Industrial Distribution Group
IDG is a $500 million industrial distributor with 31 sales offices and 10 distribution centers. One segment — our $200 million general distribution business — was underperforming. We partnered with SPA to get help creating the discipline, controls, process and strategy we lacked in our pricing, with the hope that this could help us deliver acceptable results.
I knew we needed to do something with pricing because it was the place where we had the most opportunity. Our pricing approach was “cost-up.” Good sales reps had high margins and average sales reps had poor margins, and pricing decisions were in the hands of our sales and service teams. The lack of any centralized process or control was somewhat embarrassing.
When selecting someone to help us, we looked for someone who could offer an aggressive and comprehensive approach. We chose SPA because they offered not only a program, but also a compelling philosophy which made sense to us.
Positive results? There have been so many. Our investment in the SPA program has delivered a 6-fold return on investment. Our profitability improved by $3 million in the first year alone. And, we get far fewer customers calling with pricing complaints, which frees up our associates to focus on providing real service to our customers.
SPA was also incredibly smart in helping us with cultural issues around pricing. There was much quicker buy-in because the program was “presold” to our sales force for six months before we began implementation, which started with our smallest, lowest risk customers. Once our associates saw the results and the ease with which our customers responded to our new pricing approach, they were on board and fully supported the effort. In general, it has made us a much more efficient company, which everyone likes because it gives them more time to focus on their jobs and what they are good at.
Another side benefit is that SPA stimulates our thinking. Working with them has given us ideas we’d never have thought of ourselves. I always learn something new, something that makes a difference, every time I’m with them. The relationship has been extremely rewarding, across the board.
Charlie Lingenfelter, CEO