Discover how AI is revolutionizing pricing strategies for businesses. In this article by David Anderson, VP of Business Consulting at Vendavo, learn how pricing automation, data analysis, customer behavior prediction, and price optimization work together with professional pricers to achieve better outcomes.
Despite the explosive success of the generative AI application, ChatGPT in 2023 and other large language models like it, AI isn’t new. According to a March 2023 Statista Report, the global total corporate AI investment from reached $94 billion in 2021 – a staggering 6X investment increase since 2016.
Machine learning and AI algorithms have been increasingly instrumental in helping businesses automate processes, gain insights, and predict outcomes. But the launch of consumer generative AI, like ChatGPT, Midjourney, and AudioLM,bring the possibilities of AI to life for many people by generating new outputs like text, images and audio, respectively. These types of models are based on training data iand continuously with the prompts users provide. It’s definitely a game-changer.
As Accenture researchers point out, AI is reinventing work and every role has the potential for disruption. Their 2023 Tech Vision study reveals 98% of global executives agree AI foundation models will play an important role in their organization’s strategies in the next 3-5 years. The persistent question is, how?
Pricing automation fueled by different types of AI has proven (over, and over again) to be the right move for most B2B teams. It will generate, in simple terms, just what a human would but faster, and continuously:
- Compile price data from the web
- Factor in business rules and costs, etc
- Analyze data
- Make pricing recommendations
- Monitor the market and competitors’ actions and adjust as necessary
AI will not eliminate the need for pricers. On the contrary, automation uplevels the output professional pricers can deliver by eliminating the need for repetitive, manual tasks and freeing them up for more strategic work.
When it comes to pricing, responsible innovation needs to come at the intersection of AI technologies and human collaboration. Bringing together data from disparate systems is enormously beneficial but to arrive at the right price, at the right time, for the right customer, every time, a hybrid approach where humans and machines work together for the best possible outcome is required.
AI, the Professional Pricer’s Co-Pilot
Machines doing data-intense work saves time, helps workers be more efficient, and empowers sales teams to be effective and confident when meeting clients and prospects. But none of this should be done by AI alone. Instead, professional pricers benefit from intelligent teamwork with AI in the following ways:
- Data Analysis – AI technology can analyze vast amounts of data quickly and accurately, removing the otherwise time-consuming, manual (and yes, painful) process pricers go through to identify patterns. Lack of customization capabilities can sometimes be an issue with ‘AI out of the box’ solutions however, given the nuance and human-powered expertise that is crucial. Instead, pricers are finding success co-piloting with AI.
- Customer Behavior – Accurately predicting what your customers will do using predictive analytics is one way to improve margins, but most pricers are inundated with the pertinent information required to calculate such a forecast, including market changes, supply chain disruptions, and the changing economic outlook. AI can effectively bring disparate information sources together and accurately formulate, with a degree of certainty, what to expect.
- Price Optimization – AI fuels price optimization efforts by quickly analyzing new or existing data and delivers timely pricing suggestions that maximize your competitive edge. Relying on flexible pricing logic, pricers can easily scale prices across all operations, geographies, channels and catalogs. For more, see Vendavo Deal Price Optimizer.
We would be remiss if we didn’t mention that because so much of AI is based on training there is always an inherent risk when data is inaccurate or biased.
Despite the newness of ChatGPT and drive of other generative AI applications, AI has been fueling price automation for some time. It has transformed the role of pricers everywhere, helping them work smarter, not harder. The key is to use AI as a copilot to sell and price products, and better serve customers. Vendavo users have the flexibility to oversee, refine, and manage with the AI algorithms, enabling a harmonious blend of human and machine intelligence.
Visit our AI Insights hub for more on the evolution of Artificial Intelligence.