Resource

Client Testimonial: Embarq Logistics

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Embarq Logistics, a $750 million distributor of telecommunications products and services, partnered with SPA to increase their ability to use pricing as a strategic weapon in the marketplace by improving processes, automating functions and measuring the effects of pricing changes.

“SPA is a well-kept secret and has earned my unqualified recommendation. There should be a 1-800 number and you should call now.”

          – Brad Clark, Senior VP of Sales and Marketing | Embarq Logistics

“We consider pricing a strategic weapon in the marketplace and consequently spent a good deal of time improving processes, automating functions and measuring the effects of pricing changes.”

Our division was in the process of soliciting buyers for divestiture and we needed to improve our EBITDA as much as possible to drive up the sales price. As sophisticated as we were, we employed SPA because our results had plateaued and we thought we might be leaving money on the table.

And we were. Millions of dollars. Millions of dollars that drop right to the bottom line. SPA likes to talk about delivering 2-4 margin points but from our experience that estimate is very low. If you are not evaluating your product and customer sets for price sensitivity and setting pricing accordingly, you are likely leaving 6-10 points on the table. We provide some degree of price flexibility to our inside sales reps and even with those modifications, we still see meaningful margin improvements. We expect these increases to continue, and we will continue to cash checks with each improvement!

“SPA can help you increase your bottom line in a matter of months and we are very pleased how quickly the process happened —from the analysis to bottom line impact.”

We started in early spring 2008 and we had new pricing for 140,000 SKUs analyzed, designed and implemented by September 2008.

We’ve seen minimal pushback from customers; most haven’t even noticed the price change.  Because we were nervous about potential customer backlash, we established a control group that didn’t receive the SPA-determined price increases as a way to be sure that the SPA program would not negatively impact sales.  I tracked this every week, for every group, and I can say definitively that not only did the SPA program not hurt sales, the margins for the SPA group improved over the control group.

Our sales force had some initial concerns.   But because their compensation is weighted more heavily towards margin and because we saw an immediately benefit, which was reflected in their commission checks, they were onboard very quickly.  It also helped that this had no negative impact on our supplier relationships.

“The SPA team members are consummate professionals and quickly became an extension of our pricing team.”

They are extremely nimble, very responsive and deliver exactly what they commit to, typically ahead of schedule.  They are also extremely flexible and able to meet you where you are.  Regardless of the maturity and sophistication of your pricing discipline, they will look at your unique situation, improve it and quickly drop money to your bottom line.

Click here to read more SPA client testimonials.

 

SPA Events

Click here for other SPA Seminar dates and locations and click here for upcoming SPA webcasts.

 

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.

Six Sigma Pricing – 99% Good is Just Not Good Enough!

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“Basic human processes are 4 Sigma at best … 99% good is just not good enough.”

Greg Preuer – Former Pricing Director at Cooper Lighting and General Electric

 

The Power of the Last 1%

One glaring example follows about healthcare related mistakes. Using a standard process performance at 3.8 Sigma (99%) nets 200,000 wrong drug prescriptions per year. At 6.0 Sigma (99.99966%) the number is reduced to only 68 per year.

Use the following link to access a short video that highlights why 99% is just not good enough!

https://youtu.be/HWhOy2xfTkY

 

Why Six Sigma Pricing Training?

In short – graduates will improve margins by making better pricing decisions…with better processes and decision making tools. Graduates from this course will learn to chart a clear path to pricing improvement.

They will learn each of the following steps:
1) How to design and design goals which are consistent with their company’s pricing strategy.
2) How to measure and identify characteristics critical for pricing success.
3) How to analyze the current situation and steps along the way.
4) How to design an improved alternative which moves closer to the desired result.
5) How to verify that actions taken create the right results.

Click here to access more details and download our Six Sigma Pricing White Paper.

