Profit2 was formed by former distributor executives 20 years ago. Our sole objective is to enable distributors to safely increase margin. All of our executives have walked in the same shoes as your salespeople and have experienced the benefits of defensively increasing pricing in an ever-changing environment.
Our business works with hundreds of distributors who sell to residential and commercial contractors. It goes without saying that the housing crisis in 2008 and 2009 was an awfully tough year for distributors who supplied either of these contractor markets. In June of 2009, during the height of economic unease, we were approached by a building materials distributor who had 90 percent of their business from these two contractor groups.
The distributor was a family owned business (fourth generation) and was at a crossroads: sales volume had declined 40 percent and they’d never laid off an employee in 75 plus years of business. This building materials distributor was referred to us by an electrical distributor who was having success increasing margins even during the tremendous headwind of the recession.
At Profit2, a primary focus is working with our clients to help them set up their internal ERP pricing structure in a way that’s consistent, credible and optimized. Our client’s resources are often stretched to the point they don’t have the ability to analyze potentially a million plus pricing decisions a year. They will typically oversimplify the pricing process leaving hundreds of thousands of dollars on the table for items just bought once or twice a year on average.
This building distributor, after a very frank discussion with their board, decided to hire us to help them better price the ancillary items that made up 25 percent of their total sales. Over a 75-day period we did the analysis work and imported pricing files into their system. They paid for our entire program fee within 13 days of going “live” with the new pricing and have been in the black ever since.
Most important to their management team, they still haven’t laid off an employee in company history.
The recession is here and the decisions you make- or maybe even more critically- don’t make will reverberate over the next 12 to 24 months when this ends. Getting in front of an issue by maximizing margin using existing sales dollars is one proven strategy to help weather the storm.
Paul Parsons – Partner