I could tell from benchmark studies that my company lagged the industry. The question was never should we do something, it was always what to do given the challenges.
You know the excuses we made… every sale is competitive…the sales force knows how to price…we’re making all we can…it’s complicated…we have so much to do.
At the end of the day I knew we must make more or be competitively disadvantaged. In order to address the challenge, my team developed an approach that has become the basis of our methodology at Profit2.
We operate on two central axioms: First pricing is a cultural challenge. It doesn’t matter what analytics you use if your sales force doesn’t buy into your new pricing system. If that happens, you’re stuck in an endless cycle of with little hope of payback.
Second, pricing is difficult because of the scale. Most distributors make 250,000+ pricing decisions each year. Most sales where you can safely make more margin are on incidental items where there’s little market feedback on how to price most incidentals where you can make more.
The key is not some grand strategy or magical software. A successful margin improvement program is based on engaging your organization in a transparent, understandable methodology that is exacting and granular while avoiding complexity and time-wasting process.
If you’re tired of waiting for higher margin, Profit2 may be your solution. We’ve helped 300+ distributors gain 1 point of margin in just 60 days.