To learn how you can realize the benefits of SixSigma Pricing training online or on-site go here https://spasigma.com/pricing-mastery

 

Upcoming SPA Events

Set You and Your Team Up to Win Better Agreements at Battle For Margin

Your organization’s profits depend on the individual and collective negotiation skill of your employees – from sales to purchasing. The Battle for Margin negotiation intensive is a rare opportunity to dive deeper into negotiation strategy that will immediately drive for more profitable agreements. Don’t you and your team deserve to be set up for success? Don’t miss the Battle for Margin.

It will be held June 8-9 at the Mandarin Oriental in Las Vegas, NV.

Get negotiation intelligence you’ll find nowhere else:

Revolutionize how you and your team view negotiation. Give your organization the tools and knowledge to drive more profit than ever before with compelling and eye-opening case studies, critiques, and group exercises. Instill knowledge fast. The day will fly by because our seminars are purposefully entertaining and educational; people learn more when they’re having fun.

Attendee Testimonials

Here what our clients have to say about the power of strategic pricing tools from SPASigma Negotiation Training Seminars.

“SPASIGMA breaks the standard mold of slow pace seminars. It’s engaging, fun, and interactive in a setting that feels warm and comfortable.”

     — Mitch Koepp, Marketing Manager, All World Machinery

Other SPA Events

Click here for other SPA event dates and times including our upcoming webcasts.

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.

SPA Featured in The Distributor Channel article “Applying Black Belt Principles to the Pricing Process”

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SPA was featured in a recent The Distributor Channel article, “Applying Black Belt Principles to the Pricing Process”, which discusses how distributors can apply Six Sigma methodology to the pricing function to generate repeatable margin gains and why a solid pricing process is an essential part of any strategic initiative.

Excerpts of the article follow.

“Initially, Black Belts worked entirely within the manufacturing process”

One person saw the advantage of putting the same principle to work on the pricing process.  Enter Greg Preuer of SPASigma.  Greg was certified as a Master Black Belt DMAK by General Electric.  He saw an opportunity to apply the same Black Belt methodology to the pricing used by companies.

The goal:  better pricing programs.

“Pricing is a big deal”

In an age when most companies find themselves facing competitive pressures, pricing policies have fallen into disrepair: special pricing abounds, discounting has grown rampant and operating margins have been pushed and squeezed.  Here’s where Six Sigma (Black Belt) efforts come into play.  Black Belts work to understand and leverage each specific customer’s willingness to pay a price slightly different from their peers.  Simply put, they focus on already existing price sensitivity variances between customers.

Most companies rely heavily on their sales teams for what little direction they may have.  But the reality of the situation is very few sales teams have the proper training or tools to determine price.  Because they place priority on closing the order at any cost (or price,) they tend to underestimate the proper price level.  With this approach in mind, it’s no wonder that pricing has fallen in to disarray.  What sales teams crave is an advanced scouting report on what each specific customer would be willing to pay for every (specific) product in the portfolio; real data that kills the guessing game they currently must play.

“One wholesaler described pricing in his organization as a visit to the wild west.”

Lone Ranger salespeople set pricing for their customers mostly without firm understanding of costs associated with handling or servicing the customer.  Gross margin numbers are used for the same customer regardless of order size or difficulty in providing the products.  Reviews of the pricing used by hundreds of distributors reveals sell prices using familiar numbers which predictably end in zero or five.  Profitability suffers.

“Quoting Greg Preuer:”

“While most formal Black Belt training uses case studies pulled from academia, we apply exercises using the student’s own company’s data.  We’re talking about real actions with real people and dynamic environments.  It’s not just busy work to flesh out the course material, our exercises are tasks developed to make an impact on your companies pricing organization.”  The Black Belt makes a real impact even before certification is achieved.

Click here to read the complete article.

About SPASigma Six Sigma Pricing Training

“Basic human processes are 4 Sigma at best … 99% good is just not good enough.”

Greg Preuer – Former Pricing Director at Cooper Lighting and General Electric

Click here to learn how manufacturers and distributors can apply Six Sigma methodology to the pricing function to generate repeatable margin gains.

Click here to read an interview of Greg about 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.

Click here to learn how you can realize the benefits of SixSigma Pricing training online.

