Global Fire, Safety & Security Systems Services
Quick Wins, Foundation for Value, and Centralized, Sustainable Pricing Capability
2.5% price impact in Y1; Additional 1-2% projected in Y2
Centralized Pricing and Profit Growth Through Phased Approach
Stronger pricing capability across organization to drive tangible, sustainable results
This global fire, safety, and security services company had grown rapidly through acquisition and organic growth, resulting in significant decentralization, autonomous decision-making, and profit leaks. The business lacked a clear, organizational-wide pricing strategy that aligned to company goals as well as visibility to the data to drive more profitable decisions. INSIGHT developed a phased approach to ensure team-wide buy-in, establish quick wins to see immediate results, and drive a cultural shift. Then, we implemented a value-based pricing strategy and supporting quoting infrastructure to address margin leakage and provide sustainable pricing guidance.
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Situation
Strategic Pricing Decisions for a Rapidly Growing Business
Identifying the ideal approach to drive real, profitable change
- Highly acquisitive, global systems integrator focused on the design, install, and service for security, fire alarm, life safety, audio-visual, and building automation solutions for enterprise customers
- Decentralized organizational structure led to significant pricing variation and inconsistencies across 100+ branches
- Minimal YoY growth primarily driven by volume, with overall net price loss due to discounted rates for customers with increased volume
- Limited margin guidance provided to the sales team, leading to arbitrary pricing decisions that are rarely reviewed or updated
- Client lacked differentiated across key factors such as customer and job size
- Lack of automation and visibility to data led to margin leakage on a local and global scale
Current State Diagnostic: Key Findings
Lack of process automation, data quality, and visibility to actionable insights created margin leakage on a local and global scale
Install Pricing
- Limited margin differentiation between projects
- Limited guidance provided to branches on pricing
- Commission structure influences Account Executive pricing behavior
- Price was one of the first negotiation levers utilized by Account Executives
Service Pricing
- More customers had unique rates than branch standards
- Cross-branch pricing was manual and difficult to estimate
- Billing errors were common due to manual tracking
- Standard rate and fee changes were not synchronous and tracked
Infrastructure
- Buying power was underutilized
- No central repository for contracts and commercial terms
- “90% of contracts were on ‘customer paper’”
- Unique or limited approval processes across branches for quoting process
- Finance and business operations utilize different data sources
- Decentralized business where local leaders desire a level of guidance
Cost-to-Serve Analysis
Fully utilized and populated data fields helped determine true margins and identify areas of leakage within the business
Service Rate & Adherence: Sample Analysis
The review process highlighted different areas of opportunity to improve service rates and revealed inconsistent practices
Assessment Opportunity Identification
Quick wins and near-term opportunities identified a base case of >2% in margin improvement, with significant upside
- Client has grown top line significantly YOY and continues to grow, although bottom line has remained stagnant
- The identified initiatives will enable growth to the bottom line
- Select pricing activities are low-risk but high-reward, establishing foundation for pricing capability and cash flow
Approach
Value-Based Pricing and Leak Management
Market intelligence, segmentation, value-based pricing model, and commercial execution plan to deliver tangible impact
- Initial scope focused on 50+ North American branches, installation services
- Conducted current state assessment and qualitative interviews to compile short-term quick win opportunity roadmap, including opportunities to improve margins through job size differentiation, scope change management, material handling fees, and contract adherence
- Conducted voice of customer analysis to determine factors that drive customer purchase and retention
- Implemented quick wins through warranty, freight, and change fee pricing to establish confidence in pricing as a growth lever
- Segmented peer groups based on similar transactions to calculate a recommended price range, standardizing service rates across branches to ensure pricing consistency and simplify the customer experience
- Executed differentiated price adjustment based on peer groups to address outliers across customers and service levels
- Implemented a value-based pricing model designed to capture additional margin by aligning prices with the complexity and criticality of each job from the customer’s perspective
- Led a 2-day in-person negotiation workshop for the sales team and company leaders, delivering a structured framework to enhance negotiation strategies and drive better outcomes
- Implemented KPI reporting to closely monitor the pricing app’s performance and ensure effective adoption and usage across the team
- Future workstreams: cost estimation increase, contract re-negotiation, material & freight cost assessment, additional global regions
Customer Surveys
Market intelligence showed quality is the primary purchasing factor for large projects
Key Takeaways
- Larger projects were previously priced below small and mid-sized projects, resulting in lower margins
- Survey results show that price isn’t a key factor for large projects
- Opportunity to capture more value by raising target margins on these projects
Value-Based Pricing Model
Differentiate margin targets based on value drivers to standardize rates and increase adherence
- Data-driven rate recommendations transfers the responsibility of rate setting to the pricing team, bringing greater clarity and consistency to customer rates
- Integrated recommendations into Client’s internal quoting tool
Infrastructure, Governance, and Sustainability
Drive improvement in people, process, and technology while ensuring impact and adoption continues to improve
People & Process
- Lead monthly measurement discussions
- Facilitate and set goals of recurring activities
- Training, coaching, and enhancing tools in the field
- Drive users to utilize system functionality for efficiency and visibility
Technology
- Weekly validation of reporting attributes and troubleshooting
- Support in prioritization and validation of new data releases
- Create business health reporting and visibility
- Detail development for installation margin guidance
Impact
Centralized, Sustainable Pricing
2.5%
Price Impact in Year 1
Additional 1-2% projected in year 2
Quick wins funded follow-on sustainable projects
Cultural shift toward pricing capability
Centralized value-based pricing
Unlocking Competitive Advantage: How Competitive Intelligence Fuels Strategic Pricing
Learn how competitive intelligence drives informed pricing decisions and an effective pricing and commercial strategy
Price vs. Volume Tradeoff
Every business, whether selling products or services, faces a familiar dilemma: lower the price to attract more customers or maintain higher prices to protect profit margins.
Professional Services Overview
Does your pricing strategy capture your full value?