TL;DR
Get home appliances delivered free with Prime
- Fast, free delivery on millions of items
- Prime Video, Amazon Music and more included
- Member-only deals all year
Mike Aylen, an industry expert and NHPA strategic consultant, argues that hardware retailers can use customer groups and category-specific pricing to grow contractor sales without relying on blanket discounts. His recommendations include reviewing groups at least twice a year, testing new-customer offers and checking item-level prices and expiration dates.
Hardware Retailing has published the fourth article in its “Inside the Margin” series, in which industry expert and NHPA strategic consultant Mike Aylen sets out how retailers can group contractor and professional customers and tailor discounts by product category. Aylen says the approach can help stores pursue more customer business while avoiding margin losses from discounts applied too broadly.
Aylen recommends that retailers starting from scratch keep their standard customer groups to no more than 10, with separate plans for exceptional high-volume accounts if needed. Groups should reflect the store’s market and customers’ work, such as plumbers, painters, builders, concrete workers, property maintenance firms or local councils. Retailers should set clear allocation criteria, which could include a customer’s activities and sales volume.
For example, Aylen describes a retailer that divided plumbers into large, medium and small groups and set discount rates using monthly sales. He says stores can use current sales reports to place customers, review whether their business is growing or declining, and make adjustments. He recommends reviewing customer activity at least twice a year.
Aylen also advises estimating how much each customer might spend and identifying products they buy elsewhere. Retailers can discuss those gaps with customers and offer a 60- or 90-day trial group to new accounts rather than immediately granting the best permanent discount. The customer can demonstrate whether they meet the store’s criteria before joining an ongoing group.
Discounts Must Match Product Margins
The article’s central point is that a single discount across every department can reduce profits on items where the store has little room to cut prices, while also giving away margin unnecessarily on other products. Aylen says retailers should calculate discounts by department and, where needed, refine them further by class, fineline or individual SKU.
He illustrates the risk with examples from his work with retailers. A blanket 15% discount for plumbers could leave little profit on hot-water units, he says, while the same offer to painters could result in ladders being sold at a loss. In another example, a plumbing plan priced at cost plus 28% produced a clamp price of 94 cents, compared with $1.64 at the retailer’s main corporate competitor. These are examples reported by Aylen, not independently verified market-wide findings.
For store owners and pricing teams, the practical implication is that customer loyalty and sales growth need to be balanced against the economics of each product category. A targeted plan can provide a basis for discussing additional business with customers, but discount levels need to be checked against actual costs and competitive prices.
Products Worth Considering
Ring Alarm 14-Piece Wireless Security System
Ring Alarm 5-Piece Wireless Security System
Ring Alarm 8-Piece Kit (2nd Gen) Home Security System
As an affiliate, we earn on qualifying purchases.
From Customer Groups to Pricing Rules
Aylen’s article is a practical viewpoint rather than a report of a new industry-wide policy or measured study. He presents a sequence for retailers: define customer groups and eligibility rules, use sales records to assign accounts, determine discounts by category, then review performance and adjust the plans.
He names Margin Master and Epicor Pricing Planner as tools retailers can use to examine selling prices by department and discount. He says the same calculations can be done manually in Excel. When using software, he advises turning off rounding during the analysis so the resulting prices can be assessed accurately. The article does not provide comparative results showing how retailers using these tools perform against others.
“If you are starting this from scratch, I recommend limiting your customer groups to no more than 10.”
— Mike Aylen, industry expert and NHPA strategic consultant
No Measured Results Provided
The source is an expert viewpoint and does not report a controlled study, retailer survey or quantified results showing how much category price plans increase sales or protect margins. The retailer examples and prices are presented by Aylen; the supplied material does not identify the businesses, dates, product costs or local market conditions behind them.
It is also unclear how retailers should set specific discount rates across different markets or how often they should review individual product exceptions. Aylen’s recommendations depend on each store’s customer mix, purchasing data, costs and competitors. The article offers a method, not a universal pricing formula.
Review Plans Against Sales Data
Aylen’s recommended next step for retailers is to use customer sales reports to establish or reassess groups, then calculate discount rates by department and narrower product categories where necessary. Stores can build the finalized plans into their pricing systems or use spreadsheets, allocate customers under stated criteria and monitor results during regular reviews.
For SKU-level exceptions, Aylen advises against fixing a price indefinitely: he says to use an expiration date so the exception can be revisited. The supplied article does not announce a specific follow-up date; Aylen says the series will address another topic in a future installment.
Key Questions
What did Mike Aylen recommend in the article?
He recommends grouping contractor and professional customers using clear criteria, then setting discounts by product category rather than applying one rate across all departments.
How many customer groups does Aylen suggest?
For a retailer building a system from scratch, Aylen recommends no more than 10 standard groups. He says exceptional high-volume accounts may need separate plans.
How often should retailers review customer groups?
Aylen recommends reviewing activity at least twice a year, using sales-by-customer reports to assess changes and consider reallocating accounts.
Why does Aylen oppose a single discount across departments?
Different products have different margins and competitive conditions. Aylen says a blanket rate can cut too deeply into low-margin items or give away more margin than necessary elsewhere.
What does the article establish about the results of these plans?
It provides Aylen’s recommendations and examples from his retail work, but does not present measured industry-wide results or prove a specific sales or margin gain.
Source: hardwareretailing.com
