Increasing Sales & Profits with SPAs … A Case Study

interesting, never thought about SPA contract usage or promoting products to our SPA customers. Only think of it as a pricing tool. Need to get my sales and marketing people to look at this

“Profitability on the SPA customers had improved by double digits”
Where did the extra profit come from: process cost take-out or reduced distributor margins?
I’ve seen the Jigsaw presentation. It definitely has some good features, but it looked strongly weighted to the mfrs’ benefit, not the distributors’.
To answer your questions: SPA’s are *immensely* beneficial to us, we’re fairly well automated, and the greatest improvement opportunities are (1) how we set end-user pricing and (2)increased use of SPA’s to gain business we’re either missing or taking at low margins.

The profitability improvements came from two areas:

1) Setting discount levels to be more appropriate with customer buying volumes when renewing contracts.
2) Overseeing new contract requests using cost benefit analysis to set pricing discounts in line with market strategies.

Ultimately the process asks for a little more price from the end customer where appropriate. This allows both manufacturer and distributor to be price competitive when necessary, but avoids giving wide discounts when unnecessary to maintain the customer business. This approach can improve the profitability of both the manufacturer and distributor.

Too many SPA’s today give up price unnecessarily and have resulted in profit erosion for all parties in the industry.

Dave
You know a lot about marketing but very little about the actual details of SPA’s!
You probably won’t post and that’s fine.

Thanks for the compliment, and agree don’t know much about SPA administration / processing but know many who can vet services and recommend process improvement. They key is that SPAs, in the right hands, can be effective marketing tools (and price is a component of the marketing mix) and with the data that SPAs can capture / generate, this can be a marketing bonanza that can further help a distributor’s sales efforts.