PROS BIG DATA INNOVATIONS

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1 Unlock Your Data Unleash Your Sales 1

2 The Science Inside Big data innovations that are uniquely PROS At PROS, we talk a lot about our big data science, but what exactly is PROS Science? It is the output of some of the best and brightest minds in the fields of pricing optimization, prescriptive analytics and big data for sales effectiveness. PROS has close to 30 PhDs on staff spending 100% of their time conceptualizing and collaborating with customers on how to more effectively use big data science and predictive analytics to drive greater sales growth and pricing power. With 18 patents filed or pending, PROS leads the way with one best practice after another, each helping to find and accelerate sales growth helping you make more money with PROS. PROS BIG DATA INNOVATIONS: PATENTS FILED AND PENDING Centralize your critical data for revenue management and ticket price optimization. Send statistical analysis through an electronic exchange to a supplier/buyer. Generate optimized pricing recommendations for commodity products. Adaptively select the best action for a profiled customer, see the customer's response, and then update the response statistics to determine the best action to offer during the next engagement. Generate optimal list prices that balance revenue and profit Automatically generate optimized price quotes for products at the SKU, product line and even product family levels. Create workflows for investigating a specific set of new pricing recommendations. Synchronize inventory availability data for immediate look up by third parties. Determine the best data metrics to use for pricing optimization. Know which companies are leaders and which are followers in regards to their pricing strategies Optimize and test customer segment-specific products and pricing. Determine cross-property upgrade recommendations Set the optimal price points on limited resources and/or declining inventory. Generate up-sell and cross-sell recommendations based on historical buying patterns rather than business rules. 17 Determine the most significant attributes for each micro-segment. 8 Use win-rate elasticity to create pricing recommendations. 16 Determine your ideal segmentation strategy. 18 Tailor workflows to reflect your sales reps business processes. 2

3 PROS products apply a statistical approach to determine the precise price that maximizes your expected revenue or margin for each deal by balancing the probability of winning the deal with the price of the deal. PROS Top Big Data Patents Generate up-sell and cross-sell recommendations based on historical buying patterns not business rules Finding new business even in your existing customer base is a time-consuming, manual challenge, especially for manufacturers and distributors dealing with multiple channels, thousands of customers and millions of products. Unlike other companies who provide simple lookup tables and rules where a product manager decides what should be sold together or what product lines should replace another our approach is different: It produces accurate results based on data science research. Our unique and powerful algorithm generates up-sell and cross-sell recommendations based on actual buying patterns and compares that to the transactions of other like companies in the same segment. PROS approach results in products that are actually proven to be bought either in tandem with or in place of other products by that specific account. That means there is a greater likelihood that the products you are recommending will be bought, resulting in bigger and potentially more profitable deal sizes. Use win-rate elasticity to generate pricing recommendations What s the right price for a product? Price too high and the deal will likely be lost. Price too low and the deal may be won but at what cost? How much money was left on the table? Our unique, patent-pending scientific approach is to determine the win-rate elasticity of each deal based on the characteristics of your customer, product and transactional situation. PROS products apply this statistical approach to determine the precise price that maximizes your expected revenue or margin for each deal by balancing the probability of winning the deal with the price of the deal. Set the optimal price points on limited resources and/or declining inventory When a customer asks to buy a certain product or service, typically it s sold on a first come first serve basis. If you re dealing with limited availability of those resources, you may potentially be losing money by taking this strategy. Not all customers are the same. They have different willingness-to-pay thresholds and different demands for a particular resource. This science uses historical data to calculate that demand. By leveraging this intelligence, along with a customer s willingness to pay, you can properly allocate your resources and maximize your revenue potential. Hone your offers through segmentation and predictive analytics Winning isn t just about price but rather a whole set of factors that can be difficult to measure. This is how we think about contract and offer optimization putting the best offer on the table based on market testing and responses. Instead of guessing, now you can statistically reveal the most relevant and meaningful negotiation attributes for each customer. This methodology starts with segmentation and the creation of a 3

