As a manufacturer of building materials for roofs, facades, structures and decorations, Terreal has a mission to develop apartments that are beautiful, functional and sustainable, according to the company.
If they increased sales 1%, we increased 1.4%.
Jean-Baptiste Fayet, Vice President and Commercial Marketing Director
With roots in the manufacture of terracotta building materials, it accomplishes this mission by “working with clay and being inspired by it”.
The strategy has helped establish Terreal as a supplier for innovative construction projects. Recently, however, she’s been adopting a different strategy to build market share – and without detracting from profits, says Jean-Baptiste Fayet, vice president and director of commercial marketing.
Terreal, based in France and with international sales, operates several websites worldwide, but sells mainly to distributors through sales staff. For years, the sales team struggled efficiently setting the best prices to generate both sales and profit margins. Using a system of spreadsheets, each developed for a different sales region, “pricing was not managed very efficiently,” says Fayet.
Fayet recalls that the company didn’t have a good pricing tool due to numerous versions of spreadsheets covering many customer projects and SKUs including accessories. “There were a lot of gut instincts from people in the field,” he says. “The whole process was not well managed.”
New price recommendation system
Last year Terreal introduced a new web-based pricing system from Zilliant that automates price recommendations for each sales region down to individual item numbers and customer projects.
The Zilliant system works with more than 4,000 customer segments based on location and integrates and analyzes data from Terreal’s records of invoices and inventory in its SAP business software. The system then provides price recommendations based on Terreal’s target and minimum prices and informs Terreal sales reps through their mobile devices of how each price recommendation is likely to affect sales and profit margins.
Terreal sets business rules instructing salespeople how to proceed and asking them to get management approval before selling a product below the recommended minimum price. “If we increase the price by 1%, we can see how that affects the sales volume and the margin,” says Fayet.
The Zilliant pricing system, which took approximately six months to deploy, included a three-month training period for sales reps.
“The more we use the system, the better it gets,” says Fayet.
Gain market share
In two years with the system, Terreal gained 0.3% of market share as its growth rate outperformed the competition by almost half a percentage point, says Fayet. “If they grew sales 1%, we were up 1.4%,” he says, adding, “We are in a mature market – these are significant numbers.”
In the future, Terreal expects the pricing tool to help grow in new markets and with new products. “We want to keep innovating,” he says. “We are always developing new colors and accessories. An important innovation is a new roof solar panel that generates electricity. The interesting thing about solar is that we have a lot of data on what is happening in the field. We know how much energy a new roof produces. This enables us to differentiate the way in which we rate products. “
Terreal, which operates in the United States under the Ludowici Roof Tiles brand in New Lexington, Ohio, operates several web portals to provide information on product companies to its sales partners and end customers. The company could potentially use the Zilliant pricing system on its websites to provide updated prices for products, Fayet says.
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