Chris Reddick (President and CEO at Clarity Ventures) and Ron Halversen (Vice-President of Sales and Marketing at Clarity) discuss how you can take advantage of customer-specific pricing in a buying group.

Part 3 of a 7-part series (Return to Part 2)

CHRIS: The next thing that we'll talk about is putting yourself into these different personas or roles. If you're going to the site and you're looking for the benefits of a group purchasing organization, fundamentally you're looking for inventory, fulfillment, and pricing. And those are beyond some of the other aspects.  

Those have to be there. If they're not, what are you doing? That needs to be accurate and up to date. Ideally, the whole point of having this software is so that we can self-serve these customers in the buying group. And a lot of that's the ethos and the philosophy of the buying group. The group purchasing organization should be beyond what it is for a typical organization; it's to serve the members. And we really want to take advantage of that with this integration.  

We want to, as much as possible, get the information out transparently, rapidly, with high integrity around the different tiers, the different scope of products that are presented, and then the associated customer-specific pricing. There may be multi-tiered pricing. 

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CHRIS: Just to break some of these down, an example of the customer-specific pricing might be: This one customer was the first customer that joined the buying group, and they just get 20% off on everything. And then the rest of the customers fall into three different tiers. So maybe they have a role assigned to them. And based on their role, they either get a 5%, 10% or 15% discount. So that customer-specific pricing is 20%. 

Maybe it's just customer-specific for one product. Maybe the sales team made a deal and there was a vendor that we wanted to start bringing into the buying group, and this one customer committed, no matter what, every quarter I will buy a thousand units. If no one else buys anything, I will buy the thousand units as long as you give me a 20% discount, and then whatever anyone else doesn't buy, I will soak up. But if all thousand units are sold to other members, great. 

So we can do things like that to help you expand your reach and leverage the customer-specific pricing or discounts to be able to do that. But then the typical scenario would be the customers would have different tiers of pricing based on their roles. This can be granular down to a product category, subcategory, or category level. It can be based on purchase amount. So if somebody purchases $100,000 worth of items during the year, then they start to get a 2% additional discount and the next hundred thousand they get another 1%. We can do things like that.  

The other thing that I would say, and I'm hitting on a lot of topics. Ron, I'm expecting you to go back and tweak some of these for folks and point a few other things out. But one of the other big things that we want to look at here is, again, putting yourself in the shoes of the user. We want to learn what they're looking for, so we have a tracking system inside of the buying group software that we provide that actually tells us what people are looking at. It's not a third party, it's native to the platform. 

This allows us to do machine learning, just really simple suggestions. We can do some really sophisticated or very simple suggestions, like, “People with your browsing history on the site have found these items to be helpful. You seem like you're focusing on these categories the most, we're going to show you that content more when you're on the site.”  

And being able to present information based on selections. If they're looking at a certain product type, then they need to have related accessories, possibly the ability to work with a kit and break it apart, things like that, that ultimately, if you're buying in a buying group scenario and you bulk purchase something and you don't have a necessary component, that could be a showstopper for you. We want to be able to provide this recommended and related content related purchases. Any thoughts on these? I'd love for you to drill down on some of them as well. 

RON: Oh, yeah. We've talked a lot about the front-end tiers, but we really didn't talk about the back-end tiers too, because tiers are a really big one. You might have a tier for CFOs. They're the only ones that can come in and pay an invoice. You might have a procurement manager that approves all orders over $1,000. So any of your users can come in and they can order up to $1,000, but if a cart goes over $1,000, it has to go through an approval process. 

With dynamic content, you may have a certain tier that are dealers or redistributors, and so they need all of the warranty brochures and catalogs and other things that go along with reselling the products. So when they log in, they have a whole other section of the group purchasing platform's website and/or of the products that makes it available so they can download the additional marketing, videos, and demonstration collateral for reselling the products and things like that. I mean, we could literally spend an hour on this slide alone. But yeah, that's a great one. 

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RON: I think you touched on almost everything there, so good job. The next one would be talking about automating the order process in the group buying software. I'm going to hit just a quick high-level of what we're talking about, automation, and then I'll have you dive into the technicality of it. 

If you're integrating your orders with your back-office system, this could be—and I'm just going to cover the high level of simplicity, what we normally see—normally it's at least integrated with the ERP for fulfillment, but about 10% of the time it's also integrated with the CRM for the sales insight. 

For example, Chris is going to go buy a lot of stuff for Clarity from whatever it is, Office Depot, OfficeMax, and we're a corporate account, so we buy a lot of stuff. Well, the sales rep sitting up there in the CRM is tracking Chris’s buying behavior. They're going to want to know stuff like, if Chris hasn't logged in in 60 days, I want a report called Clients at Risk because I need to pick up the phone and call Chris and ask him what's going on. 

So in the CRM, I might be tracking things, like how much they're buying, the quantity that they're buying, maybe the number of times they're logging in, and maybe that's enough. If they're not logging in, I know they're at risk. If I'm tracking their sales and their sales drop more than 10% or 15% month over month, I'm going to pick up the phone.  

I might want to know the types of things that they're buying from a marketing perspective so I can go in and go, “Hey, 90% of the time Chris is buying hand tools and only 10% power tools. We make a lot more margin on our power tools.” So I'm going to serve him up some coupons on some power tools and see if I can get him buying more power tools.” 

Or conversely, every time Chris goes in, he puts hand tools in his cart. He looks at hand tools 90% of the time, but he never seems to buy. Next time he comes in I’m going to give him a 10% off coupon for hand tools and see if we can get him to buy some of those tools that he keeps looking at. That might be something just from the CRM side. From the order side. We're going to take that order and flip it through so it can be picked and packed.  

So first off is fulfillment. The orders are usually going to go into the back-end ERP so that they can do the fulfillment. And on the bidirectional side of that, we want to make sure to update the inventory that has been deprecated and shipped back. We want to take the order status. Maybe the order goes from pending to confirmed to backordered to delayed to estimated ship, time to ship, and here's the tracking status. And we've got six, seven, eight different updates to the order so Chris can track those orders in the group purchasing platform. The other thing, too, would be to track the fulfillment and the shipping throughout on the back-office platform. 

 

Entice Every Customer

Customer-specific pricing is an excellent way to dial in the price that different customers will pay. Let Clarity's platform help you discover what that price is.

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Continue to Part 4 to automating as many tasks as possible.