Enterprise Value Creation

Summary

How did a private-equity owned specialty distributor enhance margins before going to market? Find out in this success story.

 

A private-equity owned specialty distributor wanted to enhance margins before going to market and engaged INSIGHT2PROFIT eight months prior to the transaction.

The Result: $3M EBITDA Improvement (annualized).

 

Early Engagement on Sell-Side Diligence Drives $24M+ in Enterprise Value Creation. Utilizing sell-side Quality of PricingSM (QoP®), INSIGHT collaborated with the company to identify and execute on strategic pricing opportunities and worked in conjunction with the investment bank to show realized EBITDA impact and incremental EBITDA growth opportunities in the CIM and marketing materials. After the transaction, the acquiring private equity retained INSIGHT to manage and execute the opportunity roadmap.

 

The Challenge

The QoP assessment quickly revealed an unstructured pricing strategy creating significant variation:

  • Indiscriminate “peanut-butter” spread approach to pricing lacking customer and product segmentation
  • Limited pricing structure and process
  • Commercial team infrequently selling on value and discussing price with customers
  • Inability to analyze and report at the customer and product levels

 

The Approach

The QoP assessment identified immediate opportunities for price differentiation to yield financial impact pre-transaction and multiple incremental margin improvement areas. The new strategic price increases were based on sales velocity, market pricing, margin floors, and volume discount caps. INSIGHT also developed an opportunity roadmap that identified incremental profit improvements.

  • Identified relevant price drivers for pricing model and additional customer and product attributes to enable critical granular data analytics (growth accounts, competitor pricing, etc.)
  • Established new list prices based on good/better/best value proposition
  • Implemented differentiated value-based price adjustments based on vendor and product category
  • Created formal sales processes and account ownership, and built pricing confidence across the organization through INSIGHT’S salesforce effectiveness program – including workflows, playbooks, trainings, KPIs, and sales operations
  • Developed a path to implementation with both quick wins and longer-term improvement areas such as price optimization, segmentation, and cross selling

The distributor implemented the differentiated price increase and immediately began realizing and measuring impact – $3 million on an annualized basis during the first three months post-implementation ($3M EBITDA lift equates to $24M in enterprise value based on conservative 8x EBITDA multiple). The expected incremental annualized profit and the roadmap of another $6 million of potential profit opportunities were included in the management presentation and CIM, arming the investment bank with the rationale for the proforma EBITDA adjustments and growth plan for the business.

 

Improved Data Visibility

Summary

Learn how one manufacturer earned an additional $2.0 million in profit over 12 months by getting a better grasp on its data.

$2 million+ in additional revenue in just 12 months.

 

Manufacturer Increases Revenue by More Than $2 million with Better Visibility into Pricing Data

With more than 3 million unique customer-product prices, it’s understandable this North-American manufacturer found it difficult to effectively manage pricing. Over the course of four years, the company left additional revenue of more than $2 million buried in lost data.

With the help of INSIGHT2PROFIT, the manufacturer was able to achieve standardization within its pricing structure, which helped to bring clarity to pricing and overall profit potential.

In this short case study, you’ll follow how the manufacturer went from product managers, sales personnel and customer service representatives working independently of one another, often contradicting pricing initiatives with deep discounts, cost Increases that outpaced price increase over a 4-year period and override revenue loss of $3.5 million to realizing more than $2 million in additional revenue in just 12 months.

 

PDF: Improved-Data-Visibility (5 pages)

Simplifying Data

Summary

A $1.5B global manufacturer struggled to manage pricing company-wide. Read about how we helped the company implement and maximize technology to overcome its challenges.

 

A $1.5 billion global manufacturer was struggling to systematically control and manage pricing company-wide. We developed a technology to change that.

The right pricing information led to better pricing decisions – and a $7.2 million boost in revenue. 

 

Do You Have True Pricing Visibility?