To learn how you can realize the benefits of Six Sigma Pricing Training on-site for your team, contact SPA today at info@strategicpricing.com or 216.455.1545.

 

Upcoming SPA Events

Set You and Your Team Up to Win Better Agreements at Battle For Margin

Your organization’s profits depend on the individual and collective negotiation skill of your employees – from sales to purchasing. The Battle for Margin negotiation intensive is a rare opportunity to dive deeper into negotiation strategy that will immediately drive for more profitable agreements. Don’t you and your team deserve to be set up for success? Don’t miss the Battle for Margin.

It will be held June 8-9 at the Mandarin Oriental in Las Vegas, NV.

Get negotiation intelligence you’ll find nowhere else:

Revolutionize how you and your team view negotiation. Give your organization the tools and knowledge to drive more profit than ever before with compelling and eye-opening case studies, critiques, and group exercises. Instill knowledge fast. The day will fly by because our seminars are purposefully entertaining and educational; people learn more when they’re having fun.

Attendee Testimonials

Here what our clients have to say about the power of strategic pricing tools from SPASigma Negotiation Training Seminars.

“SPASIGMA breaks the standard mold of slow pace seminars. It’s engaging, fun, and interactive in a setting that feels warm and comfortable.”

     — Mitch Koepp, Marketing Manager, All World Machinery

Other SPA Events

Click here for other SPA event dates and times including our upcoming webcasts.

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.

Price Increase: If Not Now, When?

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Read excerpts of an article that highlights how important it is for distributors to be able to implement price increases given a backdrop of continually rising input costs and a strong economy with some forecasting 3.7 percent growth.  Now is the time for distributors to raise their prices.

“Why we’ve got low margins today…”

Downward pressure on margins is the universal distributor complaint. New competitors, supplier sales teams setting prices at unsustainable levels, the internet and customer pushback are all finding their way into the discussion. Further, in spite of some major productivity advancements, operating costs continue to rise. One distributor, who closely monitors operational costs, commented costs have risen nearly 25 percent faster than offsetting gross margin gains over the post-recession era. Clearly, we need to do something.

When times are tough, margins get another squeeze. During “The Recession,” many suppliers instructed their field teams and distributors “not to let price be an issue” while grabbing what little business was available. We responded. Pricing levels extended on projects and ongoing flow business took a gross margin nose dive for manufacturers and distributors alike. The problem lies in the fundamental difference in the distributor and manufacturer business model. The distributor slice of the total “supply chain” gross margin is much smaller than that of their supply partners. For example, Manufacturers make 45-60 percent gross margin and the Distributors receive 20-30 percent. Simply put, we distributors have less wiggle room.

Once The Recession ended, we found ourselves stuck with the lower prices and lower margins. On the customer side, customers discovered new base-line low prices and latched onto the savings. With this fact freshly planted in their minds, many pushed/negotiated to extend the lower level.

“Good times are the right time to ask for a little more.”

Fortunately, most of our customers are out of their own financial crisis. They no longer need to squeeze their suppliers just to survive. The new sellers pumped into our territory are mostly settled into position. They have discovered enough accounts to justify the meager commissions needed to survive. More importantly, customers are busy. They, along with their purchasing/procurement departments, are relying on you for expanded services and dependable deliveries, not record setting prices.

If ever a time existed to push margin to a new level it is now. The window, however, is narrow. Business cycles, by their very nature, move from great to poor. According to economists, this growth spurt will extend into mid-2018. Time is short. We cannot and should not procrastinate our plan.

“Strangely, many distributors have long term pricing agreements without expiration dates.”

The customer asked for longer range pricing stability and the distributor pushed competitors out of the way with a pricing agreement. Some of these are well crafted, while others ask the question: Exactly when will the distributor ever be able to execute a price increase?

Any agreement over one year old is ripe for a price increase, regardless of your current margin. With exception given to a limited number of commodities, it’s just not reasonable to assume the cost of anything has remained the same for over a year. I recommend a proposed price increase of 2-3 points here.

When establishing new agreements, put in openings for new price increases in the future. Ideally, these would be tied to a six or twelve month cycle.

