How do business opportunities detected by artificial intelligence materialize?

Fernando Pavón

CEO of Gamco

Once you are clear about the basic concepts for building commercial software with artificial intelligence where it is defined to whom to devote effort and investment commercial. Which customers have potential and present commercial opportunities to expand their orders or to develop their regular orders.

The next issue to be resolved is how opportunities materialize detected by artificial intelligence. Here we must define the levers and promotions available to the business.

Artificial Intelligence. Management of commercial levers and promotions

Management of commercial levers

A lever is nothing more than any action that can be carried out by the commercial management, by its commercial force or using the different on-line channels. Let's take a look at some levers:

  • Moment  to convey or present the opportunity to the customer. Depending on the product and the customer, they may be more receptive to accept an offer or suggestion at certain times of the day, week, month or year. There are many examples, for example: the owner of the bar who goes to the cash&carry because he is short of product and when the salesperson arrives he asks for fewer cases, the salesperson can change the day of the visit in order to prevent the bar from being out of stock and resorting to other channels for supplies or worse, going to the competition.
  • Message to use for each customer and each opportunity. It is difficult to define well the messages that can be used to convince potential customers of the benefits or advantages of certain products, or of a specific promotion, etc. This is where the salesperson's "nose" is indispensable. Artificial intelligence can define what type of message to use or manage several predefined templates of them that can be used at any given time.
  • PLVs (Point of Sale Advertising), in its wide range of possibilities: posters, napkin holders, tables, chairs, showcases, and a long etcetera. They are levers that can be used to make the point of sale more loyal to us, to motivate you to sell more to get certain items or simply be useful to increase the consumption of certain products by consumers.
    A problem that often appears in the use of POS is the lack of record of what element has been given to a bar, its characteristics and cost of the element. We must not forget that artificial intelligence uses data and historical data and if we do not have concrete data of elements that have been used as marketing or as a reward for achieving objectives at points of sale, it will not be able to learn which elements, for which customers and with which characteristics are useful for customer development and customer loyalty.
  • Channel used and orderToday there are multiple channels that allow us to communicate and offer our products and services to the customer. Depending on the combination: customer - product - moment, a certain channel may work better or another. You can also use combinations of channels as levers, for example, first send an email with a certain offer and then use telesales or the pop-up in the online store to try to materialize the sale. 
  • Conditions The payment system is another lever that can be used in two ways: on the one hand, to develop the business with good customers who have potential, providing them with good payment conditions. And on the other hand, to control the risk of those customers who at a certain moment could have payment problems.

Payment conditions are of no use if they are static, as in any lever: a static lever ceases to be static and becomes one of the constant variables that define the characteristics of a customer but on which we cannot act.

Predictive models and machine learning allow us to monitor the potential and risk of each customer in order to adjust customer by customer their conditions to provide an optimal service and develop the business safely with them.

  • PriceAs you may have noticed, many of you may have wondered why we have not included price among the levers so far. Obviously it is the first thing that comes to mind to act in order to sell more to a customer or get new customers, in short, to have more margin and/or more market penetration. But we have preferred to deal with price within promotions (which we will see below), as a lever the AI can define the price that should be set for a given product or service, for a customer at a given time; logically meeting the requirements of the business in terms of objectives and margins.

Commercial Optimization

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Promotion management

Promotionsare one of the most widely used mechanisms to provide greater perceived value to the customer, increase customer loyalty and, as far as possible increasing our margins and market penetration. We can divide promotions into four types:

  • DiscountThe easiest promotion is simply to lose part of the product's margin so that the customer will buy it. Some companies give total freedom to the commercial to adjust prices for each customer, only an average price per product is set. Commercial software and artificial intelligence will help estimate what discount is necessary for a customer to accept a product while maximizing business by meeting margin and market penetration targets.
  • Merchandise free of chargeis a variant of the discount, only that you get a discount in the form of a gift of the same reference when you meet certain volumes or rappels (for example 3x2).
  • Cross-sellingThe main advantage of a discount or even a free gift of another reference different from the one purchased. For example, for the purchase of three cases of cola, one case of water is given as a gift.
  • Added valueis a cross-selling but of products and services from third party companies. Added values can be gifts of fuel cards, discounts in e-commerce, travel, insurance, etc.

How can artificial intelligence help to optimize promotions?

If you're wondering how artificial intelligence can help a company's optimization of promotionsThe main way in which this is done is through three channels:

1. Only use them when necessary

It seems obvious, but they should only be used when it pays off for the company and are necessary to meet objectives and provide better customer service.

Often promotions are "wasted" with customers who do not demand or need them, because they are loyal to the product, it is what they need and they are not going to go to the competition. Or also because they are used with customers who do not have potential or do not give us enough margin, or what is the same, they provide little value. And with this we "drain" resources that are necessary to develop the business with other customers.

2. Leverage commercial opportunities with the right promotions.

They are correct from two points of view: because they help us to improve customer loyalty, their margin or the market penetration of certain families. And on the other hand, because the value perceived by the customer is interesting to him, the customer appreciates that we make that effort, that we want to give him a good service in the best conditions.

Suggest the best promotions.

One of the pioneering developments of the commercial AI-based software The main feature of Gamco: SAIL, is to have a module to suggest promotions (GPR - Gamco Promotions Recommender). These will be suggested of the four types seen above (discount, free merchandise, cross-selling and added heat). 

We can ask ourselves how the AI knows how to define those promotions that meet the business objectives and have the greatest impact on the business; the AI knows how to define them because it "sees" the orders of all customers, it can identify which products usually go together in those orders and which is the dominant product or the one that drags the rest of the products, therefore that would be the product to promote to generate, for example, a cross-sale.

In addition, as previously indicated, it knows the customer-to-customer potential and margins, the business opportunities identified by the customer and the prices that can best fit the customer's needs.

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