Before we met the folks at SPA, our basic approach to pricing was a "peanut butter" approach: We applied a standard increase to a product family with no differentiation based on our customer’s buying behavior. SPA's analytics allowed us to view our products from our customer's perspective and to classify the products into high- and low-sensitivity categories, providing us a whole new set of insights on our customers. We like to use the milk and toothpick analogy to describe what SPA does: Customers know what they are paying for milk but they don't know what they are paying for toothpicks and they really don't care. SPA’s process builds on this notion.
Because a significant amount of our business is under agreements, we were going from year to year realizing little to no price yield, year over year. Within a 3-4 month period of starting the analysis with SPA, we saw significant gains. Now we are applying what we’ve learned to Latin America, Asia Pacific and are working through the process a second time for U.S. pricing. And we expect to see more improvements in our business.
SPA also helped us roll this out to our distributors. Without SPA’s involvement, our distributors would not have been as receptive as they were; I’m certain that, had we done this without SPA, we would have gotten pretty significant push back. We worked hand in glove with SPA, and there were no surprises.
This has been pretty painless — we’ve been surprised at how little pushback we have gotten, both internally and externally. And after seeing one year of results, it’s been an even easier sell.
Our work with SPA has been very successful.
Tim McCarthy, Global Director of Contracts & Pricing