Johnstone Supply Oakland Group Increases Margins, Saves Time with epaCUBE Price Optimization

Profile

Johnstone Supply is a nationwide chain of wholesale distributors serving professional HVACR contractors. The Oakland Group includes 5 locations operating as one business with centralized management and control.

"The best thing is ringing the bell and knowing we’re making more money, especially in this economy. Thank God we found epaCUBE!"

Kevin Hunter, CEO

Background

Johnstone Supply is a wholesale distributor serving professional HVACR contractors, with the largest selection of equipment and genuine OEM parts in the industry. Acting on a recommendation from headquarters, the Oakland, California affiliate sought to modernize and automate pricing to improve customer service and profitability across its five locations.

Inconsistent Pricing Impacted Margins and Productivity

“We never had any consistent pricing,” said Kevin Hunter, CEO. “Everything’s been on a matrix that was never maintained. It was a complete disaster.” Sales would override prices from the matrix, and managers thought they had A customers that were really D customers.

Dealing with customer calls and pricing issues was consuming at least two hours a day. “Managers were calling us and then we had to research the products and look at the history of the price. It just was a mess.”

Options Explored

Oakland looked at two other potential pricing solutions but considered them unsuitable. Hunter spoke to other Johnstone groups and received positive reports about epaCUBE. “The number one reason we decided on epaCUBE is that Johnstone corporate recommended the product. Every one of them said it’s been working great for us.”

Challenges

The Oakland Group faced three core pricing challenges that were hampering their growth and profitability:

Sales representatives were regularly overriding prices from a matrix that was never properly maintained, creating unpredictable margins and customer confusion.

Inconsistent pricing across five locations damaged customer relationships and eroded margins. Customers were getting different prices from different stores.

Customer calls and pricing disputes consumed at least two hours of management time per day — time that could be spent on growth-focused activities.

Customer Cleanup

Beginning in May 2021, Oakland Group prepared for the epaCUBE installation by updating records in their Epicor Eclipse ERP system. “We had to do a lot of customer cleanup on our side to get ready,” reported Hunter. When ready, they provided remote access to epaCUBE engineers to install the software and set up the interface — “They did most of the work themselves.”

Training and Setup

Installation and training proceeded smoothly via Zoom calls. Starting in October, Oakland spent a few months setting up ABCD pricing levels based on volume, history, and returns. “We changed a lot of those A customers and moved them to D. We saw that we were leaving a lot of money on the table.”

World-Class Segmentation

epaCUBE enabled Oakland to build customer segmentation based on similar profitability, buying power, and cost-to-serve characteristics — supporting the concept of “like customers buying like products, should pay a similar price.” The epaCUBE approach analyzes sales history to create minimum and maximum ranges, a statistical floor and ceiling, and a target price. Oakland created 3,693 price records in addition to all new customer and product segmentation.

Support Like Family

“The epaCUBE Customer Success Team has done a phenomenal job for us. We call or email and they get right back to us. Great service is a big thing that I like. We’re like a family, and epaCUBE provides that same kind of service.”

Increased Margin Dollars 5.7%

After five months, epaCUBE reports show that Oakland added a six-figure amount to YTD margin dollars — a 5.7% increase — due to consistent pricing and correct customer classification. “Our margins have increased at least 5% with consistent pricing using epaCUBE. That’s huge for a company our size. We’ve been leaving a lot of money on the table.”

Saves 2 Hours Per Day

Oakland reports that epaCUBE saves at least two hours per day for key personnel. “I don’t think we’ve had a call from a manager since we completed this. We have the same amount of staff but now we can focus our energy on other things.” Billing issues have also decreased, and customer satisfaction has improved 100%.

Reduced Inventory

epaCUBE segmentation enables Oakland to break out product categories and manage what they need to stock. “It’s an eye opener watching our products and what we’re ordering because we can see what’s not moving.” Oakland now orders smarter, using their distribution centers more efficiently.

Extra Profits and Smiles

“I would recommend epaCUBE to anybody who’s looking to streamline their processes for products. This has been a great partnership, and we want to continue it. The company as a whole is benefiting because now, we can reinvest the extra profits into our business or the employees. It puts a smile on my face.”