4 It s like having a team of pricing business experts and data scientists working for you, showing you where the price-lift opportunities exist by product line and customer. unique profile for each customer grouping based on their prior purchasing behaviors. As different actions are tested, the corresponding responses from your installed base are gathered for analysis and the best offers are identified for each segment. Each customer segment profile is enhanced with these new attributes, making it easy to hone your offers for future deals. Optimize and test customer segment-specific products and pricing Presenting the right offer at the right time is crucial to winning. Moreover, the offer must be customer specific, since different customers can have very different preferences. This science shows how you can track current offerings, introduce new ones and optimize the best offering by customer segment even when facing competing goals such as revenue, conversion or profit. Determine cross-property upgrade recommendations (for hotel chains) Automatically generate optimized price quotes for products at the SKU, product line and even product family levels With a huge product portfolio, it s not realistic to expect a salesperson to accurately select the most profitable price and discount at the SKU level when constructing a deal. Imagine a price catalog that contains 1,500 prices for different types of screws. You could quote each one individually, you could quote all Phillips head screws, you could quote all flat head screws, you could quote all hardware, or you could even quote Phillips head screws for West Coast customers. This patented process automatically creates your deal with an optimal hierarchical structure based on historical transactions, enabling your sales team to quickly create deals that achieve higher margins. This methodology determines if enough transaction history exists to provide a statistically significant price. If not, then price recommendations are determined at the next level or higher in the product hierarchy and applied to all products at that level and below. This helps ensure statistically accurate and reliable prices. Hotel chains are often challenged with driving demand evenly across multiple hotels. This patent simultaneously looks at multiple properties and multiple room types, as well as historical demand and prices paid, to predict future revenue to come. The science automatically determines the optimal inventory allocation by allowing upgrades and inventory movements. If you ve ever booked a reservation at one hotel, and upon check-in were upgraded to a sister hotel s penthouse at no extra charge, you may have experienced this science in action. 4

5 Micro-segmentation delivers the sales results that come with knowing what each customer is willing to pay for your products before you make the offer. Determine the best data metrics to use for pricing optimization To truly leverage the power of pricing you need to understand and know what works and what doesn t work in practice. You will want to know how companies have applied pricing science to their business in a successful way and how you can do the same. For that you could spend a lot of time and money hiring consultants or doing your own research and proof of concept. You will also need to spend time developing and testing tools that could help you apply this process systematically. This patent-pending approach gives you instant pricing power putting nearly three decades of pricing optimization science and research behind your strategies. It is realized in our new big data application for the mid-market, Step. It s like having a team of pricing business experts and data scientists working for you, showing you where the pricelift opportunities exist by product line and customer. This data science methodology makes accurate, profitable pricing fast and easy from the convenience of the cloud. Determine your ideal segmentation strategy & the most significant attributes for each micro-segment need to achieve this level of true value-based pricing. Microsegmentation delivers the sales results that come with knowing what each customer is willing to pay for your products before you make the offer. That s how the best sales leaders arm their team to close bigger deals and deliver the sales growth they demand. We have two patents focused on our segmentation approach, which has been successfully implemented and honed at more than 600 accounts worldwide. Tailor workflows to reflect your sales reps business processes For out-of-the-box sales solutions, your salespeople are forced to change their processes, resulting in user adoption issues. Otherwise, you re dealing with expensive and time-consuming custom-code solutions. With this new configuration capability, you can easily model current end user workflows while still injecting PROS-recommended best practices without building an entirely customized solution. All from within the user interface, a business process expert can easily define account structures and role-specific workflows, seamlessly introducing best practices to your sales team. Many companies remain content to use a traditional segmentation approach, such as classifying customers by revenue, industry or geography. However, when you re trying to find incremental sales growth in today s ultra-competitive world, it takes more than simple classifications and basic spreadsheet analysis. Without the right customer-centric segmentation, millions of potential profit dollars are left on the table. That s why more companies today seek a solution capable of segmenting their customers by the unique patterns and preferences that drive actual buying behavior. Only by analyzing transaction data with the power of big data science and predictive analytics can you generate the insight you 5

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7 About PROS PROS Holdings, Inc. (NYSE: PRO) is a big data software company that helps customers outperform in their markets by using big data to sell more effectively. We apply 27 years of data science experience to unlock buying patterns and preferences within transaction data to reveal which opportunities are most likely to close, which offers are most likely to sell and which prices are most likely to win. PROS offers big data solutions to optimize sales, pricing, quoting, rebates and revenue management across more than 30 industries. PROS has implemented more than 600 solutions in more than 55 countries. The PROS team comprises more than 700 people around the world. To learn more, visit PROS.com Copyright 2013, PROS Inc. All rights reserved. This document is provided for information purposes only and the contents hereof are subject to change without notice. This document is not warranted to be error-free, nor subject to any other warranties or conditions, whether expressed orally or implied in law, including implied warranties and conditions of merchantability or fitness for a particular purpose. We specifically disclaim any liability with respect to this document and no contractual obligations are formed either directly or indirectly by this document. This document may not be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without our prior written permission. 7