With a new web-based pricing management system, Terreal has been gaining market share without losing out on profits, the manufacturer says. And with data-gathering solar roofs gaining popularity, it sees new uses ahead for its pricing technology.
As a manufacturer of building materials for roofs, facades, structures and decorations, Terreal has a mission to develop housing that is beautiful, functional and sustainable, the company says. If they increased sales by 1%, we were up 1.4%.
Its roots in manufacturing terracotta building materials, it carries out that mission by “working with clay and letting it inspire us.”
The strategy has helped establish Terreal as a supplier to innovative construction projects, but of late it has also been using a different kind of strategy to build market share—and without cutting into profits, says Jean-Baptiste Fayet, vice president and director of commercial marketing.
Terreal, based in France and with international sales operations, operates several websites worldwide but sells largely to distributors through sales reps. For years, its sales team operation had struggled with ways to efficiently set the best pricing to build both sales and profit margins. But using a system of spreadsheets each designed for a different selling region, “pricing was not managed very efficiently,” Fayet says.
Relying on numerous versions of spreadsheets covering many customer projects and SKUs including accessories, Fayet recalls, left the company without a good tool for setting pricing. “There were a lot of gut-feeling decisions by people in the field,” he says. “The whole process was not well managed.”
New pricing recommendation system
Last year, Terreal deployed a new web-based pricing system from Zilliant that automates price recommendations for each selling region down to individual SKUs and customer projects.
Working with more than 4,000 segments of customers based on location, the Zilliant system integrates with and analyzes data from Terreal’s records of invoices and inventory stocks in its SAP business software. The system then issues price recommendations based on Terreal’s targeted and minimum prices, informing Terreal’s sales reps through their mobile devices how each price recommendation is likely to affect sales and profit margins.
Terreal sets business rules that instruct sales reps on how to proceed and requires them to get approval from management before selling a product below the recommended minimum price. “If we increase the price by 1%, it tells us what the effect will be on sales volume and margin,” Fayet says.
The Zilliant pricing system, which took about six months to deploy, included a three-month training period for sales reps.
“The more we use the system, the better it gets,” Fayet says.
Gaining market share
In two years of using the system, Terreal has gained 0.3% of market share as it outpaced competitors with its growth rate by nearly half a percentage point, Fayet says. “If they increased sales by 1%, we were up 1.4%,” he says, adding: “We are in a mature market—those are significant numbers.”
Going forward, he says, Terreal expects the pricing tool to help it grow in new markets and with new products. “We want to continue to innovate,” he says. “We’re always coming up with new colors and accessories. A major innovation coming is a new roofing solar panel that produces electricity. What’s interesting with solar is we have a lot of data from what’s happening in the field, we know how much energy a new roof is producing. That allows us to be more sophisticated in the way we price products.”
Terreal, which operates in the United States under its New Lexington, Ohio-based Ludowici Roof Tiles brand, operates several web portals for providing product company information to its distribution partners and end-customers. The company may eventually apply the Zilliant pricing system on its websites provide updated pricing on products, Fayet says.