Optimizing Medical Device Gross Profits with Dynamic B2B Margin Analytics Platform - Case Study

Enhancing pricing and discounting analytics to strengthen margin management for a leading med-tech company.

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SITUATION

A leading med-tech company aimed to improve its pricing and discounting analytics capabilities to enhance margin management.

The company struggled with visibility into macro insights, granular price, margin leakage drivers, and managing discounting discipline among sales teams.

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The client, operating in North America and Europe, faced significant challenges in effectively managing its pricing and discounting strategies. There was a notable lack of visibility into macro-level insights and an inability to access the granular drivers behind price and margin leakages.

This hindered their efforts to maintain robust margin management discipline.

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  Furthermore, the sales teams needed help managing discounting practices systematically, leading to inconsistent pricing strategies across different regions and product lines. To address these issues, the company sought to build an in-house Margin Analytics solution for its largest business units.

  The goal was to enhance decision-making capabilities and empower sales teams with the insights needed to optimize pricing and margin management.

Dashboard Concept co-created with Stakeholders

ACTION

Revology Analytics partnered with the company to implement a six-step engagement process, developing a Margin Analytics platform that included executive dashboards, in-depth analyses, and training modules for sales teams.

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The company partnered with Revology Analytics to tackle these challenges due to our expertise in Revenue Growth Management and Advanced Analytics. We implemented a six-step engagement process to develop a comprehensive Margin Analytics solution:

1. Understand Critical Pricing Problems: Identified and defined the core pricing and margin management issues.

2. Split the Problem into Sub-Components: Aligned on the solution concept by breaking the problem into manageable parts.

3. Iterative Alignment Sessions: Conducted regular sessions with executive stakeholders and the core team to ensure alignment.

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  4. Minimum Viable Analytics Solution:** Developed an initial solution and collected feedback from key users.

  5. Launch Production Version: Based on feedback, we launched the final production version of the Pricing Excellence platform.

  6. Training and Playbook Development: Created training modules and a playbook to drive tool adoption among sales teams and functional leaders.

  The Margin Analytics platform was designed to include an executive dashboard, detailed analyses of Net Revenue and Profit growth drivers, assessments of discounting practices, and evaluations of customer-level pricing and margin opportunities. The concept and design of the solution were aligned with client expectations, and a Minimum Viable Analytics solution was developed within four weeks. We also created comprehensive training modules to ensure widespread adoption of the tool across the global commercial organization.

Sample Margin Analytics Platform modules

Initial Concept Document for Margin Analytics Platform

OBSTACLES

Decision-makers lacked quick access to insights for fixing price and margin leakages.

Sales teams needed help understanding the top customer and product-level opportunities, leading to inconsistent discounting practices.

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The company faced several obstacles that impeded its ability to manage margins effectively. Decision-makers struggled to access timely insights to identify and address price and margin leakages.

This delay in obtaining critical information often resulted in missed opportunities to optimize pricing strategies.

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  Sales teams faced challenges due to a lack of pragmatic insights into customer and product-level opportunities. This knowledge gap led to a wide dispersion of price discounts offered by different sales representatives for similar customers and products.

  The inconsistency in discounting practices eroded margins and affected the overall pricing discipline within the organization.

  The absence of a systematic approach to managing discounting practices further complicated the situation.

  Without a clear framework, sales teams found it challenging to make informed decisions, leading to suboptimal pricing strategies that impacted the company’s profitability.

Example of a Gross Profit $ Deep Dive module built in Tableau

RESULTS

Implemented in under 90 days, the Margin Analytics solution improved Net Price realization and enhanced discounting behavior and price realization, laying the groundwork for a value-based pricing journey.

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The Margin Analytics solution was successfully implemented in less than 90 days, leveraging the client’s existing technology stack, including Tableau. The rapid deployment allowed the company to address its pricing and margin management challenges quickly.

As a result, the company improved its Net Price realization within the first year by identifying and addressing previously unnoticed price leakage and margin erosion drivers. The platform enabled the organization to understand better various factors impacting its gross profits, leading to more effective discounting behavior and enhanced price realization.

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  The insights provided by the platform empowered the company to develop more targeted and strategic pricing strategies at both the customer and product group levels.

  This strategic shift improved profitability and laid the groundwork for a value-based pricing journey. By aligning their pricing strategies with the value provided to customers, the company was able to refine its approach and strengthen its market position.

  Overall, the Margin Analytics solution facilitated better decision-making, improved financial performance, and positioned the company for sustained growth in the highly competitive med-tech industry.