Industry: Consumer / Pet
Area: Pricing Strategy and Revenue Growth Management

In collaboration with EBITDA Catalyst, Revology's strategic partner for driving value creation for mid-market Private Equity.

SITUATION

Client Background

• The Client, a privately owned premium pet food & pet products multinational company, sells under a portfolio of leading Pet brands primarily to cat / dog, aquatics, reptile and durables such as pet furniture, toys, and feeding devices

• Primary markets span the large economies of North America and
  Europe, with strong channels in Big Box Retail, Ecommerce & Club

Chaotic, Bazaar-like Pricing With No Strategy

• The Client's didn't have a well defined MSRP list and various price lists for larger customers had no clear connection to each other or central strategy. MAP pricing was spotty and outdated.

• All but the largest customers seemed to have price lists with separately negotiated discounts, often submitted by an individual sales rep

• Head of Sales seemed alone in knowing the price lists location & contents.

ACTION

Revology and EBITDA Catalyst assisted Client in reset of Pricing strategy, deep SKU rationalization, and negotiating pricing as it shifted to a distribution 2-step sales model.

• Quantitative and Stakeholder Deep Dive

  We conducted a comprehensive analysis of the client’s transactional data and detailed interviews with key stakeholders.

• Analytical Tools & Financial Impact Model

  We built customized analytical tools in R, Tableau & Excel to educate all pricing, SKU and customer rationalization decisions, quickly adopted as one-source-of-truth based on auditable data from central HQ data team.

• Effected SKU Rationalization of 1,000+ SKUs

  We created framework for quantitative economic and strategic analysis of the rationalization decisions, recommending a deep list of SKUs to discontinue

OBSTACLES

No Pricing Strategy -> Reactive & Defensive

• Nearly all pricing resided with the head of Sales, much of it reactively managed in "old school" Excel sprawl. There was virtually no process, with limited bandwidth available for each pricing decision. Most "pricing" was merely saying "yes" to retailers. The fear of losing sales resulted in "forgetting" the true cost to serve and selling unprofitably.

• SKU and Customer Sprawl Complexity

  The sheer count of (customer x SKU) combinations presented daunting deterrence from any data-driven approach, or initiative to establish MSRP and MAP price points. The bandwidth cost to "analyze" was wearing out the entire management team, while $ ops costs were a big drain on the bottom line.

• Lack of Analytics & Pricing Tools

  The company had no central repository of pricing data or tools to generate a "one-source-of truth" analysis of pricing decisions, or how they performed. Excel sheets had no version control, no data audit trail, and were insight-deprived, often hardcoded numbers.

RESULTS
Revenue & Margin Growth:

• New MSRPs and Key Account price lists with analytical framework to win more margin $

• Client won 3+% of margin in negotiations with distributor that will also expand Revenue by 50%+ on over 30% of total Revenue

• Shaved 2-3% of revenue in unproductive rebates and poorly administered Terms concessions

Give-Gets Pricing Execution Training:

• Trained Client's entire team to grow a new negotiating backbone, with CEO using our slides to evangelize

• Recommended establishing new pricing function, schedule of governance & approvals, and a pricing "Operating system" cadence of activities

Portfolio & Customer Rationalization:

• Eliminated 1,000+ unproductive SKUs and migrated 90%+ of customers by count to distribution.

• Dramatic reduction in cost to serve, complexity, and obstacles to manage pricing.

• Enabled Client to redirect management time and energy to creating value for customers and new product innovation