreadsheet can sing, providing answers to your segmenting or trending questions. As you are storing more pieces of data, databases, Business Intelligence tools and financial software become a necessity as these are much better at aggregating large data pools.
Collecting External Data requires patience and dedication. Each conversation you have will provide you with insight. It is important to catalog this insight. You will also need to be proactive gathering this data. Competitive mining and Industry Trends should be actively researched and logged. This is time consuming but will reap benefits down the road.
Do not skimp on this first important step. Setting up your analytics will be time consuming but when done right should provide information at the push of a button. Sir Francis Bacon said, “Ipsa Scientia Potestas Est” or in English as “Knowledge is power”. Data and information make up that knowledge and will power your profitable pricing strategies.
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