Grow your Margin by Two Points - An opportunity to attend SPA's Pricing Strategy Seminar - For Free

By -




Imagine the impact of two additional points of additional margin to your business.  Since I got into the business back in the 70s, distributors have talked about adding just a single point.  They held rah-rah employee meetings, made posters embarrassed with things like “The Power of One” and listened intently as experts extolled the virtues of Matrix Pricing.  Nothing sustainable happened; they were largely unsuccessful.    

Over the past couple of years, I have had the opportunity to study the margin results enjoyed by the clients of Strategic Pricing Associates.  Being an engineer by training (and a bit of a computer geek), it was their scientific computer analysis of invoiced pricing that originally drew me to their company.  However, after learning more and interviewing dozens of their clients for my own research in sales process, I would say I am struck with their process.

It’s a combination of analytics, documentation, metrics and coaching; precisely what I believe goes into a great process.   Here’s a quick breakdown:

Analytics
Computer-based scientific analytics give distributors a better view of their situation than is humanly possible.  The typical distributor has millions of pricing permutations – think 2,000 customers x 1,000 SKUs equals 2,000,000 unique pricing situations.  It’s not humanly possible to manage this kind of data even using a really good spreadsheet.

Documentation
The SPA plan segments both customers and products.  It spells out a plan for pricing agreements which have been abandoned or abused.  It lays down documentation via reliable system prices that take the burden of decision off of inside sales people. 

Metrics
SPA refers to these metrics as Ratios of Attainment.  They provide the tools to measure how much of your business is selling at management set prices versus discounting.  These numbers are available by customer, territory, branch and product lines.  Remembering, that which is measured improves, the very act of setting measures drives results on its own accord.

Coaching
Not only does SPA’s process provide solid data for coaching their client’s employees, using experience garnered from over 350 distributor implementations SPA provides management level coaching to drive the greatest results.

Why am I sharing this?  SPA will be holding a FREE Strategy Seminar in Chicago on September 19th.  I have taken part in a half dozen of these sessions and I feel they provide value.  I will be speaking to the group and taking part in some of the panel discussions. 

If you would like to register or learn more, I suggest you click here of contact Sheri Morford at 216-455-1544.  These things fill up fast.  

Comments

Post a Comment

Popular posts from this blog

The Dance of Onboarding: Integrating New Hires into Your Corporate Culture

By -
Image
Have you ever tried to waltz or swing dance with someone who couldn't match your rhythm or didn't know the steps? It can become a clash of styles or cultures, or, worse—somebody gets their toes stepped on. A similar thing can happen when a new hire doesn't quite 'get' the culture. Much like dancing, though, skills can be learned. I recently facilitated a panel on Cultural Quotient (CQ) where we discussed best practices for increasing CQ. This involved intentional learning, self-awareness of physical cues such as body language and personal space, and the willingness to adapt to new cultures. I have some amusing stories about what not to do based on experiences with insensitive former colleagues. However, it's more productive to focus on how employers can improve the onboarding experience and subsequently enhance retention and employee engagement by welcoming people into their corporate culture. Maybe someday in person, over drinks, I'll share a funny story o
Read more

50 Questions for Distributors

By -
Image
Last week I wrote an article titled “Six Questions that Demand an Answer.”  Sharing the article with a few trusted advisers, I received one consistent bit of feedback best summarized by this response. “Frank, I agree these are questions we must ask ourselves; they caused me to pause and ponder.  I used them as an exercise with my team to think about our overall strategy.  I believe taking the time to think about our business from an outside perspective to be justified and worthwhile.   Sometimes it’s hard to do this subjectively.  I would like to see more questions just like these.” The following is my first round of questions.  I have put them into categories to make them easier to digest.  Some will apply to your position, some will not.  I suggest spending a moment visiting these topics with members of your own team. A note:  The readers of this blog come from a variety of backgrounds, hold a diverse collection of positions within distribution and come from a number of
Read more

Ship and Debit Programs

By -
Image
Special Pricing Agreement and Thoughts about Ship and Debit Programs Click here for a brief tutorial on Ship and Debit Programs. Special Pricing Agreements (SPA) have been around for a very long time. The concept is simple; a manufacturer uses their distribution channel as a vehicle to service a customer who requires very low pricing to match some commercial situation. The details of the commercial situation aren’t really all that pertinent. They can arise due to customer potential, competitive pricing pressure, or supply contracts driven with large mega-corporations. The point is normal distributor margins no longer support the selling price and the distributor plays a critical role in providing some service to the customer. In years gone by, distributors involved in these situations purchased products earmarked for the special priced customer at sub-distributor price levels. The freshly purchased (at lower than normal cost) products were either brought “into stock” to sell
Read more