“Review all Manufacturer extended Special Pricing Agreements”

These pricing agreements negotiated trilaterally with the manufacturer, distributor and customer. Typically, distributors raise the price only when the manufacturer raises the price. Sometimes, the manufacturer price increases are not passed along to the customer. This needs to be addressed as soon as possible.

Whatever the manufacturer’s increase, move the gross margin up at least full point. To illustrate, the manufacturer increases the distributor price by 2.75 percent, the distributor increases the customer price by 3.75 percent.

Click here to read the complete article.

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.

The Ultimate Negotiation Strategy Checklist

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Negotiation is like any sport. The best negotiators, like the best athletes, never stop training. They learn new skills and work to develop them. They welcome the coaching and equipment that can improve performance.

We’ve trained thousands of master negotiators over the years, and if there’s one common trait among those who become expert negotiators, it’s that they start to see negotiation as a game. It’s not uncommon for people who want to learn “just enough to get by” get wrapped up in it, suddenly amazed by all the new opportunities made visible through the lens of negotiation.

When you start to see the art, the strategy and the techniques of professional negotiation as a game, what you have is a challenging, rewarding “hobby” that boosts your professional worth, the demand for your talents, and consequently, your income. Heck, even practicing negotiation can be an entertaining endeavor.

Ready to up your game? Get started with our ultimate negotiation strategy checklist.

❒ Brainstorm “The Golden Question”.

With a name like “the Golden Question,” you know it’s juicy. So I won’t keep you waiting – here it is: If there are pressures on me, what are the pressures on the other side?

We tend to dwell on our own pressures, and that puts us at a disadvantage. It’s easy to forget that the other party has pressures too. Brainstorming the Golden Question isn’t just a great strategic exercise that can put you on equal, if not firmer footing than the other party. It also promotes a productive mindset that allows you to approach each deal with confidence.

❒ Employ a discovery process.

Now that you’ve brainstormed a list of pressures the other party may be facing, it’s time to uncover which ones the other party is actually experiencing. Here are a few tactics you can use:

  • The Detective– Strategically probe the other party for beneficial information. Think through the “5 W’s” and ask open-ended questions. Write your questions down and review them before the meeting because it helps you ask each question at the most opportune time.
  • The Schmoozer– Use casual conversation to uncover the other party’s pressures. You’d be surprised what you can learn by simply showing a genuine interest in the other party’s business.
  • The Snooper– This is about using the internet to gather beneficial information about the other party. Dig beyond their website to unearth third-party data and marketing or sales presentations that reveal concerns, motivations and values.

Click here to access the complete negotiation strategy checklist and to learn more about SPASigma.

 

SPA Events

Click here for SPA event info including our next Battle for Margin and our upcoming webcasts.

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.

 

SPA Featured in The Distributor Channel article “Every Silver Cloud has a Dark Lining: Things to Consider in a Growth Economy”

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SPA was featured in a recent The Distributor Channel article, “Every Silver Cloud has a Dark Lining: Things to Consider in a Growth Economy”, which discusses the fact that a strong economic growth business environment can “distract from strategic thought” and why a solid pricing process is an essential part of any strategic initiative.

Excerpts of the article follow.

“Every Silver Cloud has a Dark Lining”

Not to be a perennial bummer, but all this growth stuff presents a few issues for distributors.  For the next couple of weeks we will explore issues tied to operating in a good economic times.  So, without further ado, let’s explore the dark lining in what most view as a silver cloud.

“Issue One: Brisk Business Masks Process Breakdowns”

Surging sales provides stealth cover for many problems.  You lose market share, but since the numbers are looking good you don’t notice competitors poaching business from some of your accounts.  Mediocre sellers post growth dollars and their lack of skills go unnoticed.   Sellers announce they are too busy for CRM data input.  Warehouses get dirty, shelves get cluttered.  Customer returns languish for months before suppliers are notified and credit received.

