Introducing Pricing Insights Powered By Community Intelligence
Whether we realize it or not, we have become heavily reliant on community intelligence in our personal lives. Whether it’s picking the right outfit (Google Shopping), the right restaurant (Yelp reviews), or the right hotels (Kayak) – or making most any kind of decision (community forums) – we rely heavily on recommendations, ratings, and benchmarks from the community. This, however, has not always translated well to the business domain for a variety of reasons.
First, even with the proliferation of external datasets, it’s hard to find data that is truly reliable. Second, even when such datasets can be found, they’re often somewhat static in nature, or are updated infrequently. Third, integrating these datasets into your own enterprise data environment and extracting value from them can be a lengthy and difficult process, with no guarantee of success.
Our goal with Pricing Insights is to provide our customers with fast, reliable information at their fingertips so that they can focus on what they do best — identify and execute opportunities to reduce spend and make the best buying decisions. Pricing Insights is part of Coupa's community.ai, a set of next-generation spend management innovations.
Customer insights from within the community
As Coupa CEO Rob Bernshteyn highlights in his book "Smarter Together," there are a couple of great reasons for getting information from the community. As Rob says, “The first is that you are truly getting behavior-based data and not opinion.” That is, you’re not having the all-important pricing negotiations with your suppliers based on market sentiment and opinion pieces alone. Instead, these negotiations can be driven and supported by actual data from the community. On top of that, the insights give you an unbiased picture from most or all members of the community who are transacting that item.
Unlike Yelp reviews, for example, which may be over-indexing on those who feel very strongly for or against a restaurant, or may even be prone to false reviews from outside the community of restaurant visitors, our community-centric tools show you the full picture of item prices along the entire spectrum of prices.
In all of our community intelligence offerings, privacy has been a key design consideration, and we ensure that all our products follow the principles and approach outlined in our Community Intelligence Privacy and Security Whitepaper. This means, for example, that we will not include items which are transacted with a small number of customers or a very small number of transactions. We want to ensure that community insights are truly powered by a community of customers and suppliers.
In our first release, we offer our customers insights about 100 frequently transacted items across the community, and we plan to grow that number with future releases. Some of the key features you can expect to see are highlighted below.
One of the key features of Pricing Insights is to highlight any pricing inefficiencies by comparing your price on certain frequently transacted items against community benchmarks. For example, the rate card pictured above shows a customer that their price of $2,806 for a Dell Precision 5540 is greater than the 80th percentile of the community price, which is $2,600. (Please note that the figure above contains mock prices and should not be used for actual benchmarking.)
The range of prices shown in the rate cards corresponds to the 20th and 80th percentile of the volume weighted prices seen across the community. Using outlier detection, these prices have been checked for anomalous behavior, such as incorrectly tagged items. The price ranges also take buy volume into account so the price ranges are more reflective of volume buys than one-off purchases.
These Pricing Insight benchmarks will be available to all customers who have opted into community intelligence, even if you haven’t necessarily transacted on a particular item. In these situations, only the community price range will be provided, as shown below.
In addition to benchmarking their prices, customers can better prioritize their actions through a quantifiable potential savings value associated with each transacted item. These per-item savings can be seen in the table below.
The savings are personalized for each customer and are the best of three calculations for each item:
- Long-term savings compare your volume weighted average price to the lower end of the community price range over the past year. That is, how much you could save if you could get the lower range of community prices over the past year.
- Short-term savings, or recent best community price, performs a similar comparison for prices over the last three transactions or prior 30 days. That is, how much you could potentially save if you could get the lower range of community prices in the last 30 days.
- Best within-customer price compares the transaction prices within the customer to uncover scenarios where a customer may have multiple suppliers or buyers who are not achieving a consistently low price.
Customers can now see how the price for an item has been trending across the community. When users click “View Details” on any item card (see below), they are taken to the details page where they can see several important KPIs as well as the monthly trend in price over the past year.
Users can see their prices compared to the community price range for each month and can easily see if community prices have trended up or down in recent months, or if they are on the upper or lower end of the range in general. Additionally, these trends are also available by currency.
These community ranges are only displayed for months where the monthly data meets the minimum requirements for customers, suppliers, and transactions.
At Coupa, we understand the power of savings and prescriptive action for our customers. With this first release of Pricing Insights, users will have access to several prescriptions to help put these insights into action. Some sample prescriptions are shown below.
The following prescriptions will be available in the first release.
- Spend consolidation: If you bought this item from, say, three suppliers last year, we recommend consolidating this spend to your lowest price supplier.
- Shifting to on-catalog spend: If you’ve bought an item from an on-catalog supplier at an off-catalog price, we recommend shifting to more on-catalog spend.
- Sourcing Advantage: You’re likely on an item page because you think you can do better on the price. One way to do this is to be part of an upcoming Sourcing Advantage event.
This is only the first step in leveraging community intelligence to bring savings to our customers, and these 100 items are just the beginning. We truly believe that none of us is smarter than all of us.