Precise Promo Pricing and the Maxeda success story

Predicting what tomorrow will bring is extremely tricky. And so is learning from the past. Hard truth: the past is noisy. Perhaps your last promotion on, say, air-conditioning, did seem to pay off. But what part about it worked, exactly?

Was it really the promo, or was it the heatwave? Or just dad’s DIY weekend? Should you shave A/C prices on the first hot days to catch the wave, or sell them all at full price?

Do paint buyers need a brush discount or will they grab a brush anyway, since painting with your fingers is slow and frowned upon by society? Last year’s tool blitz felt huge, do you replay it or trim the cut a little?

Often it's a hard problem to tackle. Almost like a black box.

So we’re in the dark with limited visibility. Trying to figure out what worked yesterday and what will work tomorrow. Stuck with a bazillion parameters and zero certitude. How do they interact? Most often it comes down to gut feeling, intuition and educated guesses, right?

Three levers, three metrics.

Well, no. It really doesn’t have to. That’s why we stopped guessing and started crunching data and using smart AI models. To turn on the lights and see connections, pitfalls and opportunities where others don’t. To stop poking around in the darkness.

Sounds good (we know), but how exactly? Well, we boiled down the discount strategy puzzle to three basic levers that every trader actually controls:

• When do we drop the price?
• Which products get a discount?
• How much can we shave off without bleeding?

To give a trader the right insights to make the smart and informed decisions, our AI models kill the noise of all uncontrollable factors (the weather, seasonality, competitors, etc…) and give you three crystal clear metrics on a silver platter:

• When is the general demand for your products high, regardless of discounts?
• When are the products sensitive to price changes? What will the impact be in terms of sales?
• What products drive people to your shop and how much “tack-on” sales do they generate?

The power of certainty.

Crunch the data, blend those metrics and you get a sandbox where every possible promo scenario—timing, depth, product mix—shows its forecasted impact on not just the discounted product, but your whole assortment. Instantly, you can:

• Kill deadweight promos. AC-units fly off the shelf at full price in the summer, no need for unnecessary discounts. Your “successful” promo didn’t do anything but lose you a lot of money. Sorry.
• Work on your timing. Your marketing campaign is great and doubles the demand in lawnmowers, but you might want to reschedule. Baseline demand is too low in September, so it’s better to maximize its impact at the general demand peak in May.
• Control exploding discount levels. The jump from a -35% to a -50% discount on flooring might be a tad too much. It’s like using a flamethrower to light a birthday candle. Spectacular, sure, but a little wasteful. It will hardly generate any extra sales and you’re just losing money for no reason.
• Take into account your basket twins. Correct, a steep discount in plants might cut into your margin, but the associated tack-on margin generated by pots & shovels far outweigh this. You lose some, true, but you win a lot more.
• Learn from the past. Our models allow you to draw valuable lessons from your past promos. As two famous British brothers once sang: “don’t look back in anger, look back with smart AI models and take a dive in your newly acquired mountain of insights”. At least that’s the version the Crunch team sings at karaoke every Friday.

So, no need for staring into the crystal ball until your eyeballs pop out. AI powered pricing and demand models like the ones we use at Crunch are full-on power tools. If, and only if, they are tuned to real business questions, the people who sell and buy your product and the context in which the money moves (or doesn’t). And in the right hands, of people who know how to interpret the data and distil the right game plan for your business.