[EN] How to analyze your sales to generate sustainable profitability

In previous articles, we've discussed what Revenue Management is and the techniques and tools it offers to make any type of business more profitable. But how can you implement it effectively?

Implementation always depends on the size of your business and the number of people available, but generally, a phased approach is preferable. At datalemons, we've defined four key stages that will serve as a guide for implementing Revenue Management in your business.

1. Understand what's happening in the business

   The first step is to comprehend what's occurring with your sales and profitability. For this, it's essential to have dashboards that show the evolution of key variables (such as sales, orders, average ticket, among others) over time. Additionally, it's important to conduct an analysis that helps you understand variations, like the Price-Volume-Mix analysis. This will allow you to evaluate what's changing and why, which will be crucial for measuring the performance of the strategies you implement.

   In addition to the Price-Volume-Mix analysis, we recommend establishing business rules or using traffic light systems that help you quickly identify products or categories with the greatest variations in sales.

2. Analyze and optimize your prices

   To facilitate price analysis, group products into comparable segments. A good practice is to create these groups thinking as a customer would when comparing different products of the same type, asking themselves "which one should I choose?". This way, analyses will be conducted from the customer's perspective.

   Once the groups are defined, compare prices using both unit and measure-based indices. For example, if you're comparing beverages, you can do it per unit and also per milliliter. You can perform this same exercise both with your products and comparing them with those of the competition.

   Analyze the results and conduct tests by modifying your product prices, always thinking about making sense for your customers.

3. Segment and personalize

   Depending on the type of business, you can further personalize the experience and price to obtain better returns. In a B2C (Business to Consumer) environment, the focus is usually on personalizing the experience. In this case, we recommend using algorithms that segment customers based on their preferences and behavior, to communicate products and services that incentivize purchase and profitability.

   In B2B (Business to Business), it's more common to differentiate prices, as there are generally differences in the conditions offered to different clients or in their willingness to pay. In this case, we recommend developing a commercial policy that clearly defines prices and helps control their dispersion.

4. Advanced evaluations

   Finally, we recommend implementing more advanced models and tools, such as a predictive sales model to anticipate what might happen in the future, a causal analysis model that allows understanding the impact of prices, promotions, and other factors on sales, or a financial analysis model that evaluates product profitability.

While there are many other studies and tools related to Revenue Management, the foundation we've defined in this article covers the most important aspects.

At datalemons 🍋, we've already developed these tools so you don't have to. By simply syncing your data, we take care of all the analysis and model creation, so that in just a few hours you can harness the power of Revenue Management.