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A Data-Driven Pricing Strategy unlocks Revenue for these Portfolio companies

Success through data analytics is possible and incredibly valuable.

Many private equity companies gather large amounts of data, but collecting data is only one of the necessary steps to transforming into a truly data-driven organization and increasing profitability. Data-driven, dynamic pricing strategies can help provide PE firms and their Portfolio Companies with the critical insights they need to positively impact their bottom line.

While many organizations understand the importance of data analytics, key challenges often exist when it comes to creating a strategic pricing plan:

  • Data silos add complexity and often stall Data-Driven Pricing initiatives 
  • Adoption of new data driven processes and/or technology fails
  • Stalled Projects due to Data Architecture, project team bandwidth and lack of expertise 

Success through data analytics is not only possible, it’s also incredibly valuable. What your organization does with your data and the action you take upon its analysis can make a tremendous impact on profitability and your Value Creation plans. 

The Path Toward Data Analytics Success

Data-driven decision-making is being employed across organizations of all sizes, particularly those looking to grow quickly. According to Kellogg School of Management Professor Joel Shapiro, data analytics drives a major impact because it provides input based on real intelligence—and can prove what previously had only been perceived. Ultimately, it creates a solid foundation for business decision-making and ongoing growth. 

Business applications for data analytics can include forecasting, financial modeling, customer targeting and market analysis. For rapidly growing PE-backed companies in particular, analytics can provide tangible ROI and a fresh competitive advantage. Now is a great time to re-examine your data analytics tools and capabilities in order to set the stage for a more dynamic pricing approach.

Portfolio Company One: Data Analytics in Action

The benefits of establishing a dynamic pricing strategy offer strong use cases for a data analytics program, but many organizations miss out on the opportunity and potential additional profit. Recently, Messina Group partnered with two different portfolio companies to evaluate their pricing strategies and help improve their profitability using data. In the first example, we worked with a fast-growing, private equity-backed $250 million national pallet company

The company had a number of locations across the United States, but each location had fluctuating prices for the buying and selling of pallets. It sought to improve its profit margins by developing and implementing a data-driven pricing strategy. This company had already spent months working with another analytics vendor and had already invested substantial budget, time and resources. Unfortunately, that data analytics engagement with the other vendor produced no results and the company was seeing very little progress and no ROI. That’s what led their Private Equity owner to call in Messina Group.

“This company … had already invested substantial budget, time and resources. Unfortunately, that produced no results”

After evaluating their current state, our experts collaborated with the pallet company to deploy a custom NetSuite integration solution. We created a robust cloud enterprise data warehouse (EDW) to identify real-time, historical and predictive pricing elements by market, customer, supplier and product. Using this EDW, prescriptive actions are able to be funneled to market managers for seamless results. 

The predictive pricing strategy deployment took place in two phases, each with a three-month duration. Messina Group team worked closely with key contacts throughout the organization to review the current pallet pricing strategy and determine how it could be improved on both the buying and selling side of the business. 

Once complete, the predictive pricing strategy quickly realized ROI. In less than one year, the company generated more than $3M in added profit. The new strategy helped to identify average purchase costs as well as improve the pricing of pallets sold across all markets. The advanced analytics platform has also enabled additional operational improvements—and has over time become a critical component of indoctrinating a company-wide data-driven culture. 

Portfolio Company Two: Rapid Growth and Improved Gross Margin

In another recent example, Messina Group worked with a rapidly growing PE-backed pharma company with organic growth plans to triple revenue by 2025. As a part of these ambitious growth initiatives, it had goals to double its national sales team size and improve overall sales productivity while reducing the cost of sales. In addition, it sought to utilize data analytics to help improve gross margin (GM) as it continued to quickly grow. 

“These new pricing insights enabled the organization to improve GM by greater than 10% the first year.”

Working closely with Messina Group’s analytics consultants, the client unlocked access to cost and pricing insights by gathering and consolidating the data collected from all client quotes. This included custom quotes from their manufacturers as well as their client pricing quotes. We then designed and created customized business intelligence dashboards that provided the prescriptive insights needed to empower the company’s sales reps to better negotiate purchase prices from their vendors as well as negotiate higher, market-based client sales prices. As a result of the data integration and analytics solution from Messina, these new pricing insights enabled the organization to improve GM by greater than 10% the first year.

Messina Group’s Data Analytics Approach

Messina Group proudly works with our clients to introduce new, data-driven processes and build improved pricing strategies using advanced analytics. This next-generation business intelligence can transform organizations by seizing the value of data and empowering decision-makers with insights and analysis to make better business decisions. 

While the idea of implementing these new processes can seem overwhelming, Messina Group is focused on making sure our clients realize value. Our blend of functional and technical expertise with our keen business acumen ensures your organization maximizes business value creation with every initiative. From robust data management platforms and self-service analytics to rich visualizations that fuel actionable insights, our analytics practice focuses on giving our clients a competitive advantage.  

Why is now the right time for your organization to consider data analytics? As shown above, our analytics services span from creating strategic transformation roadmaps all the way through step-by-step execution to help our clients realize the most business value from their data. 

Are you ready to unlock revenue by leveraging your data to create a proven pricing strategy? Contact us to learn more about how we can help you create value for your organization.

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