55. The Ultimate Guide To Pricing & Profitability | Scott Sinning

Karthik Chidambaram: Hello, everyone! Welcome to a brand new episode of the
Driven by DCKAP podcast. I'm your host, Karthik Chidambaram, CEO of DCKAP.
We make systems talk to each other for distributors. Today we're going to
be talking about pricing and profitability. And I'm really excited because
we have a very special guest, Scott Sinning, Founder and CEO of Pricing for
Distributors.

Scott has an impressive career of over 30 years in wholesale distribution,
and he's a frequent speaker and writer on the distribution industry. He was
former VP of Pricing Strategy at Graybar Electric, one of the largest
distributors across the world. He's worked closely with the Graybar CEO. In
2022, he retired. Well, he didn't really retire. He turned into an
entrepreneur. He started Pricing for Distributors after retiring, and he's
helping a lot of distributors. All his learnings from Graybar are being
translated into other distributors.

Scott, we are very, very excited today. The theme of this podcast is
going to be on pricing and profitability for your business. And thanks so
much for joining us on the Driven by DCKAP podcast.

Scott Sinning: Thank you very much, Karthik. It's my pleasure to be here and
looking forward to our conversation.

Karthik Chidambaram: So, Scott, to start off, how did you get into
distribution and tell us about your journey at Graybar? You were with them
for over 30 years, doing multiple roles. Very fascinating journey. So tell
us about it.

Scott Sinning: Yes, of course. Thank you. Well, I started out the old
fashioned way, which is it started at the bottom sweeping floors and doing
whatever they needed me to do.

But really, when I started with Graybar out of college, I didn't know
anything about the company. I'd never heard of the company. And I didn't
know anything about wholesale distribution. What I knew is I needed a job
and I was interested in business and I was interested in hopefully working
for a good company where I could grow. But that was about as far as I could
see.

Once I started, I started as a management trainee. Again, in the old days
that meant starting in the warehouse doing shipping, receiving, put away,
backing up the counter, pretty much everything that was needed behind the
scenes to make sure the customers were taken care of.

And at the time, it was a really hot summer. And I remember sweating so much
thinking, boy, I don't know how long I can do this because it's really hard
work, but I would never trade for for anything at this point because it
helped give me some perspective about the business, about the hard work that
goes on to serve customers, whether it's a truck driver, warehouse counter
or moving into the the ranks of customer service or management in a branch
or a region.

So that's how I got started. And it was, it was a great beginning to what
turned out to be a long term career with Graybar.

Karthik Chidambaram: Very interesting. So you started at the bottom and then
you work your way up.

You've got hired to be the VP of pricing strategy, not because you have
experience with pricing, but then you have done a lot of other things. And I
think there's also a great hiring lesson. See, obviously, you know, when we
look for people.

We really look for people with experience, but then a wide range of
experience also helps. This is something I have noticed. Hey, let's say you
have a problem to solve. It's always nice even to recruit people from
outside of the industry. And hey, you know, get them on and tackle the
problem because they have a completely different view.

So it's a very fascinating story on how your experience at Graybar, you
know, doing multiple roles right from the warehouse to the distribution
sellers. To technology, how all that plays into running pricing for Graybar.
You know, it's really, really interesting and fascinating.

Scott Sinning: It's been a great ride, and it certainly has surprised me how
interesting it got, getting into pricing because, you know, as a discipline,
it's for me anyway, it kind of blends all aspects of the business from
sales, marketing, finance, operations, customer service.

Of course, there's components around legal HR. For sure, IT is a huge part
of it. Part of that and so one of the things I've always liked to do, even
when I was in a more functional role is think very broad, try to think
broadly around the stakeholders around a team and not just have a functional
silo, but rather a more broad view of the business.

And so, that maybe was a reason why they thought I'd be a good pick because
I really had a strong sense of life in the branch life as a sales rep and as
a CSR in the branch. As well as I had a pretty good perspective, executive
perspective, on pricing profitability and then the IT and the technique
technology that's required to work well, if change is going to happen.

So that plus, you know, I think, Many others on this call probably. I'm just
the guy in the room that when someone said, hey, who wants to take on the
challenging project that has a high risk of failure that nobody's ever done?
And I'm the guy, Oh, okay, I guess I'll do it. All right. And so I was
always in my career at Graybar eager to take on challenging assignments and
really wasn't afraid of failing.

