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Mike Aylen, an industry expert and NHPA strategic consultant, recommends that hardware retailers use customer groups and department-specific price plans to grow contractor sales while protecting margins. His advice, published in Hardware Retailing as part of its “Inside the Margin” series, includes reviewing customer activity at least twice a year and using dated expiration rules for SKU-level exceptions.
Hardware Retailing has published a new industry viewpoint by Mike Aylen, an industry expert and NHPA strategic consultant, on using customer groups and category-specific price plans to pursue contractor sales without unnecessarily giving up margin. The article is the fourth installment of the publication’s “Inside the Margin” series and offers operational recommendations, not reported results from a measured pricing study.
Aylen recommends that retailers building customer groups from scratch keep them to no more than 10 general groups, with individual plans added separately where a customer’s volume warrants it. The groups should reflect the store’s market and customer activity. His examples include plumbers and painters, as well as builders, concrete workers, property maintenance businesses and local councils. Retailers should set clear allocation criteria, such as the customer’s trade, sales volume or monthly purchases.
The article describes a large retailer that divided plumbers into large, medium and small groups and based discount rates on monthly sales. Aylen says sales-by-customer reports can help retailers assign accounts, adjust allocations and identify declining purchases. He recommends reviewing groups at least twice a year, then speaking with customers whose sales are falling to understand the reasons.
For new customers, Aylen advises against immediately offering the best permanent discount. Instead, he suggests discussing the qualification criteria and using a 60- or 90-day trial group before assigning a customer to a standing plan. For setting the plans, he warns against one discount across every department and recommends working out rates by department, then by class, fineline or individual product where needed. Retailers can use pricing software or an Excel spreadsheet, he says. Any SKU-level exception should have an expiration date and should not be locked permanently at a set price.
Pricing Plans Can Protect Product Margins
The advice addresses a practical tension for hardware retailers: trade discounts may encourage customers to consolidate purchases, but a broad rate can cut into profits on products that already have low margins. Aylen uses examples to show why a uniform percentage can produce sharply different outcomes across categories. He says a 15% discount on plumbing could leave little room on hot water units, while the same discount for painters could mean selling some ladders at a loss.
He also recounts a retailer’s plumbing plan set at cost plus 28%. According to Aylen, that calculation priced a clamp at 94 cents, compared with $1.64 at the retailer’s main corporate competitor. The example is presented as an illustration from his consulting work, not as a sector-wide pricing benchmark. For store owners, the takeaway is that discount decisions need to account for individual categories and products, rather than relying on a single rate intended to fit every purchase.
Customer grouping can also make pricing a tool for account management, rather than simply a discount applied at checkout. Aylen argues that purchase records can reveal where a customer is buying only part of their regular needs from the store. A retailer can then discuss that gap and explain what terms might be available if the customer brings more business to the store. Whether that approach increases sales or improves margins will depend on each retailer’s prices, costs and customer relationships.
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How Aylen Builds Customer Tiers
The article focuses on contractor and professional customers and describes a process that starts with customer classification before discount rates are set. Aylen’s approach is to use the existing customer base and sales records to decide which groups make sense for a particular market. He cautions that retailers may need more than one group for a trade if customers’ purchase volumes vary substantially.
After defining groups and allocation criteria, the retailer can map rates to departments and refine them further where price and margin differences call for it. Aylen mentions Margin Master and Epicor Pricing Planner as tools that can be used to examine department pricing, while noting that retailers without those systems can work through the figures manually in Excel. He advises turning off rounding during the analysis so the resulting discount calculations can be assessed more precisely.
The source is an expert viewpoint by Aylen, not an independent survey or a report of retailer-wide performance. Its examples and recommendations reflect his professional experience; the article does not provide a dataset comparing the results of different pricing strategies.
““The main advantage is that you can use it to grow sales.””
— Mike Aylen, industry expert and NHPA strategic consultant
Results Depend on Store-Level Data
The article does not quantify how much sales or margin retailers can expect to gain by adopting the proposed plans. It provides examples from Aylen’s work but no sample size, time period, comparison group or independently verified outcomes. The clamp and competitor prices are not accompanied by a date or details about the products’ specifications, so they should not be treated as a current market comparison.
Nor does the article set universal discount thresholds for particular trades or departments. The appropriate rates depend on each retailer’s costs, selling prices, customer mix and local competition. Aylen’s recommendation is to calculate those rates using a retailer’s own data; the source does not say that the cited software is required or establish that a particular pricing method will work for every store.
Retailers Can Review Plans Twice Yearly
Aylen’s recommended next step for retailers is to build groups from existing customer and sales information, define eligibility rules, and calculate discounts by department before assigning accounts. He says businesses should revisit allocations at least twice a year using sales-by-customer reports and investigate declining purchases through direct customer conversations.
The article is part of an ongoing series, and Aylen says he plans to cover another topic in a future installment. The supplied source does not specify a publication date for that next article or name its subject.
Key Questions
What pricing approach does Mike Aylen recommend?
He recommends grouping contractor and professional customers using clear criteria, then setting different discounts by department rather than applying a single rate across the store.
How often should retailers review customer groups?
Aylen recommends reviewing them at least twice a year, using sales-by-customer reports to check activity and adjust allocations.
How should a retailer handle a new contractor account?
Aylen suggests explaining the qualification criteria and using a 60- or 90-day trial group before offering a permanent plan at the highest discount level.
Why does Aylen warn against a storewide trade discount?
Different departments and products have different margins. A uniform discount could be unnecessarily large on some items, including products with low margins, according to Aylen.
What does the article say about SKU-level exceptions?
Aylen advises retailers not to lock an exception at a fixed price indefinitely and says it should have an expiration date.
Source: hardwareretailing.com
