A global energy company was struggling with a pricing visibility problem for 10 years before they sought the help of Datamine.
The commercial branch of this energy company was offering a variety of goods at varying prices for their customers, with pricing changing sometimes daily. The company would only have insight to whether this branch (and its products) was profitable or not in retrospect through irregular financial reports, meaning there was a lack of strategic planning or stocking that maximised profits. This way of operating meant customer and pricing decisions were made on hunches rather than concrete evidence and they were leaving millions of dollars on the table every year.
They brought in Datamine to help them establish total visibility over their profits, down to how much margin each customer was generating. This involved processing data like each customers’ transaction history, the price point it was purchased at and correctly identifying cost of goods on any given day.
We first had to understand what data was available. It was then cleaned, sorted and run through a custom-built profitability model. During collaborative sessions with the company, we helped them align on the business logic for cost of goods and profit calculations. From there, we put it all together to form a single view - this included:
Customer pricing plan, and buy price of goods on each day
The discounts customers were getting (or not getting)
Volume of product sold
When and where it was bought
A full cost of goods buildup including logistics and levies
We could then deliver comprehensive Profitably Reports with clear visibility over total volume and total margin to a daily level, plus insights into individual and group customer performance.
Within 10 weeks we had solved the challenge they had been battling for 10 years.
The company decision makers now have clarity over profits on any given day, allowing them to plan pricing and discounts better, celebrate loyalty and focus energy on high-value customers. Pricing decisions can be made on concrete data rather than guesses or outdated reports.
The reports also immediately uncovered a whole host of customers that were incorrectly priced, over-discounted, and in some cases were receiving double rebates in error. They then corrected these errors, saving them millions of dollars in leakage.
During the process, we made another interesting discovery: 10% of their customers made up around 80% of total yearly margin (a very concentrated “pareto” effect). This insight unlocked further potential for better customer care and retaining millions more in revenue over time.
If your energy or utilities company is suffering from a lack of pricing visibility or margin leakage, we're here to help.
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