Removing Risks in Resegmentation

If you get your segments wrong, you can skew the data that you use for decisions across your organization. Bad segments generate increasingly inaccurate data, causing a cascade effect where bad data leads to decisions generating more bad data.

Here are a few short illustrations of gross profit losses that can happen when your segments are incorrect:

• You raise the prices on high-margin customers because they fall into the wrong segment and price them out of future sales.
• You increase prices without a corresponding increase from your vendors which raises the ire of your best customers.
• Your historical pricing highs and lows can skew the data toward the lowest common denominator.
• You implement your new pricing matrix changing pricing without a corresponding price increases from your vendor, so your customers are mad and confused.
• You miss products that should be included in VIP pricing agreements, angering your best customers.
• Customers talk to each other and without a clear strategy driving your pricing conversations you face increased downward pricing pressure.
• Your sales reps increasingly override your pricing guidelines because they do not understand or trust your segmentation.
• Customers in the wrong segment with incorrect pricing fall off the radar—they stop calling but no one knows why.

Fortunately, epaCUBE allows you to pull back the curtain on segmentation and continuously improve your gross profits through better segments. We further reduce the risk for you by allowing you to test a what-if analysis of your new segments before putting them into play.

Photo credit: Derek Gavey