Read a follow up article to “Pricing Professional – The time has come” – the piece outlined the need for distributors to consider how they run their business and develop a new position. We pushed for distributors to consider the impact of a true pricing process and the qualities of the person best equipped to make the pricing process work. Somewhere along the way, we touched a nerve. Building a pricing process is a viewed as a top secret strategy. While a number of our readers commented, it seems no one wants to go on record with their plans. Excerpts of some of the responses follow.
“I really don’t want our competitors to know we’re doing this”
“Hope things are going well. While you’d probably prefer I comment directly on the post I really don’t want our competitors to know we’re doing this. So feel free to use the info here without disclosing the source or location.”
“We fear that acknowledging our efforts in the pricing department will only create an environment where sales brings in a story for every account”
“Management has given us the responsibility of raising margins, but they will quickly cave when a salesman comes back with a story of this or that competitor having a lower across the board price. We fear that acknowledging our efforts in the pricing department will only create an environment where sales brings in a story for every account they deal with. This will crush our efforts to make pricing stick.”
“our GM is up dramatically, over 2 points”
“We went live with Strategic Pricing Associates just a little over a year ago. Based on offline conversations with others already using SPA, we decided to apply our pricing process to all of our customers except our top 100 accounts. In our old culture, it was acceptable for both outside and inside salespeople to set their own price. It took us a while to get this changed. Originally we had a team of three people who spent nearly an hour at the end of each day reviewing the pricing exceptions made by our salespeople. We constantly reeducated and argued. After a month or so, everyone knew the new program had teeth. We still find ourselves discussing price issues but not nearly as often. And, our GM is up dramatically, over 2 points…”
Top Secret Strategy?
With results like these, I can see why pricing strategy might be considered the secret sauce of distribution profitability. Those employing advanced pricing strategies are quietly building their cash reserves for future purchases, systems improvements, building upgrades and establishing shareholder equity.
If they are your competitor, there is a very good chance you’ll never learn of their strategy from shared customers. Why? After speaking with all of these folks, only one reported an issue with customer pushback. And, that one was a customer put into the wrong category via clerical error.
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