Why Big Data is like teenage sex in B2B pricing

“ Big data is like teenage sex: everyone talks about it, nobody really knows how to do it, everyone thinks everyone else is doing it,
so everyone claims they are doing it.”

posted economist Dan Ariely in 2013. Have things changed since then? Is it any different in B2B pricing where every cent matters?

One of my favorite questions to the audience when I present at conferences is the following: “What percent of Fortune 1000 companies can pull correct transactional data quickly?”

The answer options I usually give are 0%, 23%, 65%, 90%. What do you think is the most common answer? (I should add that I define “correct” as within 90% of a company’s financial reporting and “quickly” as within a week.)

Most managers select 23%.

And then they stare at each other in disbelief because everyone thought their company was the only one still struggling with this.

Knowing who buys what at what price requires forensic skills

Why is this so important? Transactional data is the core ingredient of any B2B pricing effort: Unless you understand which customer buys what exact product at what exact price it is impossible to run any meaningful analyses. That’s why in every B2B pricing project (and I have done close to a hundred) the first thing we ask for is a transactional data pull. On average, it takes six weeks (!) to get the data right with 80%-90% of the effort being a manual correction of dozens of structural flaws in the transactional data. The most common (but by no means the only) flaw is that special rebates, year-end kickbacks, and other typical price leakages are not captured at the transactional level nor anywhere else in the data warehouse.

Smart B2B pricing is still about human skills and experience

As long as data imperfections in data collection persist there is every reason to believe that pricing software will remain in the “trough of disillusionment” per analyst firm Gartner’s hype cycle for CRM and sales solutions.

There are many additional reasons why Big Data analytics still fail as Ian St-Maurice explains in his excellent post. Usually well-informed sources tell me that more than half of the hardware/software bundles sold to drive Big Data analytics are “shelfware”. That means that companies have spent six figures or more on a solution only to let it gather dust on the shelf and not use it!

Key lessons for Big Data in B2B pricing

1. In B2B pricing, big data alone will not save you because the two classic quips apply:

“Junk in, junk out!”
“A fool with a tool is still a fool!”

1. B2B pricing is all about optimizing decisions in the absence of perfect data – by building the right strategy, behavioral transformation, and the right processes.

Ten years ago I thought that by now these issues with transactional data would have been fixed, given the billions and billions of dollars invested in ERP software and data infrastructures. The sad truth is that I do not see any improvement. So my personal answer to the question above - having done this more than a hundred times - is very clearly 0%!

Frank Bilstein is a Düsseldorf-based partner in A.T. Kearney’s Strategy, Marketing, and Sales practice, leading the firm’s global pricing activities. With more than 150 B2B and B2C pricing projects globally, he is arguably one of the world’s most experienced pricing consultants. He can be reached at [email protected].