KompanStrategic pricing improves the bottom line
For some years, competition has urged Kompan to set up a number of services for the customers to defend its position as a price leader. The price pressure resulted in an increased need to differentiate prices and discounts for different segments, channels and customers in order to maintain a satisfactory margin.
In addition to the lack of connection between discount and the customer’s value, the diagnosis showed, supplemented by interviews in the sales organisation, that there was a large potential in shifting the customers’ focus to products with a higher profit margin. Moreover, an analysis revealed that the average discount was 10-15% higher than originally planned.
The project contains a combination of a large number of different competences combining strategy, pricing, marketing, sales and implementation of organisational changes. As part of the roll-out of the solution in eight countries, one country was selected as a pilot project. A complete price implementation concept containing an “analysis package”, a “training package” and a “tool package” was developed. These packages consisted of specific analysis and training tools, a detailed implementation plan including the agenda for the individual workshops, discount policies, processes for the work with price structures and followup plans. All “packages” were tested in the selected pilot country.
... supported the change process as each sales office was involved at an early stage in connection with the preparation of the analysis package. In the solution, a special focus has been devoted to developing tools, KPIs, processes and followup procedures in order to ensure a permanent effect in the organisation. Many resources have also been dedicated to developing and implementing a simple IT support for the follow-up on price and discount structures on the different markets.
One of the challenges in the solution was to implement improvements in eight countries with widely different cultures and approaches to sales. By using Implement Consulting Group’s implementation model and involving all relevant employees in the company’s sales organisation, Kompan succeeded in overcoming this challenge.
One year after the launch of the project, the bottom line in the sales offices working with pricing in a structured way has improved by 1-2%, corresponding to additional annual earnings of more than DKK 10 million.
"In retrospect, we only regret that we did not launch this project earlier. After only a few months, the project has already generated a noticeable improvement of the turnover as well as of the result, so our expectations as regards the future improvements are great, with good reason.
The process has been successful, with a strong focus on practical work instead of theory, and the most important part has been the constant focus on the fact that the result of the process must be applicable in practice and implementable in the organisation."
This case story was originally written by Nicolai Broby Eckert
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