Chris Reddick and Ron Halversen talk about the intelligent ways that buying group platforms can work with customer-specific pricing scenarios.

Part 4 of a 6-part series (Return to Part 3)

RON: Let's go in and talk about determining the price and figuring out how to calculate on a group buying platform. Now, obviously, the ability to have these capabilities can affect this, right, Chris? I mean, if I don't have the ability to do pricing tiers or I don't have the ability to do pricing rules, then that just puts so much more pressure on ensuring that I set the price right to begin with.  

The great thing about this—and I'm going to just mention the first bullet or two, and then I'm going to let you tear into this—if I have the ability to experiment with things on the platform and I can dynamically do that within the pricing tables, right? I can go into the ERP settings and go, you know what, I'm going to go out and do a campaign to all my distributors and I'm going to tell them for the month of July, I'm really trying to move all the pool stuff. It's not moving like I want it to. I'm going to go in and tell them for the month of July, if they buy at least $500 a pop, I'm going to give them another 10% off, I'm going to experiment with that strategy and see if that makes a dent. Does it do anything? Do any of my resellers, wholesalers, distributors, do they bite, does that strategy work?
 
If you have a buying group platform that can adjust automatically and dynamically and make it easy to apply those changes, you don't want to have to go back to your developer and pay ten grand of custom development and [spend] three months to try to roll something out. You want to try it this weekend and see if it works right. 

You have to have a buyers group platform that allows A/B testing or multivariate testing, where the different variations of strategies you can implement and try what works, what doesn't work, what spaghetti can we throw against the wall, get some feedback and make adjustments to help improve the business? So for me, as the marketing sales guy, that's always what I'm looking at. 
 
Obviously from a business owner and from a technical perspective, your perspective could be very different than mine, right? So go ahead and start diving into some of these different things and give me your take on how group buying platforms need to be able to address and deal with these items. 

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CHRIS: Absolutely. So the reality, like you just said, Ron, is that, depending on the situation, the buying group needs to be able to adapt and test. And we really need to be able to be selective about this so that we can get a good data set, but also limit the risk and make sure that we're able to identify inputs and outputs and causality as well as generally being able to do complex things in many cases that are necessary. 
 
We need to be able to have different pricing models that are available. This can be any of the pricing models that you outlined, or possibly a hybrid of one of those: quantity-based discounts, rules-based discounts, having these have intelligent inheritance so that, if a customer-specific pricing rule is in place or customer specific quantity discount is in place, that can override a product-specific one that the product one would override a subcategory. A subcategory would override a category, category would override a store. You can even have different stores that have different rules.  

So you have this inheritance model that needs to be applicable. Then we need to be able to push and pull the data from an ERP system or another line-of-business application. We also need to be able to combine this with discounts, promotions, being able to do things that are auto-applied discounts and promotions, or maybe they require a coupon code or some form of promotional activity has to happen. 
 
We also want to be able to handle the scenario where we have rewards or some form of membership that the user has become a part of. This can be based on revenue, it could be based on positive reviews. Maybe they have a really high review rating where they're very good at participating in certain group buying purchases. 
 
By getting more people to participate, those people that more actively participate or maybe more consistently actually participate at the level they said they would, these things can be rewards that we provide to the members. And ultimately, we want to deliver flexibility on how we get to a very consistent outcome of lowering the costs and being able to—like this slide says here—dynamically adjust the margins. 
 
So, how do you do that? And I think ultimately it's those things that I just mentioned. But we also need the ability to be able to adjust things on pricing for the shipping, be intelligent about taxes, and some of the other calculations that we need to provide the users, and make all of this be as dynamic as possible. 
 
Combining all of those, that's really where it gets pretty tricky for some clients. And we just want to encourage you that—one of the best starting places, if you haven't already ventured into these areas—is to just draft out where you are right now. Where are you in your current state? Where do you want to get to in the near to midterm? And then where do you want to get to in the long term? And you can even just bullet it out, make it simple so that you can take action, get yourself to a point where you put your plan in place for where you want to get to and then decompose that backwards, just like you do for anything else that you set goals and objectives for. 
 
What we want to share with you is, we have literally been providing custome B2B eCommerce solutions for over a decade in this space. And by necessity, Ron, we've just continued to establish these additional capabilities that are really permutations of this set of options, and essentially a hybrid of some form that fits the specific buyers group, right? 

RON: You made a comment there a second ago. I don't remember your exact word, but you said when you combine them, it gets really tricky. I think you said something similar to that. Well, where we've seen that is a lot of people are moving to these hybrid B2C, B2B sites now. And our platform does both. 
 
We always talk about C2C, D2C, B2C, B2B, and the ability to dynamically adjust within a single storefront to whoever the purchaser or buyer is who’s logging in. Well, if you think about one of the things that we've seen occasionally—and one of the reasons why I've seen clients come to us looking for a better mousetrap, if you will—is because they used to have to maintain separate storefronts  

And the reason is, at some point in time it bit them where—let's say, for example, I have a really aggressive pricing model and I'm only at 13% uplift for my master distributors. So I only have a 13% margin, but I'm also selling to D2C, I'm selling direct to consumers. And so I've got my marketing team out doing promotions for 10% and 20% off and blah, blah, blah.  

And the next thing you know, because the platform isn't intelligent enough or dynamic enough to understand the ability to combine and not combine, you end up getting where somebody finds that coupon one week and gives it to their significant other who works for the buying group who then goes in and only has a 13% margin, uses the 20% off coupon and buys at bulk for 7% under cost. And the platform didn't restrict that and it allowed that to combine.  

So I'm going to pop up a quick screenshot. If I went into our sample group buying platform and clicked Add Discount, you'll notice here there's a couple of things on the screen here where we can set a priority. So when we go in and apply multiple coupons when they're not combining well, do we set the priority, enforce one over the other so you can set priority, is it combinable or not? You can flip the toggle and allow it to be combined or not.

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RON: And our buyers group platform can go in and, if they're not combinable, they can actually apply for different coupons if they're applicable, and whichever coupon would give them the best deal, it would just give them that off and then would not apply the other three.  

So there's definitely some trickiness, as Chris called it, to ensuring your platform doesn't give away product, and you want to be careful of that.  

Continue to Part 5 to find out more about mutli-tier pricing in real-time.