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In a Hardware Retailing viewpoint, NHPA strategic consultant Mike Aylen recommends that hardware retailers build customer groups and set contractor discounts by product category rather than applying a single discount across departments. He says retailers should review customer sales at least twice a year, use trial periods for new accounts and set expiration dates for SKU-level price exceptions. The article offers guidance, not evidence that a particular retailer adopted the approach or achieved measured results.
Mike Aylen, an industry expert and strategic consultant to the North American Hardware and Paint Association, has outlined a pricing approach for independent hardware retailers serving contractors and other professional customers. In a Hardware Retailing article, Aylen recommends grouping customers by business activity and sales criteria, then setting discounts by product department to pursue sales growth without applying unnecessary discounts to low-margin items.
Aylen’s article is the fourth installment in Hardware Retailing’s “Inside the Margin” series. He advises retailers starting a customer-group system to keep it to 10 groups or fewer, with additional individual plans where a customer’s sales volume warrants one. Potential groups could include plumbers, painters, builders, concrete workers, property-maintenance businesses and local councils, depending on the retailer’s customer base.
Before assigning customers, retailers should define the criteria for each group, such as the customer’s day-to-day work and monthly sales. Aylen describes one retailer that divided plumbers into large, medium and small groups, with discount rates tied to monthly sales. He also recommends reviewing sales information at least twice a year, using customer reports to identify changing purchasing patterns and prompt conversations about declining sales or unmet needs.
For pricing, Aylen cautions against one discount across all departments. He recommends checking each department, and where needed individual classes, finelines or products, before setting a customer group’s rates. Retailers can use pricing software such as Margin Master or Epicor Pricing Planner, he writes, or work through the calculations in Excel. He also advises against locking SKU-level exceptions at a fixed price and says those exceptions should have an expiration date.
How Category Pricing Can Protect Margins
The advice addresses a practical tension for hardware stores: contractor discounts can help attract or retain professional customers, but the same percentage reduction does not have the same effect across products. Aylen’s examples illustrate the risk. He says a global 15% discount could leave little or no profit on low-margin, high-value plumbing products, or lead to losses on ladders sold to painters.
His approach makes customer discounts conditional on both the account’s activity and the economics of the goods being sold. That can give retailers a framework to discuss a larger share of a customer’s purchasing with the store while avoiding broad price cuts that may erode returns. These are recommendations and examples from the article; the source does not provide independently measured results showing the effect on sales or margins.
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From Customer Groups to Product-Level Rates
The article focuses on the sequence Aylen recommends: first establish customer groups and their allocation rules, then set rates by category, and finally assign customers and monitor their sales. He says retailers should use their existing customer base to choose relevant groups rather than adopting a fixed template. Customers with especially high volume may need individual plans beyond the standard groups.
Aylen also advises caution when welcoming new contractor accounts. Rather than immediately offering the highest discount, he suggests explaining the criteria for permanent group membership and using a 60- or 90-day trial period. A customer can then demonstrate whether their purchasing meets the retailer’s requirements. The article does not specify particular thresholds, discount percentages or a standard method for calculating those criteria.
“Limiting the number of customer groups will make it easier to do regular reviews of the activity in each group and make the necessary adjustments when needed.”
— Mike Aylen, industry expert and NHPA strategic consultant
Results and Pricing Criteria Remain Unspecified
The article does not report that a named retailer implemented the full approach or provide before-and-after figures for sales, margins or customer retention. Aylen’s examples are presented as observations from his work, not as a controlled comparison. The source also does not set out recommended discount levels, exact group thresholds or a formula for estimating each customer’s potential spend. Each retailer would need to determine those values using its own costs, prices, market and customer data.
Retailers Would Need to Set and Review Plans
Under Aylen’s proposed process, a retailer would define group criteria, calculate rates by department and, where appropriate, by class, fineline or SKU, then assign customers to the plans. It would review account activity at least twice a year and make adjustments based on sales information. New customers could begin in a time-limited trial group, while SKU exceptions would carry expiration dates. Aylen says he plans to cover another topic in a future installment of the “Inside the Margin” series; the source does not give a date or subject for that article.
Key Questions
What pricing approach does Mike Aylen recommend?
He recommends placing professional customers in groups based on factors such as their work and sales, then setting discounts by product department rather than using one discount across the store.
How many customer groups does Aylen suggest retailers start with?
For a new system, Aylen recommends no more than 10 groups, while allowing additional individual plans for customers whose volume warrants them.
How often should retailers review customer groups?
Aylen says to review group activity and customer sales information at least twice a year.
How does Aylen suggest handling new contractor customers?
He recommends explaining the requirements for permanent group membership and considering a 60- or 90-day trial period rather than immediately offering the best discount.
Does the article show that the strategy increases margins?
No. The article presents Aylen’s recommendations and examples but does not provide measured results showing how the approach affected margins or sales.
Source: hardwareretailing.com
