Create New Segmentation Strategies

A Powerful Add-on to Price Optimizer

Before optimizing pricing with their current segments inside of epaCUBE Price Optimizer, many distributors find that their segmentation is too simple and lack the depth and definition needed for a truly optimized pricing strategy. Perhaps they have segmented their customers into small, medium and large groups or added industry codes or even gross profit levels. Unfortunately, that may not be granular enough.

epaCUBE Segment Creator is an add-on module that allows you to create new customer or product groups and conduct a what-if analysis of the impact of that segmentation before making your new segmentation strategy live inside your back-office or ERP system. These new segmentation strategies might include things like:

  • Buying Power. You may want to group customers together not just based on their sales figures, but also based on the breadth of product they purchase from you. How many product lines do they buy from you compared to other customers? What is their consistency, recency and frequency? How long is their time between orders? How many times did an item show up on one of their sales orders?
  • Profitability. Compared to others and their own history, is their margin and gross profit going up or down?
  • Average Order Size. Many distributors estimate that it can cost between $50 to $150 or even more to process a single order. Customer with larger order sizes tend to be more profitable and you may want to consider segmentation based on order size.
  • Cost to serve. The cost of serving a customer can span a variety of dimensions. You might look at average days to pay. You might look at their product mix, as customers who buy more A and B products tend to be more profitable than customers who buy C and D products.

Unfortunately, conducting a resegmentation project can be a challenge. How do you know you are using the right information? How do you know what the impact of your new segmentation strategy will be without testing it in the market. How do you keep your best sales reps from arguing against your new strategies before they even take shape?

Using epaCUBE Segment Creator takes the risk out of resegmentation by allowing you to experiment with new segments based on your own market knowledge and then conducting a what-if analysis inside of epaCUBE Price Optimizer. epaCUBE pricing experts will personally lead you through a methodical and well defined process that leverages the power of epaCUBE’s Segment Creator to quickly and efficiently establish and refine proper segmentation that is the foundation of optimized strategic pricing optimization.