CP net pricing and prepay: Get 2024 program year off to a strong start

Prepay season: it’s full of opportunity for a strong start to the new program year. 

And it’s equally as full of potholes that can take you off track from your organization’s goals. 

Take this fact, for example: Retailers and distributors can lose up to 10% of earnings due to delays in pricing adjustments.

If you’re a sales leader at an Ag retail organization, you know this dance well. This time of year can feel like walking on a tightrope. You want to keep prices high enough to make money — and low enough to win business. You’re trying to plan ahead for demand and sales — while often lacking robust data to easily identify past years’ patterns and opportunities.

That lack of data is partially the result of manufacturers not publishing their rebate programs yet, an industry issue that’s highlighted by the fact that 83% of ag retailers and distributors would like “accurate, standardized, and timely digital product and program communications” from their suppliers.

We get it if you need a little extra coffee this time of year. But better data can also help you proactively, more strategically manage all the moving pieces you’re in charge of.

Get pricing swings (and confusion) under control

Accurate pricing is always important — but especially now after all the crazy market swings and stock challenges of the past year. When you’re in an overstock situation and trying to move the glut of products you’re stuck with, a strong (and accurate) pricing strategy is more significant than ever.

But even when sales teams need accurate pricing data the most, this still escapes so many Ag retail organizations. Our data has shown that about 5% of all invoices sent to growers contain price errors.

That might seem like a small percentage, especially when you think about the pure number of invoices you send. But those dollars add up quickly. How much are you chopping off the bottom line just because of incorrect pricing?

Getting a handle on this challenge is more complex than ever, though. In 2020, the average Ag retailer in the U.S. faced three price changes per SKU. That jumped to 7 in and has remained at that level. Fast and furious pricing changes aren’t going away — and if anything, the stream of data is only going to get faster and harder to handle.

However, a pricing visibility solution isn’t out of reach. Smartwyre’s work with one Midwest retailer led to a margin improvement of 1.5% ($150K per $10M of sales) after implementation across their 60-person sales team.

It’s time to stop missing your best prepay opportunities

But setting the right pricing isn’t the only challenge sales leaders are dealing with this time of year. Bigger questions might be: 

• What should we be selling more of?

• What do we tell our sales team to focus on?

• Do we actually know what our highest margin performers are?

Having a better handle on which products your sales team should push during prepay is not only helpful to the bottom line now. The choices made now could also have a huge impact on your rebate earnings at the end of next season.

While instant pricing visibility is the first way to unlock sales productivity, the second is automatic, real-time rebate program performance. Instantaneous incentive updates are calculated for better alignment. The sales team can be strategic in product recommendations against both margin and rebate program process. 

That common notion of “maybe if we had only pushed a little harder during prepay”disappears when you no longer just retroactively look at the numbers at program year-end.

Prepay season doesn’t have to be a season of salespeople throwing things at the wall to see what sticks. They’ll have a clear plan for what to focus on, based on what actually drives the most rebate revenue for your business.

Data is the bridge between retroactive missed chances — and proactively seizing opportunities.

The complexity and pace of change in the Ag industry is only accelerating. Keeping up with the swirl of pricing data, establishing a clear plan for your sales team, and not missing out on crucial rebate program opportunities will all help your business weather that storm. 

But none of that is possible without visible, accurate data. If you’re looking to fortify your organization’s data system so you can optimize your sales processes (in prepay and beyond), reach out to the Smartwyre team today.