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Mike Aylen, an industry expert and NHPA strategic consultant, recommends that hardware retailers organize contractor customers into manageable groups and set discounts by product category. His guidance, published in Hardware Retailing’s “Inside the Margin” series, is advice rather than a report of measured results; retailers’ costs, prices and customer responses will vary.
Hardware Retailing has published a new installment in its “Inside the Margin” series, in which Mike Aylen, an industry expert and NHPA strategic consultant, advises retailers to tailor contractor discounts by customer group and product category. The guidance is aimed at growing sales to professional customers while avoiding discounts that cut into margins on products that cannot support them.
Aylen recommends starting with a clear method for assigning customers to groups such as plumbers, painters, builders or property maintenance companies. Retailers starting from scratch should, in his view, keep the number of standard groups to 10 or fewer, with exceptions for individual high-volume customers where appropriate. Groups can reflect the work customers do, their purchasing patterns or sales volume.
He describes one retailer that divided plumbers into large, medium and small groups, with discounts linked to monthly sales. Aylen says retailers can also take customer loyalty into account: a buyer whose sales volume fits a middle tier might receive a higher tier’s offer if the store receives all of that customer’s business. He recommends reviewing sales information and customer allocations at least twice a year, and contacting customers whose purchases are falling to learn why.
For pricing, Aylen warns against applying a single discount across every department. Instead, he recommends working out rates separately by department, then by class, fineline or individual stock-keeping unit where needed. Retailers can use pricing software such as Margin Master or Epicor Pricing Planner, or calculate plans in a spreadsheet. He also advises using expiration dates for SKU-level exceptions rather than fixing them at a permanent price.
How Category Pricing Can Protect Margins
The article addresses a practical tension for hardware retailers: contractor discounts can help win or retain business, but a broad discount may reduce earnings on products with already-thin margins. Aylen’s examples show why pricing the same way across departments can produce uneven results. He says a 15% discount across the board could leave little room on hot water units and could lead to selling ladders at a loss.
More targeted plans may help retailers make offers that reflect both customer value and product economics. Aylen also frames customer grouping as a sales tool: reviewing what a contractor buys, identifying products they source elsewhere and discussing those gaps may create opportunities to increase the store’s share of that customer’s spending. These are recommendations, not independently verified outcomes; the source does not provide data measuring their effect on sales or margins.
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A Framework for Contractor Accounts
The article is the fourth piece in “Inside the Margin”, a series about increasing sales and protecting margin among contractor and professional customers. Its focus is the design of category price plans: rules that determine which customer receives which discount on which products.
Aylen advises retailers to use their own customer base and sales records when defining groups and eligibility. For new customers, he suggests a 60- or 90-day trial group rather than granting the best permanent discount immediately. The customer can then demonstrate whether they meet the retailer’s criteria for a lasting tier. The source provides examples and professional advice, but does not identify a single plan that would suit all retailers.
“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
Results Depend on Local Pricing
The source does not give the article’s publication date or provide independent performance data showing how much a category price plan changes sales, customer retention or margins. It also does not specify discount rates that would work across different retailers, markets or product mixes. Aylen’s examples are presented as his professional observations and recommendations, not as a controlled comparison. Retailers would need to check their own costs, competitors’ prices and customer purchasing records before adopting a plan.
Review Plans and Customer Activity
Aylen recommends that retailers calculate and check proposed discounts before assigning customers, then build the plans into their pricing system or a spreadsheet. Once the plans are in use, stores can review customer sales at least twice a year, adjust group allocations and investigate declining purchases. Trial groups for new customers can be assessed after 60 or 90 days, while SKU-level exceptions should carry expiration dates. The article says Aylen plans to cover another topic in a future installment of “Inside the Margin,” but does not give a date or subject for it.
Key Questions
What does Aylen recommend for organizing contractor customers?
He suggests defining groups around customer activity, purchasing patterns or sales volume, and keeping standard groups to 10 or fewer when building a plan from scratch. Individual high-volume accounts can be handled separately.
Why does the article caution against one discount for every department?
Product categories have different margins. Aylen says a uniform discount could cut too deeply into earnings on low-margin items or lead to some products being sold at a loss.
How often should retailers review customer groups?
Aylen recommends reviewing customer sales and allocations at least twice a year, using sales-by-customer reports to identify changes and possible reasons for declining purchases.
How should a retailer handle discounts for a new contractor?
Aylen advises considering a 60- or 90-day trial group rather than immediately offering the best permanent discount. The retailer can then assess whether the customer meets its criteria.
Does the article show that these plans increase profits?
No measured results are provided in the supplied article. It presents Aylen’s advice and examples; the financial effect for a particular retailer is not established and would depend on its prices, costs and customer behavior.
Source: hardwareretailing.com
