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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.