Advantage Margin Experimentation
Overview
Advantage’s new Margin Experimentation feature helps you find the best markup strategies by letting you experiment with different pricing levels. By adjusting your target markups within a set range, you can see how changes affect your win rate and overall profit. This way, you can figure out the most profitable pricing strategy for each customer. It’s all about using real data to make smarter decisions, stay competitive, and boost your profits.
Please note that Margin Experimentation is disabled by default.
How Margin Experimentation Works:
Randomization
When Margin Experimentation is enabled, the bidding engine will randomize the bid within a +/- 2% window around the baseline target. For instance, if the baseline is 7%, the bids might be 5%, 6%, 7%, 8%, or 9%, each with a 20% probability.
Data Collection and Analysis:
You want to run the experiment long enough to collect meaningful data.
Reporting tools will be added to analyze the relationship between markup, win rate, and margin to determine the optimal markup level.
How to Enable Margin Experimentation
You can enable or disable the margin experimentation at the customer level. To enable, click on the Bidding Engine icon located in the sidebar menu:
Then scroll down to your Customer Exceptions and select edit for the customer you want to enable margin experimentation with:
Set a baseline target markup using the default bidding strategy and any customer-specific adjustments. For example, if the default target bid is 10% and a customer-specific adjustment is -3%, the baseline target for that customer will be 7%.
To enable Margin Experimentation, click the toggle.
If the toggle is grey, Margin Experimentation is disabled. If the toggle is blue, Margin Experimentation is enabled.
4. If a customer has Margin Experimentation enabled, a check will appear in the corresponding column.
FAQ
Q: How do I enable margin experimentation?
A: Go to the ‘Customer Exceptions’ interface and toggle the experimentation option for the desired shipper.
Q: Can I set different baseline markups for different customers?
A: Yes, you can adjust the baseline target markup for each customer individually using the ‘additional %’ or ‘additional $’ rules.
Q: How does the randomization work?
A: The bidding engine randomizes the bid within a +/-2% window around the baseline target, distributing bids evenly within this range.
Q: How long should I run the experiment?
A: Run the experiment long enough to collect sufficient data to analyze the relationship between markup, win rate, and margin.
Q: Will there be tools to help analyze the results?
A: Yes, reporting tools will be integrated to help you analyze the experiment results and identify the optimal markup level.
Q: Can I customize the randomization window?
A: Currently, the window is fixed at 2%, but future updates may allow customization of this range.
Q: What if market conditions change?
A: Continuous experimentation helps you adapt to changing market conditions, ensuring your margin strategies remain optimal.
Q: Is the experimentation enabled by default?
A: No, experimentation is disabled by default. You must enable it manually for each shipper.