Month: March 2016

Inside SPA: The Power of Strategic Pricing

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Reducing your operating expenses, increasing your sales volume, and reducing your cost of goods sold all deliver bottom line profit improvement. But no element of your business mix can deliver more impact to your bottom line than strategic pricing. Watch our collection of videos to learn about the power of strategic pricing and how SPA’s clients are realizing significant margin improvements.

We have worked with hundreds of distributors and manufacturers to deliver margin gains of 2 to 4 points or more. How? By helping our clients implement a structured approach to pricing that avoids these common and costly pricing errors and approaches:

  • Charging small customers less than they are willing to pay
  • Missing the opportunity to charge premiums on products that are less sensitive to price
  • Allowing exceptions to drive pricing architecture
  • Using a cost-plus pricing approach

Making small changes to your Pricing Strategy typically delivers worth 2 to 4 margin points or more. That’s $200,000 to $400,000 per year per $10 million in affected revenue!

The Architecture of Optimized Pricing

The SPA Pricing Cube™ combines your understanding of markets with SPA’s powerful analytics, to identify the optimal pricing architecture for your business, focusing discounts on the most price-sensitive products and customers, where it will have the biggest payoff in competitive positioning; and extracting small premiums on less-sensitive products and customers.

The SPA Pricing Cube™ takes the guesswork out optimized pricing in complex environments, allowing your sales force to focus on serving the customer and driving value. Our process provides for flexibility and discipline in pricing, to create a balance that works in your business.

Strategic Pricing Videos

Click Here to access our collection of videos that provide valuable perspective for all companies that would like to improve their performance through strategic pricing.

Click here to hear what our clients have to say about the power of Strategic Pricing.

Follow SPA

To easily keep up with the latest SPA announcements, events and resources you can subscribe to our Strategic Pricing Pays blog or follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.

SPASigma Featured in The Distributor Channel article “The Customer Lunch”

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SPASigma was highlighted in a recent The Distributor Channel article, “The Customer Lunch”, which discusses the power of sharing a meal during price negotiations.

Excerpts of the article follow.

“Over the years I had the strong opinion that lunches furthered my cause.”

Over the years I had the strong opinion that lunches furthered my cause. I encouraged others to use the idea.

Lately, I have run into a whole new school of distributor salespeople who don’t share this habit. Whether because they want the time to respond to personal emails, catch up on Facebook or, to use the words of one young sell, “just chill.” They don’t engage in the practice. I had a difficult time arguing with them. It was basically one man’s opinion versus another’s — at least until now.

“At a recent SPASigma negotiation seminar, negotiation expert Tony Perzow shared a bit of negotiation research”

At a recent SPASigma negotiation seminar, negotiation expert Tony Perzow shared a bit of negotiation research with me. According to scientific research done by Lakshmi Balachandra, Professor of Entrepreneurship at Babson College, those who negotiate over food are markedly more successful than those who do not.

The figures state:
“Individuals who negotiate in restaurants created 12 percent greater profits and those who negotiated over food in conference rooms created 11 percent greater profits.”

“While selling is not pure negotiations, there is a strong component of negotiations in every sale”

While selling is not pure negotiations, there is a strong component of negotiations in every sale. Further, negotiations are present in many aspects of setting price levels, determining method of delivery and laying out expected service levels. I believe the two overlap.

Click here to read the complete article.

Follow SPA

To easily keep up with the latest SPA announcements, events and resources you can follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.

Webcast: How an “Optimized Price” Reconciles Both Competitiveness and Profitability

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During this 60-minute webcast SPA client, Granite City Electric Supply, Co., will share how they are leveraging science-based strategic pricing tools and proven pricing processes to balance market competitiveness and profitability!

Program Description

Register to attend our webcast March 22, 2016 that starts at 2:00 PM EST where

Greg Smith, Vice President of Marketing at Granite City Electric Supply, Co., will share their journey to pricing excellence and how they are leveraging science-based strategic pricing tools and proven pricing processes to balance market competitiveness and profitability.

“Understanding the benefits of optimized pricing and the consistency of the pricing matrices has proved a win for both GCE and it’s sales force.”

