Sector:
Manufacturing
Service Lines:
Pricing
Client Situation
Heavy machinery component supplier was experiencing declining sales during a period of extended economic growth when they expected increasing revenues
Company suspected their pricing approach was contributing to the challenge
How We Helped
Analyzed sales volumes across products and customers and identified customer and SKU mix that resulted in lower margins
Conducted voice-of-the customer research to discern customer journeys, key procurement criterion, and client’s recent performance strengths and gaps
Uncovered key insight on how becoming the default supplier in purchase order system for a specific category was central to maintaining volumes and continuing to be selected as the supplier-of-choice
Learned from customer base that total cost of ownership including volume incentives were central to the decision-making calculus
Discovered that competitor set was offering additional rebates for high volumes to increase market share
Result
Developed a new pricing structure that would reward higher volumes and revenue per customer while improving margins
Offered select customers pre-rebate structure to win market share, guarantee volumes and secure predictability of future cash flow
Client regained market share from competitors and revenues rebounded quickly