Canadian Electrical Wholesaler

Aug 4, 2020

David GordonBy David Gordon

Everyone is an expert in pricing. It’s either too high or too low based upon your role. Salespeople like it low. Management wants it high. The customer wants it “right” which, usually means “competitive” or “It’s reasonable for the value I am receiving.”

And the term “value” is intriguing as it infers that you understand

• the value that you bring

• the value that your product / service brings

• the competitive landscape (which also includes alternatives and inertia)

But I digress.

In times of crisis, when salespeople are competing for limited opportunities, frequently they revert to “our price is too high.” Further, in distribution we have a tendence to start pricing endeavours with 1s and 2s as we “morally feel that we can’t charge too much.”

In reality, we’re starting to create customer expectations for the future that the price can always go lower.

Gross margin dollars/invoice

And, if we don’t have gross margin dollars, we can’t meet payroll (or other operating expenses.)

The most important metric for companies is a version of “gross margin dollars/invoice” (for reps it could be commission dollars/invoice). Why? Because you cannot spend percentages! Percentages are solely derived calculation.

Consider:

• A large, project order that will be drop shipped and requires little intervention/handling that has “quick” turnaround. Does it make a different whether it is 4 or 6% if the extra 2% costs you the order? If it is a $50,000 single order, that’s $2000 GP/order.

• For a 15-cent counter item, adding 50% gross margin gets the item to 30 cents. But perhaps you could sell it for 45 cents? Is the extra 15 cents going to get someone to say “no” at the counter?

Pricing competencies

A recent article written by McKinsey consultants discussed the need for pricing discipline, flexibility, and capabilities. While “discipline” and “flexibility” may be at opposite ends of the spectrum, in the right doses both work. It all comes down to when, how often and how much. And just because you go “down” from your target doesn’t mean other times you couldn’t go “up”.

Some key points and comments from their article appear below.

The most resilient companies put in place practices during downturns that prepare them to succeed when the recovery comes around. (So, don’t give away the store and look for profit leakage holes to plug. Be targeted in your discounting and no, not all orders should be treated equally.)

Three areas to be focused on are

1. Being creative in meeting customer needs while preserving value (this begs the question of “can your salespeople (inside and outside) express the value of doing business with you?” Perhaps more importantly, can your pricing / quotations people express why someone should do business with you? Do they know “why you should get the order?” For significant quotes could they write one sentence on “why you” for that order?)

• The article highlights 4 of the most common strategies


2. Driving strong pricing discipline

• Tight governance for discounting and approvals (do you know how frequently system pricing for stock items are overridden? By how much? By whom? This is a huge profit leakage area for every distributor. While there are systems to measure and manage this, we’ve also worked with some small to mid-sized companies where simple Excel, peer pressure and recognition mitigate the issue pretty quickly – give a call and we’ll share some thoughts.  Flexibility is needed, hence override approval processes are needed.) Speaking of overrides, distributors, have you looked to see if your SPAs are being overridden? What about customer contracts or GSA agreements? (and yes, overrides on GSA’s could open you to an audit!)

• Measuring customer profitability

• Review sales compensation models / incentives as well as price realization (or gross margin) targets

And they list others.

3. Investing in capabilities

• Value-driving initiatives, analytics, personnel skill sets

To improve profitability while using price as a strategic weapon to take share:

• Channel Marketing Group and Epicor’s tips to improving gross margin from a webinar jointly conducted

• Plug the profit holes


• Have pricing discipline

• Automate processes with timely, local, override approval means

• Focus on gross margin dollars invoice (and incent your team to achieve this)


• Ensure all know your value… on every order where price is or may be an issue

• Track win lose and learn from trends in this information[IT]

The alternative: how low can you go and still have a profitable business?

David Gordon is President of Channel Marketing Group. Channel Marketing Group develops market share and growth strategies for manufacturers and distributors and develops market research. CMG’s specialty is the electrical industry. He also authors an electrical industry blog, www.electricaltrends.com. Channel Marketing Group does not engage with clients on detailed pricing strategies, however, given that pricing is a critical element of sales, marketing and growth planning, we do get asked about the topic and can share opinions and refer to those who focus on the area as well as share anecdotes. David Gordon can be reached at 919-488-8635 or This email address is being protected from spambots. You need JavaScript enabled to view it..

David Gordon New 400Everyone is an expert in pricing. It’s either too high or too low based upon your role. Salespeople like it low. Management wants it high. The customer wants it “right” which, usually means “competitive” or “It’s reasonable for the value I am receiving.”

