Any B2B leader understands that to remedy missed financial targets or improve financial performance, you first need to understand what is driving or dragging down revenue or margins from one period to the next. While on the surface, this seems like a simple enough task, it can be difficult to pull together the right information, isolate the factors that drive margin and revenue performance, and pinpoint where to focus to make improvements.
If you happen to run a business with a massive amount of transaction data, the task of simply processing this data to perform the analysis can seem impossible without the right tools.
That’s why Zilliant developed its Margin Driver Analysis more than a decade ago – a robust capability that allows us to isolate the factors that drive margins, light up the trends and make actionable recommendations for our customers. Our platform can ingest massive amounts of data and process it into easy-to-discern-and-drill-into waterfall charts. The output gives companies a holistic view of changes over any user-defined time period and explains exactly how much of the margin change is due to price, volume, cost and mix.
Whether you are already a Zilliant customer or are just starting out on the pricing journey, the powerful insights derived by the Margin Driver Analysis are actionable wellsprings of wisdom. It’s a priceless first step before any strategic pricing decisions are made.
“The number one thing we talk about with our customers is the Driver Analysis,” said Nathan Rabold, customer success director at Zilliant. “It paints the picture of what has changed in the business as well as what’s driving that change. If we increased price, did we lose volume? How well did we pass through costs? How much margin growth came from price? These are just a few of the valuable data points we can derive.”
The Margin Driver Analysis is more than a business intelligence tool. It tells the complete story of business performance based on user-defined time periods and granular data slices such as product, customer or region.
For example, the tool tells you that year-over-year a product grew in revenue and profit, but there was a noticeable dip in margin rate. How did this happen? With clicks (not code), a user can take out any data that’s not comparable, isolate true repeat business and rapidly get to the truth. In this case, you may discover that while your procurement team was successful in securing lower costs, you gave away most of those savings when it came to price. Perhaps you also saw a shift in mix to historically lower margin products. This valuable insight can be shared with executive teams and plans can be put in place to shift sales reps’ focus on selling higher margin products.
Now say you run the Margin Driver Analysis and find that sales reps in one particular branch office are dragging your margins down by consistently overriding prices or creating special price exceptions. This may highlight that you have a change management or training issue, and now you have the data to go address it.
These are just some examples of how the Margin Driver Analysis provides tremendous standalone value as a business diagnostic, but then goes one step further. The insights produced are exceedingly actionable because they clearly show which prices need to improve or inefficiencies need to be solved.
Our customers find the Margin Driver Analysis creates a feedback loop with their pricing model that continuously drives higher price performance.
How the Margin Driver Analysis Works
Zilliant’s Margin Driver Analysis tool ingests raw transactional data to get to the truth behind the numbers generated by your business. It can run on any data loaded into our platform, which scientifically organizes it into comprehensible analytical reports. Once loaded, users can run multiple “slices” to view the same set of business, such as a product slice, customer slice or branch slice, across any custom time period.
Within a clicks-not-code workbook, users can quickly sort and drill into results to see where revenue, quantity and margin is up or down. A few clicks can determine key insights into which drivers to focus on that will improve performance going forward.
It’s proven to be faster and more capable of handling massive data loads than any other margin bridge tool on the market. Over the years, we’ve refined our cloud-native microservices architecture with best-in-class components – like Amazon Redshift and Amazon Aurora - to achieve unrivaled performance. Data sets can be loaded, configured and begin reporting back key insights in less than a day.
The resulting waterfall reports are fully transparent, fast and easy to use. Users can quickly pivot or download the workbook to make adjustments. The level of configuration is virtually unlimited for users, allowing them to get the precise view of the business they need at any given time.
Tried and True
Any B2B company can benefit from the knowledge provided by the Margin Driver Analysis, whether they use spreadsheets or the most powerful data science-driven optimization solution. We know it because we’ve done it for businesses of all stripes.
In fact, every Zilliant customer for more than a decade has leveraged the tool; some use it regularly in-house and others are shepherded by their customer success manager. It’s a mainstay in our periodic business reviews, where customers trust it to analyze their entire business and drive their customer success plan.
For companies that are looking to see if they would benefit from a commercial pricing solution, Zilliant’s Margin Driver Analysis can be a valuable tool to help make the business case and better understand the pricing and margin opportunity that exists in the business.
If you have trouble getting at the truth underlying your business’ commercial data, we’re here to help. Contact us today.