Choosing the right tools for fuel price testing
In this series of four blogs, we’ll be delving into the logic of price testing to help you understand how to run an effective test that boosts your fuel pricing strategy.
Price testing is a required process for any fuel retailer that is considering a change in price position. It’s absolutely possible to run a price test without any software at all, but you’ll need timely data feeds and lots of resource to analyze data as it comes in to ensure no detrimental effect.
Many Fuel Pricing Managers already rely on software tools to help price their multiple fuel sites, but there are certain things you need to look out for when using a fuel pricing software tool to run a price test in your network.
- Removing the emotion
One thing that’s often overlooked in the price testing process is the effect of human emotion. It’s easy to get worried if a competitor acts unexpectedly, and you may want to pull the plug or change your strategy in a knee jerk reaction.
Having a robust tool that allows you to set your rules, parameters, and strategy — as well as your exit criteria — removes that emotional aspect. The overall risk of your price test is reduced, and within your control. Setting the range you’re willing to work within, removing the human emotion, and letting the test play out, will enable you to gain the most knowledge about your competitors, your customers and your overall price strategy.
- Clarity and transparency
Clarity and transparency are the key to trust. You need your decisions to be driven by data and based on fact. It’s no good having a performance outcome for your test group and a performance outcome for your control group without any detail to back them up.
Having the ability to analyze all aspects of your data throughout the price test allows you complete clarity when making your final decision. It’s the only way to be 100% confident that the outcome is applicable across your network.
Select a tool that gives you access to all the granular detail so that you can ensure your results are measurable and valid.
- Data driven recommendations
Finally, if the system makes recommendations, what are they based on? Data science and AI are fantastic tools ― if used in the right way they can quickly lead to decisions that would take weeks for a team of analysts to get to. But you need to be certain that the recommendations can be trusted.
Your software supplier should be able to explain the logic behind the algorithms and how the final price position is calculated. Again, a level of transparency is needed. You should be able to see what the data science has learnt, so that you and your team can learn too.
Select a software system that can explain its AI algorithms and allows you to learn from the results of its data science.
Kalibrate Pricing is a specialist fuel pricing software that allows you to set robust rules and parameters so you can feel confident in your price test. It gives you access to granular detail so you can ensure your results are measurable and repeatable. It can explain the algorithms that power its data science — and it allows you to learn from the AI. What’s more, it’s supported by a team of industry experts who can help you develop, implement, and analyze your price test.
Take a look at our on-demand demo to see Kalibrate Pricing in action.
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