SITUATION
A large industrial distributor with thousands of customers and products needed a better way to assess sales and margin growth opportunities. Given the vast size of their portfolio, they struggled to efficiently segment customers and products into meaningful clusters.
Leadership wanted to understand which actions would have the greatest impact on profitability and growth.
OBSTACLES
The company faced several difficulties:
- Lack of structured clustering: They didn’t have a way to group customers and products based on sales behavior, price sensitivity, and profit contribution.
- Difficulty prioritizing actions: Without structured analysis, they were unsure which pricing and sales actions would yield the best financial outcomes.
- Limited impact forecasting: They needed a way to model and predict the financial impact of various pricing and sales strategies.
ACTION
Using the Revify platform, the distributor conducted a comprehensive portfolio analysis:
- Customer and product clustering: Revify segmented customers and products based on historical sales trends, price elasticity, and profitability.
- Impact modeling: The tool simulated different pricing and cross-sell strategies to project their impact on revenue and margin.
- Optimized price adjustments: They identified low-performing customer-product combinations that had low price elasticity and raised prices by 8% in that segment. Conversely, for price-sensitive customers, they decreased prices by 3% on average, leading to a 20-25% increase in volume for the affected business.
RESULTS
By taking targeted pricing actions, the distributor optimized margins in low-elasticity segments while driving higher sales volume in price-sensitive clusters. Revify’s scenario modeling capability gave leadership the confidence to execute precise pricing strategies, ensuring both revenue growth and profitability improvements.