– Greg Smith, Vice President of Marketing

Click here to read more SPA Client Testimonials

To implement a solution that enhanced profitability, developed pricing discipline, and removed emotion from the pricing function, they turned to SPA to implement a proven strategic pricing initiative founded on SPA’s powerful pricing analytics tools. During this 60-minute webcast, they will share their experiences and advice that will provide you with a wealth of practical knowledge including their fast ROI and lessons learned!

SPA’s Dave Lienert will also discuss how our solutions, which leverage experience from working with hundreds of companies to drive 2-4 margin point gains on affected revenue with minimal customer pushback, can help your company.

Attendees will learn how to address the following all too common issues and opportunities for increasing profitability:

  • Customer relationships focused on product/service value, not price
  • Identifying and capturing available margin premiums
  • Identifying price-sensitive products and services
  • Improving sales reps’ confidence in prices
  • Stopping undisciplined discounting
  • Tracking metrics for sales force accountability
  • Improving pricing consistency and fairness

This webcast draws on SPA’s experience working with hundreds of companies to drive pricing gains of 2-4 margin points on affected revenue with minimal customer pushback.

Click here to Register

Other SPA Events

battle-for-margin-las-vegas

Battle for Margin > SPASIGMA Negotiation Workshop & Pricing Strategy Seminar

Date: June 9-10, 2016

Location: TBD Las Vegas, Nevada

Click here for other SPA event dates and times.

Follow SPA

To easily keep up with the latest SPA announcements, events and resources you can subscribe to our Strategic Pricing Pays blog or follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.

Strategic Pricing is Key for Manufacturers to Protect Margins

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Reducing operating expenses, increasing sales volumes, and reducing cost of goods sold all deliver bottom line profit. However, no element of a manufacturer’s business mix can deliver more impact to your bottom line than strategic pricing.

Pricing is the essential discipline of converting customer value into shareholder value. It has a disproportionate impact on profitability – a 2% price variation results in $2 million per year per $100 million in revenue – but it is one of the hardest areas to master.

Manufacturers struggle to maximize price performance for many reasons:

Complexity of product and customer bases

  • Hundreds or thousands of SKUs
  • Multiple segments
  • Hundreds or thousands of customers
  • Direct vs. Distribution
  • Weak understanding of distributor economics
  • Multiple pricing tiers and methods

Complexity of systems and technology

  • Various systems issues and data weakness
  • Difficult to measure performance, evaluate performance
  • Weak competitive pricing data
  • Lost price and profit opportunities

Organizational fragmentation of pricing responsibility

  • Product Managers vs. Sales Force vs. Controller
  • Lack of Training, standards
  • Cost-Plus mentality engrained
  • Unstructured discounting rampant
  • Cultural propensity to please the customer at any price above minimum margins
  • Poor upstream analysis and cultural baggage leads to chaos in transactional pricing environment

Budget-Driven Process

  • Flat price increases to outpace cost increases or meet financial goals, sacrificing market-based analyses
  • Not enough time to properly analyze pricing: start in September, send prices to publish by November 1 for January 1 Release

Strategic Pricing addresses all of these issues.

Massive investments by manufacturers and their distributors create value for customers. Strategic Pricing Management maximizes the return on those investments, while recognizing competitive realities in the marketplace and the benefits flow through directly to the bottom line.

Manufacturers that have an optimized, enforceable, measurable strategic pricing program in place with the proper tools and training achieve significant increases in profits.

Strategic pricing is a big opportunity – generally 2+% of revenue. As pricing gains flow through directly to the bottom line, they can improve a company’s net profitability by 20% or more.

The drivers of the opportunity are clear:

  • Reigning in Sales rep discounting practices
  • Replacing the Cost-plus mentality
  • Managing complexity of product lines, customer base, revenue types

To be effective, a pricing program needs to be data-driven and able to translate strategy into actionable plans.

Pricing is a specialized discipline where expertise has huge payoff in impact and speed of execution.

Join over 200 Manufacturers that have partnered with SPA on the road to achieving strategic pricing excellence today.

The numbers speak for themselves hear what our clients have to say.

 

SPA Events

Click here for webinar dates and times or click here for upcoming in-person Strategic Pricing Seminars.

Follow SPA

To easily keep up with the latest SPA announcements, events and resources you can subscribe to our Strategic Pricing Pays blog or follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.