 

The Challenge:

An economic downturn. Workforce reductions. Our client was a leader in their field, yet they weren’t immune to outside forces. They needed help addressing pricing mistakes and looking at their global price positioning so they could succeed. Yet their current processes and systems gave them limited pricing visibility. 

 

The Solution:

Using data mining, intensive interviews and our DRIVE technology, INSIGHT2PROFIT was able to systematically organize and review thousands of pricing records. Our technology also allowed the client to establish a process for product managers to review pricing approaches and created a dashboard for management to easily review profit progress reports.

 

PDF: Simplifying-Data (one-page printable version)

Maximizing Revenue

Summary:

How did a national medical products distributor maximize revenue despite customer cost-cutting and increased vendor demands?

 

This client maximized their revenue despite vendor price increases and customer cost-cutting demands.

We added $4 million in profit (4% revenue lift)

 

What’s cutting into your profit?

 

The Challenge:

In the medical field, costs and bottom lines are getting pinched more than ever. Our client, a national medical products distributor, was feeling the squeeze from all sides: vendors were not only increasing costs, but hospitals – the client’s primary customer – were actively seeking cost reductions. Past price increases had failed, and the sales team needed to know that any price changes would not mean roadblocks and lost business. 

 

The Solution:

INSIGHT2PROFIT capitalized on the client’s distinct products and services while strengthening its financial positioning using a 4-step process: they looked at deriving revenue lift through (1) peer alignment, (2) comparative alignment, (3) adjusting the price ceiling and (4) custom adjusting specific price points. This included pricing recommendations for all products as well as training and support for the client’s sales team – helping them confidently and effectively negotiate with hospital buyers.

 

PDF: Maximizing Revenue (one-page printable version)

Understanding Market Dynamics

Summary:

An industrial tape manufacturer needed to overcome price objections and prove the superior value of its products. Read about how we helped them achieve their objectives.

 

“You are more expensive than the other guys.” Ever hear this?

Our client was told that their prices were 15% higher than the competition. We proved that they were in fact 20% lower and their name brand product offered more value.

 

How do your prices compare to the competition?

 

The Challenge:

An industrial tape manufacturer was faced with an influx of private label competition, creating a commodity feel for their high-performance product. These forces created the perception that their brand was priced higher and under delivering. 

 

The Solution:

Using a custom market research survey, INSIGHT2PROFIT gathered unbiased market data that dug deeper and analyzed the data to formulate actionable answers. The resulting information was three-fold. It helped (1) define the perceived market value of the client’s primary products, (2) quantify the value proposition the client offered for its various distribution channels and (3) quantify the value the client’s brand provided versus the private labels. We then armed the sales force with pricing facts and figures that helped during negotiations, and helped the sales reps strengthen the positioning of the client’s brand.

 

PDF: Market-Dynamics (one-page printable version)

 

Success Story: Rewarding a Sales Force

Summary:

How do you get the most out of your sales force? In this success story, you’ll learn how we helped a mid-sized manufacturer build a new sales compensation program that empowered its salesforce to adapt to business changes.

 

INSIGHT2PROFIT helped our client successfully build and implement a new sales compensation program that empowered the sales force, rewarded individuals for profit-oriented decisions and was adaptable to business changes.

 

Are you getting the most out of your salesforce?

 

The Challenge:

Our mid-size manufacturing client was struggling with the effectiveness of their sales compensation program. Was it driving the right products and services? And was there any way for the payout structure to be more predictable?

 

The Solution:

INSIGHT2PROFIT assessed the current compensation program and worked closely with the client to build upon the program’s strengths; namely the fact it was based on Gross Profit Dollars (versus revenue), incorporated sales representatives’ expenses, and was a good mix between base salary and variable pay. The modified program also compensated sales representatives on price waterfall elements they could influence, such as terms discounts, freight revenue and invoice deductions. We also built a business application that gives sales representatives the ability to clearly understand the program and see how their daily decisions impacted the company’s profit and their resulting pay.

 

PDF: Rewarding-Sales (one-page printable version)