“Issue Two:  Great Business Climates Distract from Strategic Thought”

Without the right kind of discipline, distributor types find themselves consumed by urgent issues and procrastinate strategically critical issues.  It feels good to be busy and even better when busy is tied to the instant gratification of big business.  But our world is changing… Actually spinning faster than ever before.  Investing in strategic issues during good times is more important during upticks in the economy.  Experience dictates, those with solid strategy go into recession better positioned and rise faster with the next upturn.  Let’s think of strategically important topics.

“I believe a solid pricing process is an essential part of any strategic initiative.  There’s three big reasons why:”

> Pricing Process drives bottom line results.  The typical distributor using David Bauders’ Strategic Pricing Associates improves gross margin by two points.  In some industries, this nearly doubles the bottom line results.  For most distributors the gain is still in the 50 percent range.  You can’t ignore this size of an increase.

> Company value is dramatically improved.  Distributor businesses are valued on a multiple of bottom line profits before tax and interest (EBITA).  Here’s a simplified example of how it works.  A company putting $1M to the bottom line could be valued at 6 times earnings or $6M.  That company increases the bottom line via pricing by 50 percent to $1.5M.  Using the same formula, the company is now valued at $9M.  Further, our research indicates companies with higher performance than industry norms often attract a higher multiple of earnings.  So, the process may actually improve the value substantially more think multiple of 8, which means a value of $12M.  Yep, pretty strategic.

> Processes in the sales department tend to interact.  Building a credible pricing process requires detailed customer and supplier segmentation; marketing improves.  Salespeople are forced to think more critically about the customers they invest time with.  Targeting improves.  And, sales teams with well-developed targets are 47 percent more effective in reaching their goals

Click here to read the complete article.

 

Upcoming SPA Events

Set You and Your Team Up to Win Better Agreements at Battle For Margin

Your organization’s profits depend on the individual and collective negotiation skill of your employees – from sales to purchasing. The Battle for Margin negotiation intensive is a rare opportunity to dive deeper into negotiation strategy that will immediately drive for more profitable agreements. Don’t you and your team deserve to be set up for success? Don’t miss the Battle for Margin.

It will be held June 8-9 at the Mandarin Oriental in Las Vegas, NV.

Get negotiation intelligence you’ll find nowhere else:

Revolutionize how you and your team view negotiation. Give your organization the tools and knowledge to drive more profit than ever before with compelling and eye-opening case studies, critiques, and group exercises. Instill knowledge fast. The day will fly by because our seminars are purposefully entertaining and educational; people learn more when they’re having fun.

Attendee Testimonials

Here what our clients have to say about the power of strategic pricing tools from SPASigma Negotiation Training Seminars.

“SPASIGMA breaks the standard mold of slow pace seminars. It’s engaging, fun, and interactive in a setting that feels warm and comfortable.”

     — Mitch Koepp, Marketing Manager, All World Machinery

Other SPA Events

Click here for other SPA event dates and times including our upcoming webcasts.

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.

10 Buyer Negotiation Tactics to Lower Price Points

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spasigma-blog-10-buyer-neg

Negotiation is a dance. To have it go smoothly, you must be ultra-attentive to your own actions and the actions of your partner. Even the slightest, unexpected move can create a better – or worse – outcome. That’s why we’ve built negotiation tactics around the smartest actions. Here are 10:

1. Anchor them. State your very best price. When you establish your price point, you influence expectation. We tend to expect the first position we hear.

2. Throw junk. Point out negatives about whatever it is they’re trying to sell. You want to make your negotiation partner questions his or her price point.  Before beginning negotiations, collect junk by asking internal stakeholders about their overall satisfaction with the vendor. Did they deliver on time? Was their customer service acceptable? Did they honor the fine print?

3. Woo them. With every bit of junk you throw, be sure to give them a positive statement, such as “We really want to make this work,” or “We really want to do business with you.”

You want to minimize conflict and open the party up to new ideas like a lower price.

Click here to access the full list and to learn more about SPASigma’s negotiation training.

 

SPA Events

Click here for upcoming SPA event dates such as our next Battle for Margin June 8-9 in Las Vegas, NV and dates/times for our upcoming webcasts.

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.