Learn how a leading national auto service retailer optimized its pricing strategy to unlock millions in operating profit. Through a multi-phased approach, we helped them overcome fragmented data, outdated systems, and inconsistent pricing practices. Discover how an optimized pricing strategy, customer segmentation, and advanced analytics led to significant revenue gains and improved operational efficiency. Read the case study to see how your auto service business can achieve similar results.

SITUATION

A leading national auto service and tire retailer with nearly $1 billion in annual revenue and 350+ stores across the United States sought to optimize its pricing strategy and enhance operational efficiency.

The company had experienced consistent growth through acquisitions, expanding its footprint and market share. However, this rapid expansion had led to a complex and fragmented pricing landscape.

Despite its strong market position and growth trajectory, the client acknowledged a critical need to address underlying pricing challenges.

The company lacked a sophisticated and coherent pricing strategy, instead relying on outdated systems, fragmented data, and inconsistent pricing and discount practices across its various banners.

ACTION

We implemented a multi-phased approach to address these challenges and build a robust foundation for pricing excellence:

Phase 1: Diagnostic Assessment & Strategic Blueprint

●     Comprehensive Data Gathering & Deep-Dive Analysis: Conducted extensive data analysis, encompassing 6.8 million invoices and leveraging over 50 custom Tableau visualizations to assess pricing performance, identify areas of improvement, and understand customer behavior. This deep dive provided a granular understanding of the client's pricing landscape and revealed key areas for optimization across competitive pricing, shop supply fees, and parts markup strategies.

●     SME Interviews & Multi-State Store Visits: Conducted over 35 interviews with subject matter experts across various departments and levels of the organization. This provided valuable qualitative insights into pricing practices, market dynamics, challenges, and opportunities. Further, we visited 15 stores across six states and several banners to observe operations firsthand and gain a deeper understanding of store-level pricing execution and customer dynamics.

●     Customer & Market Research & Conjoint Analysis: Surveyed 2,000 consumers across key markets to understand price sensitivity, brand perception, service preferences, and competitive dynamics. We conducted conjoint analyses to quantify the impact of various pricing attributes (labor, shop supply fees, repair wait times, etc.) on consumer choice, providing valuable data for strategic decision-making.

●     Comprehensive Pricing Maturity Assessment: Conducted a thorough pricing maturity assessment to evaluate the company's capabilities across various dimensions, including strategy, execution, analytics, and organization. This provided a baseline for improvement and identified key areas for development.

●     Detailed Blueprint for Pricing Excellence: Developed a comprehensive blueprint outlining strategic recommendations across all pricing aspects, including structure, segmentation, discounting, analytics, technology enablement, and organizational capabilities. This served as a roadmap for achieving pricing excellence and guiding future initiatives.

OBSTACLES

The client faced several obstacles that prevented the development and implementation of a robust pricing strategy:

●     Fragmented Data & Inconsistent Data Structures: Data resided in disparate systems, making it difficult to gain a comprehensive view of pricing performance and customer behavior. Inconsistent data structures and a lack of standardization across two key banners further complicated analysis, hindering the ability to gain insights into pricing effectiveness, promotional ROI, and customer segmentation.

●     Outdated Systems & Limited Functionality: The company's primary point-of-sale system (POS) lacked essential functionalities for implementing sophisticated pricing strategies, managing discounts, and tracking price overrides effectively. This reliance on outdated technology restricted the ability to automate processes, personalize customer interactions, and analyze pricing data in a comprehensive and timely manner.

RESULTS

Our comprehensive, data-driven approach yielded significant results and positioned the company for long-term pricing excellence:

●     Significant Profitability Gains & Revenue Optimization: Identified over $2 million in immediate gross profit opportunities from targeted tire pricing adjustments alone. The parts matrix optimization and value-based segmentation initiatives will generate an additional $2 to $4 million in annual operating profit. These initiatives demonstrated the potential for significant financial impact through data-driven pricing strategies.

●     Enhanced Pricing Strategy & Customer Segmentation: We implemented a clear, data-driven pricing framework based on customer segmentation and competitive intelligence. This framework provided a structured approach to pricing decisions, moving away from ad hoc practices and enabling more targeted and effective pricing strategies.
●     Improved Operational Efficiency & Reduced Price Overrides: The simplified parts matrix and standardized pricing guidelines reduced store personnel's reliance on manual price overrides. This resulted in more consistent pricing execution across stores, improved operational efficiency, and reduced potential net revenue leakage.