Benco Dental uses Watson Analytics from IBM for data-driven pricing, decision-making
Benco Dental is using IBM's Watson Analytics to unearth insights into effectiveness of marketing and business programs.
Benco Dental, the largest privately-owned dental supply distributor in the United States, is using IBM's Watson Analytics to unearth "big data insights" to better gauge the true effectiveness of marketing and business programs. Watson Analytics, IBM's natural language-based cognitive service, provides business professionals across disciplines predictive analytic tools based on raw data.
Since its 1930 founding in Pennsylvania, Benco Dental has grown to serve more than 30,000 dental professionals in all 50 states. According to the company, it was the first dental supplier to create a Windows-based online ordering system in 1995. Now Benco is using the natural language querying power of Watson Analytics to determine the effectiveness of specific promotional programs and when possible, prove or disprove traditional marketing tactics.
Benco, specifically, is using Watson Analytics to analyze its pricing strategy.
"Our volume discounts and tiered pricing model had been in the back of our minds for some time. We knew we should revisit them, but we just hadn't thought about the best way to do it," said Don Trybulski, marketing analyst at Benco.
Initially, Benco wanted to analyze the conventional wisdom around volume discounts, and whether discounts compel customers to purchase more. Benco uploaded a portion of its large database of historical sales, pricing, and transactional data into the free version of Watson Analytics and was surprised by the finding.
"We currently have a quantity break. In our pricing model, if you order one to three items, you pay the full price, whereas if you order four or more, you get a discount," Trybulski said. "The conventional wisdom is that a quantity break becomes more effective as the net cost of the items gets lower. A customer probably won't order four handpieces if they only need three, but they might buy four boxes of disposable gloves, because they don't cost too much, and they'll probably use them eventually anyway."
Trybulski continued, "However, Watson Analytics showed us that this expected behavior is simply not reflected in the sales data. Even for lower-value items, a high percentage of customers will order three items instead of taking advantage of the quantity break at four. That's potentially a revolutionary insight that could help us redefine our pricing strategy going forward."
"Watson Analytics puts the power of predictive analytics into the hands of non-data scientists and people from across the enterprise, to generate insights and make data-driven decisions, often for the first time," said Marc Altshuller, vice president of Watson Analytics.
Benco's experience with the service led the company to use more advanced Watson Analytics software, which enables it to analyze up to 25,000 tweets per dataset to analyze the social media imact of its strategies.
"So we've gone from a strategy based on gut feeling and following what the rest of the industry does, to an approach where our decisions will be based on hard, measurable, objective data," said Mark Kolanowski, manager of marketing analysis for Benco. "And that's going to be priceless in terms of creating pricing that delivers the best value to our customers."
About Watson Analytics: Since its release in December 2014, more than 40,000 people around the globe have registered for and are using Watson Analytics to make more informed decisions. Through IBM's relationship with Twitter, Watson Analytics also enables customers to analyze social sentiment for insights around programs, products, and trends. Watson Analytics is offered in three editions: Watson Analytics, which is free to users and supports up to 500MB of data storage; Watson Analytics Personal, which is $30 per user/month and supports up to 2GB of data storage and analysis of up to 25,000 tweets per dataset; and Watson Analytics Professional edition, released last month and which supports up to 100GB of data storage and up to 50,000 tweets per dataset. Watson Analytics Professional is $80 per user/month.
Source: Benco Dental / Watson Analytics press release, 6/10/15.