Auto Parts and Services Provider Optimizes Omnichannel Pricing and Eliminates Margin Leakage
Leading European auto parts and services provider succeeds in managing and optimizing prices for its entire catalog of 1 million SKUs across all channels.
At a Glance
Leading European Auto Parts and Services Provider
Inability to frequently optimize prices and avoid margin leakage.
Price Management, Price Optimization, Deal Negotiation
Scaled to manage 1 million SKUs and eliminated margin leakage.
With Pricemoov, we’re able to manage and optimize prices for our entire catalog of 1 million SKUs across all channels with ease. We’ve also gained real-time visibility of sales adherence to price guidelines in an effort to eliminate margin leakage.
With operations throughout Europe, a leading auto parts and services provider was facing growing omnichannel pricing challenges. In pursuit of its mission, the business wanted to equip central and local teams with the right solution to eliminate margin erosion and increase profitability. The company implemented Pricemoov’s next-generation pricing platform to better manage and optimize its prices across multiple channels.
Insufficient Data and Resources to Price with Agility
The company lacked a central environment to keep track of pricing-related data. It used five different ERPs spread across 15+ countries that were not integrated. As pricing decisions were made using spreadsheets and other non-pricing-specific tools, teams involved in pricing spent a lot of time resolving data conflicts and data quality was a growing concern.
Reacting to competitor movements was another challenge. The pricing team had to monitor competitive data and manually change prices in spreadsheets. “Imagine having 1 million auto parts with neither specific rules to manage prices at the SKU level nor the manpower to cross reference with the catalog. We were only able to update prices for the top performing 100 products with no means of ensuring the accuracy of the remaining SKUs,” explains the pricing director.
An added layer of complexity was the ongoing change in market dynamics with different levels of inflation and cost volatility in each country. The company was grappling with frequently changing costs due to scarce raw materials, port disruptions, and labor constraints. Not having the necessary manpower meant the pricing team lacked agility in changing prices to protect margins.
Lacking Control Over Sales Negotiated Prices
For its B2B business – about 70% of the company’s revenue – the pricing team and category managers provided the sales teams with price guidelines once a year in a PDF file. As the format was not user-friendly, sales reps did not refer to the document.
Moreover, as customer relationships were managed by the local teams, salespeople had autonomy to set prices as they saw fit. Customers could request one-off discounts and sales reps could implement them with limited to no approval. There was no way to enforce price guidelines and the pricing team could only conduct ad hoc checks in hindsight.
“Our salespeople were more focused on growing volumes than protecting margins,” the pricing director recalls. “The result was shrinking margins per unit and decreasing profitability. We needed to adopt a more rationalized, data-driven pricing approach that would enable our sales teams to propose the right prices to every customer.”
Pricing as a Strategic Priority to Drive Profitability
A turning point came with a new CEO who prioritized pricing as a key lever to address wavering profitability. The company needed a solution that could handle a complex B2C catalog, with the capability to support different pricing strategies and optimize prices dynamically.
At the same time, the B2B side of the business required guideline-setting functionality and real-time monitoring via dashboards. Moreover, the solution had to be user-friendly and integrate with the CRM system, so that sales reps could create quotes quickly and accurately.
Upon evaluating various options, the company selected Pricemoov as the most suitable provider to support every stage of its pricing transformation. “Not only were we impressed by Pricemoov’s platform capabilities, but also its subject matter expertise. Pricemoov experts understood our pricing challenges, what we wanted to achieve and advised us on the best solution to reach our revenue objectives,” comments the pricing director.
Increasing Operational Efficiency with Centralized Data and Automation
With the Pricemoov platform connected to the company’s ERPs, all pricing-related data for over 1 million SKUs is now centralized in one place. Pricing stakeholders can see all prices, costs, and competitor data at a glance and the entire B2C catalog can be updated with ease. Furthermore, with daily tasks automated, the pricing team can focus on more strategic pricing decisions.
“The automation provided by Pricemoov has been transformational for us. With rules applied for each product category and real-time competitor insights, millions of prices are automatically optimized across all our channels,” explains the pricing director.
Improving Sales Negotiations and Maximizing Margins
The Pricemoov platform arms salespeople with real-time pricing insights to be able to better negotiate. A sales rep can see a customer’s performance, their prices from previous years, and price guidelines recommended for that customer segment. They can also simulate the impact of different prices based on historical sales volumes. “With this centralized contextual information our sales teams are empowered to set prices accurately and maximize margins,” says the pricing director.
Today, category managers closely collaborate with the sales teams on price guidelines and approval workflows. This has had a measurable impact on the enforcement of pricing policies and has reduced margin leakage. At the same time, Sales Managers are able to monitor sales performance via dashboards, develop OKRs for their teams, and link them to their performance reviews with complete transparency.
Previously, over 50% of sales reps were deviating by more than 10% from our price guidelines. After implementing Pricemoov, this number is less than 15% and the downward trend continues.
Gaining a Strategic Partner in Pricing
Pricemoov has enabled the business to align pricing with strategic revenue objectives. As the company’s pricing transformation continues, there are two key areas where Pricemoov will be instrumental to ensure further success. The first area is optimizing prices depending on stock levels to ease tensions in the supply chain. The other is navigating rising inflation and frequent supplier cost changes. This means moving away from a simplistic cost-plus approach and tapping into enhanced analytics, dynamic pricing, and promotion optimization on the Pricemoov platform.