DeLaval Increases Customer Satisfaction Through Value-Based Pricing
Learn how DeLaval, a full-service manufacturer and distributor of dairy and farming machinery, drove higher customer satisfaction with a value-based pricing strategy and help from Vendavo.
Highlighted Business Outcomes
Improved Customer Relationships
Consistent, competitor-aligned, and easy-to-explain prices improved customer relationships and trust.
Better Pricing Quality
Improved overview and quality of pricing, strategy, and processes provide more value for products and business objectives.
Stronger Pricing Management
Enhanced governance and internal efficiency managing, maintaining, and communicating global and local prices.
Addressing Disparate Pricing and Unsustainable Practices
Prior to working with Vendavo, DeLaval’s business model was developed and strategized by its parent company and then deployed to the affiliated subsidiaries with minimal consideration of the many external factors at play. Specifically, pricing was unilaterally set with little granularity. The internal process consumed too much time and energy requiring negotiations before the pricing was approved for sales to begin their customer negotiations.
Not only was the time of valuable contributors being depleted, but the affiliated subsidiaries also operated with highly disparate prices. Cross-border business was now a high-risk event that was having unintended impacts on the sales organization and branding for the company. It was not rare that the same product would be positioned as a low-price alternative in one market and a high-price alternative in another.
This was not a sustainable practice and DeLaval did not want customers to start to perceive this pricing as illogical and not conducive to their purchases and interactions. DeLaval was not realizing their full potential.
Once this was realized, the company was able to isolate their next steps to improve price management strategy.
By moving from an internal sales price strategy between the parent company and the affiliated subsidiaries, to a value-based approach the corporation increased customer satisfaction, internal efficiency, and profits.
Driving Consistent Pricing and Improving Customer Relationships
DeLaval needed to move from their cost-plus pricing system to a value-based pricing strategy and methodology. This was made possible through the partnership and continuous work with the DeLaval and Vendavo teams.
The project started with training a large team that would facilitate the roll out of the eventual strategy throughout the organization. The extensive work covered all their markets and products starting in their capital goods and aftermarket business units.
The team, made up of multiple cross-functional members, created a structure that arranged everything into three categories – spare parts, accessories, and products. Additionally, central pricing analysis and market management analysis were performed in parallel. This helped develop and supply subsidiaries with value-based, market-driven local prices.
Vendavo Pricepoint became the framework to manage and maintain global and local prices. Another factor in DeLaval’s success was the level of detail and strategy used to roll out the new system. It was important for teams and individuals to have proper training on the solution, relevant tasks, and the future strategy of pricing.
DeLaval provides integrated solutions designed to improve dairy producers’ production, animal welfare and overall quality of life. They are a full-service supplier to dairy farmers. DeLaval develops, manufactures, and distributes equipment and complete systems for milk production and animal husbandry. They operate in more than 100 markets around the world and are passionate about customer value.
Vendavo Products Leveraging: Vendavo Pricepoint
Industry: Wholesale & Distribution – Industrial Machinery and Equipment
Headquarters: Sursee, Sweeden