Pricing Professional – The time has come

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Read an article that delves deeper into the topic of how to effectively train your pricing team to implement strategic pricing principles instead of just “loading cost-centric pricing into the ERP computer system”. This article stems from a recent interview of Greg Preuer, the newest addition to the SPA team, who will be developing a program for training others in a Six Sigma Black Belt of Pricing program. Greg applied the same concepts while successfully serving as the Director of Pricing at Cooper Lighting. Excerpts of the article authored by Frank E. Hurtte Jr. who has 28 years of distribution industry experience and a lifetime in sales follow.

“customers see them [inside sales reps] as peers, and in the best of cases as a trusted professional advisor”

Distributor sellers manage their calendars better, orchestrate teams of support people and often understand bits and pieces of the customer’s business better than the customer. In many instances today’s seller has a technical degree and on-the-job experience equal to any of their customers. In most situations, customers see them as peers, and in the best of cases as a trusted professional advisor.

The inside sales group has evolved as well. Without great fanfare and sometimes without notice something happened back in the 1990s. The inside department morphed from its traditional role of training ground for outside sales recruits and elephant’s grave yard for folks who couldn’t make it, to a professional team focused on assisting customers in their selection of the right products for their applications. Today, distributors search for high caliper people who can contribute to the selling effort from the inside position. The job isn’t necessarily a stepping stone or a training slot; it’s a profession with compensation and status levels designed to attract the right kind of people.

“distributors have upped the professionalism of their warehouse and logistics teams”

Clearly all of these customer facing roles make the distributor business look different than early in most of our careers. But, changes have not been limited to the customer facing side.

In a combination back office and customer side move, distributors have upped the professionalism of their warehouse and logistics teams. Customer tolerance for shipping errors has dropped to nearly zero. The cost of fixing shipping and the resulting billing errors has escalated. In response, many progressive distributors have both installed barcode/location systems and raised the wages they pay “out back in the warehouse.” It’s not uncommon to see warehouse managers with backgrounds that include years in a manufacturer’s central distribution center. Further, the distributors establishing professional systems in the warehouse report improvements in efficiency of their operation.

“Now is the time to consider creating a new professional. The Pricing Professional.”

Many readers may be thinking, “I already have a pricing person.” However, a closer consideration of activities performed by this person has more to do with loading cost-centric pricing into the ERP computer system and very little do to with setting a companywide official price for the products going out the door.

Considering the concept of matrix pricing was a major topic of discussion during my very first distributor management training in 1991, one would wonder why the pricing profession didn’t evolve further over the past couple of decades. Reviewing hundreds of distributor organizations, experience dictates the following:

  • Many ‘customer sell prices’ are not maintained on distributor’s ERP systems encouraging sellers to use cost up pricing.
  • Cost up pricing generally settles on some ‘magical’ number which often does not reflect the value provided by the distributor.
  • Distributors lose mega bucks because their sales team neglects to consider incoming freight and other acquisition costs on specialty lines.
  • The wholesale industry struggles with eroding margins.
  • Most distributors don’t really know if the margin erosion phenomenon is a product of the economy, the market or their own actions.

“Until now, there has been no real training path for the pricing professional.”

Until now, there has been no real training path for the pricing professional. Certainly, consultants are willing to help establish a process but once the consultant leaves, things gradually slide back to mediocrity; many times initial margin gains are lost and the process must be reenergized.

Six Sigma Master Blackbelt Greg Preuer, of Strategic Pricing Associates has designed the first course designed to apply time tested Six Sigma methodology to pricing. Those who study with Greg will learn not only how drive the pricing process but how to sustain the gains and automate the process. They will become Six Sigma experts (Blackbelt) in business process with a focus placed squarely on price management.

Click here to read the complete article.

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