Electrical Equipment Manufacturer
Discounting Strategy Safeguarded Price Increases from Discount Erosion
Developed discounting strategy that ensured price increases weren't offset by discounts, delivering $25M revenue growth over 2 years
Optimizing Discounting Strategies: A Data-Driven Approach to Margin Protection
A $2B electrical equipment manufacturer centralized discounting policies, implemented data-backed controls, and achieved $25M in revenue growth.
Decentralized pricing authority and inconsistent discounting practices created significant margin erosion for this $2B electrical equipment manufacturer. Sales teams relied on their own habits for setting discount levels, leading to price variations across customers, products, and regions. To address this challenge, the company implemented a structured, data-driven discounting model, integrating it into CRM for better control and measurement. This transformation resulted in $25M in revenue growth over two years, proving the power of disciplined pricing backed by analytics.
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Situation
Decentralized Discounting Erodes Margins and Reduces Pricing Control
Inconsistent discounting practices and multiple ERP systems created pricing inefficiencies, reducing the impact of price increases.
- The company had decentralized pricing authority, multiple ERP systems, and limited ability for the sales team to understand prior customer discounts given, resulting in significant discounting autonomy to price outside recommendations.
- Significant price variation across customers, products, and individual salespeople who relied on their own habits for discount levels
- Believed their sales team is minimizing discounts and their commission structure would drive compliance
Approach
Implementing Data-Backed Discounting Controls for Pricing Consistency
A dynamic discounting model and CRM integration provided structured pricing guidance to improve revenue outcomes.
- Re-set customer discount levels through a dynamic model
- Integrated a tailored discounting application into CRM for the sales team to guide and measure discounting
New discount management system protects the bottom line, centralizes internal policies, and combats margin erosion
Key Takeaway
- Decentralized pricing authority was the primary driver of high margin variability and a result of individual salesperson’s habitual discount levels
Impact
Accelerating Growth Through Data-Driven Pricing
Advanced analytics and pricing science unlocked sustainable revenue and strategic decision-making
$25M
Revenue Growth from Price Over 2 Years
Developed optimized pricing model backed by data science
Stood up rigorous analytics to provide data-driven decisions
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