And the term “value” is intriguing as it infers that you understand
• the value that you bring
• the value that your product / service brings
• the competitive landscape (which also includes alternatives and inertia)

But I digress. 

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LDS Magiclite LS 400Magic Lite has announced the signing of Lightspec Canada Inc. as their Specification Sales Agent for the GTA.

As the Canadian Division of Lightspec, LLC, NY, this agency is headed by Steve Danzig as President and Neil Whiteford as Sales Manager. This talented sales team has over 150 years combined experience with Lighting Design, Applications, Lighting Controls, Distribution and Project Management. They are committed to bringing attentive service and expertise to their clients for their designs, projects, lighting requirements and acting as their trusted advisor and partner.

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Carol McGloganBy Carol McGlogan

EFC has just polled our members to determine the game changers that keep them up at night. Understandably, COVID-19 topped the list this year. However, talent remained the biggest issue outside of the pandemic. In September, members will have a chance to gather insights from EFC’s most recent research study: Talent for an Emerging Workforce. 

This is not intended as a spoiler alert, but “upskilling of current employees” is identified as one of the critical strategies that members need to employ...

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Consistent with the increase in sales and capacity utilization in June, the May reference month release of the Canadian Survey on Business Conditions indicated that almost one-fourth (23.9%) of manufacturers expected to increase their number of employees over the next three months. Still, the capacity utilization rate remained 8.0 percentage points below the June 2019 level (81.3%). 

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WescoBy John Kerr

Last week Wesco held its first call detailing its results post merger with Anixter. This meeting followed Wesco’s agreement with Competition Bureau Canada to divest its legacy utility businesses (Trydor, Brews and Laprairie), along with its datacom business with annual revenues approaching CDN$200 million, according to the release of August 6.

Canadian Electrical Wholesaler estimates the merged group after divestitures will reach just under CDN$2 billion, making it the largest electrical distributor in Canada ahead of Sonepar and Rexel...

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Changing Scene

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Overview: Digital technologies have amplified the features and functionality of our electrical products and are fast-becoming mainstream in how we service our customers and partners. Learn how your organization can pivot its supply chain strategy towards a digitized and automated enterprise, optimizing supply chain management to reach new service levels, lower costs and improve overall operational effectiveness.

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The original warehouse location came to AD as a part of its merger with IDI in 2019. Until now, it was available exclusively for use by members in the Industrial & Safety-Canada Division. The new facility, nearly double in size from the former location, broadens the scope of AD’s warehousing capabilities to all AD divisions in Canada, paving the way for growth and added services for members.

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Steven WrightMr. Steven Wright joins IMARK Electrical, Inc. as the Vice President of Supplier Relations and Development effective September 1, 2020.  Mr. Wright will report to Jerry Knight who is transitioning to President of IMARK Electrical as of November 1, 2020.

Mr. Wright comes to us with a varied background in wholesale distribution with Vallen / Sonepar, WESCO, Ace & True Value Hardware. 

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CEW Ricard Corinne 400The addition of a new member to Ricard Agency’s team is in line with the growth and development strategy the agency has envisioned for the province of Quebec and the Ottawa region.

As an outside sales representative, Corinne Galarneau will mainly cover the south shore of Montreal as well as the eastern side of the island. She will represent and support manufacturers in Ricard agency’s portfolio while developing strong, ongoing relationships with prospects and customers.

With over 12 years of experience in public relations and marketing, Galarneau excels in business development, more specifically in the sales of world-class products and services.

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Peers & Profiles

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Tim King, Southwire Canada’s new President and first Canadian to assume the role, has taken the ...
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Sean Bernard is the Intelligent Controls Manager, Canada for Ideal Industries. Sean resides in ...
Jenny Ng is a Business Development Manager for the Power Solutions Division of Schneider Electric. ...

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Trevor ElliottBy CEW Editorial Team

Mission Technical Solutions is a recently established sales agency founded by industry veteran Trevor Elliott. Panduit announced it would move to an agent representation model across North America earlier this year and named MTS as its Canadian representative, outside of the Atlantic provinces.

In this role, Elliott brings a long history in both supply and electrical distribution in Canada and he and his team are experienced in the Panduit electrical product line. Joining Elliott are Jean Pierre La France, Dennis Wight, Keith McRobbie, Kevin Wilkinson and Paul Stoynich. 

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