When we were initially considering implementing SPA strategic pricing, a major concern of ours was its impact on sales. Many of us were convinced our customers would react negatively and go elsewhere. Most of us were more hopeful, but still uncertain as to what the cumulative impact would be. The bottom line was that customer push back was almost non-existent and lost sales were insignificant.
Corporate Pricing Manager
I can say that our customer calls and complaints have been very, very few; less than a 20 calls across our thousands of customers and their transactions. I can also say that the potential gain is far greater than any friction that may be created by the system.
The Echo Group
We were concerned with the potential of losing customers when we first decided to utilize the Strategic Pricing solution. One of the messages that we shared with our associates was that this is not a price increase. The goal of this program is to charge the right price to each customer. With that said some of our customers' pricing actually went down; we found that we had been charging them too much.
Another benefit that the program has had is that it allows our sales people to feel more comfortable talking about pricing. When confronted with a pricing issue, rather than concede, they are able to work out a plan to get a larger commitment from the customer and move them into a different price bracket. This is something that Grainger has been doing for years, they state, if the customer buys $X per year their discount is raised to X%.
We have had to make concessions for certain customers but the ease of using the Strategic Pricing module allows this to be done allowing for an overall margin gain.
Director of Business Development
B&K Electric Wholesale
Since going live with strategic pricing in September of 2010 we can say that we have not lost any business (customers or sales). Overall we were more conservative on the initial roll-out and since have pushed the pricing up a bit more. What helped is that we had a lot of price page and job/contracts already built into the system, so all that pricing stayed and did not change for the customer. Initially the strategic pricing affected the day-to-day sales that people were not too price-sensitive on. Since the initial roll out we've focused on reviewing our price pages by customer size and found that we could eliminate many of the across the board discounts; those were removed and replaced by strategic pricing. We've now been using strategic pricing for 7 months; we've found that about a third of our sales are going through the strategic price system, a third through price pages and the remainder a combination of price edits, job/contracts and list prices (items we excluded from strategic pricing). It's an ongoing process, and heading into the busy part of our season we feel confident we've tweaked the set up to get us better return on our sales efforts.
Chas E. Phipps Co.
Anyone who is thinking about SP implementation will naturally have some concerns about potential customer push-back. We have had some push-back but it has been very minimal. We have had many more issues with push back from our sales force because of the cultural change we had. We have not lost any measurable business due to SP. On the contrary, we are seeing margin improvements, particularly in the Small and Tiny category. In this time of a difficult economy, that is huge for us.
A potential user needs to keep in mind a couple of things. 1) The data that SPA uses to measure and recommend pricing comes from their actual data. SP's analytics does an outstanding job of making recommendations. We had fewer than 100 changes to their recommendations when we implemented. 2) It is time to fully utilize that sales notion that slower moving items should have a greater gross margin premium on them. Customers are fully aware of pricing on fast moving items but are not as aware on slow moving items.
Even with SPA's recommendations, they are the first to tell you that you need to evaluate, review and test their recommendations. Each company has to evaluate their particular business, circumstances and market to make a decision. We talked to a number of users before we made the "move". Their message was the same . . . minimal push back from the customer.
Hope this helps.
Harry Cooper Supply Co.
So far our experience has been that most customers do not realize that you have changed your pricing strategies. The exceptions to this have been very few.
I must tell you that SPA was correct with regards to the potential loss of sales because of increased price - it is almost non-existent. We found only one "regular" customer that regularly checks most prices. We did find several customers (less than ten) that use old quotes/etc in an attempt to get a better price in a consistent and organized manner - we dealt with them on an individual basis. Now several months into SPA - it is not an issue - never comes up. I still find it amazing that we cannot find real examples of customers that have left because of pricing. We have not had one - and less than ten where we have had to respond to regular pricing issues. It is so hard to accept something this easy -- SPA really works and adds $$$ to the bottom line.
I was the biggest non believer of strategic pricing because Zatkoff Company, an $80 million distributor of seals and packing, is primarily an automotive distributor. The automotive business isn’t doing very well and I felt that there was no possible way that we could increase margin. SPA convinced me to give them a try and it has been nothing but wonderful things after that.
SPA has taught us a lot about using our data to make better decisions. After working with SPA, we are able to make decisions based on solid data and I think that has really helped our company. Our pricing decisions are based on facts, which make our decisions much more powerful.
The improvements our company has seen are bottom line improvements. We make more money today than we did before. We have done better every year. We have done marvelous things to the bottom line… We have found that the bottom half of your business can have a significant impact on your bottom line. It’s been a wonderful relationship! They are quick to respond and it’s been wonderful. If anyone would like to make more money they should sign up now.
We dabbled in strategic pricing on our own but never got the results that we needed until we hooked up with SPA. The greatest benefit we have seen is the margin enhancements.
We started the SPA program in the summer of 2006. Shortly after that, we suffered very difficult market conditions, however, because of the SPA program, we had our best year ever.
Working with SPA has been phenomenal! We now have data that we can analyze that we didn’t have before. People are embracing the new culture, our Freight Department has become a profit center, and we feel like we haven’t even reached the top yet.
The process has been great with SPA! There isn’t a single investment that you can make at your company that will get you the kind of returns that we’ve achieved by working with SPA
As an Industrial Distributor with a record of fifty-five consecutive profitable years, we thought we knew both how to operate a business and price products. As the SPA Pricing Program was implemented, we moved from being skeptics to believers as we saw a 2% overall gain in gross margin before the first year, and after three years margin growth continues!
Strategic Pricing is the single bottom-line program…in my 35-year career! It allows us an opportunity to reinvest in the growth of our business.
The SPA Program is the highest impact most bottom line-enhancing program I have seen in my entire 35-year career! The increased margin has give us the opportunity to reinvest in the growth of our business.
Over the years we have tried to apply some basic Strategic Pricing principles to our business. Last year it took a dedication to the process from the whole organization, which has resulted in significant gains in profitability. We look forward to working with Strategic Pricing Associates for a long time to come…
A big benefit we have received from Strategic Pricing is having a strategy for our pricing. It was difficult to say exactly how we decided on pricing for our customers before Strategic Pricing. Today we are three margin points ahead of last year.
Strategic Pricing is now a way of life at our company. We have embraced SPA’s principles and strategies and the financial impact will be everlasting.
Our vendor introduced our company to Strategic Pricing Associates (SPA) for which we are very grateful. The processes, created as the result of input from SPA, have yielded a positive bottom-line financial result more quickly and profitably than any other activity attempted. As a point of comparison, over that period we have been fortunate to have received exclusive channel assignments for activities where literally millions of dollars of sales momentum was transferred and yet, our income from SPA in the first year eclipsed each of those.
I, along with the entire Management Team, am very excited about the opportunities we can achieve through participation in Strategic Pricing. Like most companies who have completed the process, we also thought we were already doing a good job in capturing the best profitability through our own efforts. How wrong we were!
Strategic Pricing has given us the confidence to implement the correct pricing level to the various customers we serve. The overall impact of this new process will have significant affect to our bottom line. Strategic Pricing is a new way of life for our company.
Strategic Pricing is having a very positive impact on our bottom line. Not only is it helping us increase our margins, but is has pushed us to look at other areas and operations within our business that are also impacting our bottom line.
Strategic Pricing has changed the economics of distribution. We have increased our gross margins over 4 points and now enjoy ROI above 35%. This is a revolutionary concept.
The Strategic Pricing program has improved our margin from 27% to 31%. These results have moved us to the NFPDA High Performers Profit Category. The increase in profit has allowed us to justify increasing the sales force, customer service and the funding of new marketing programs.