And so this was an opportunity that was presented that I was honored to be
able to take on and learned a lot. And, you know, that's where I fell in
love with pricing unexpectedly. And that's partly why I'm here today. I
started in pricing about 10 years ago and I'm still doing it every day and
really just fall in love with that part of the business and trying to help
distributors do it better.

Karthik Chidambaram: Definitely. I love how you raise your hand because
whenever an opportunity comes, just raise your hand. And get out of your
comfort zone. Awesome, Scott. Scott, I mean, the distribution landscape
today, the business is very, very competitive. A lot of distributors compete
with each other, low margins. Everyone is looking to get ahead and have an
effective pricing strategy.

What is price optimization? Price optimization 101. What is price
optimization?

Scott Sinning: Well, it probably depends on who you ask. And there's maybe a
variety of right answers for that. And maybe there's no single one. But for
me, price optimization ultimately is charging a fair price to your customers
that reflects the value that you're offering them and that they're willing
to pay.

And so it's not always about the highest price. It's not always about the
lowest price it’s about the right price. For the right service and the right
value exchange because really price, I think of price as the lens through
which the buyer and seller see each other and agree that there's an exchange
of value that the buyer is providing that the seller says, Yep, I think
that's worth it to me.

I want to pay you X amount and you shake hands either in person or virtually
and you make a deal. And so price optimization for me is that price point
that is, is reflects the value they're providing to your customers that
they're happy to pay and are willing to come back and do it again, but also
provides the financial margins necessary for a distributor to make enough
money to, to, to pay the bills, to invest in their business, and ideally to
invest in those things, which will help them succeed many, many years into
the future around people, technology, process So price optimization is
really that that moment where you're doing the best you can to charge for
what you're worth and you're doing it consistently.

And so the big key there, Karthik, you know, is, you know, in distribution,
it's a couple of things. First, there tends to be a lot of transactions.
While there can be very large transactions on some ends of the spectrum with
big projects, typically it's a high transactional volume business. So your
business is pricing.

Every day, every day, every day, all the time and customers are receiving
that price from you every day, all the time. So, for distributors, it's key
to trying to get that process as streamlined and frictionless as you can.
So, price delivery is both fair. It's fast, and it's frictionless for your
customers to do business, and I think if you can combine those factors,
that's a long answer for your short question. To me, that's what price
optimization would look like.

Karthik Chidambaram: Yeah, fair price and make it consistent. I think that's
really well said you can have one price one day and another price another
day and you lose the customer trust.

See, I mean we are in the software business and we work with distributors
and distributors use our software. In software you hear a lot of venture
capitalists or even people like Rita Hoffman, the co-founder of LinkedIn
says price a product high so you have better margins. And obviously, when
you're able to price it high, you're able to charge more and you have better
margins, and it helps the business a lot.

Like you said, you can invest more. What are your thoughts on the same with
respect to distribution? Because software is always priced high or you see
companies charging a lot for software, but distributors don't do it that
way. I mean, is there any learning which can be applied here? But what are
your thoughts, you know, around this?

Scott Sinning: Yeah, that's a good question. And it's I think it because
there's different industry software versus wholesale distribution are kind
of different business models, different value propositions. But I feel like
at the end of the day, customers are willing to pay what for value that they
receive or that they perceive.

And so whether you're a software company or software provider or wholesale
distributor, you've got to be competitive with the prices you charge versus
the alternatives. So if, if you're a unique software company and you've got
the best way of doing something that's unique, then you're going to have, be
able to price it as a premium because there's not a lot of substitutes.

And because you've been able to show the client that it's worth much more to
them than it will cost them. I think for wholesalers, the same thing
applies. But maybe one difference is that there's a lot of different
alternatives for any given product most of the time for most of the products
is distributed.

So they're available through a variety of other channels, right? And so the
product itself may be tough to say, I'm going to earn a premium on this
product when suppliers B, C, D down the street are selling it less
expensively. The difference is, I think, for the distributors that are doing
well and will continue to do well is the service aspect.

So service is the differentiator that makes a product sale. Either worth
more or worth less to a customer because of the things that they value. And
whether that's on time delivery, accuracy, fair price follow up service,
technical support, any number of those types of value added services that
distributors offer for me and my experience.

Customers are willing to pay for that if they can understand the value and
it's communicated properly. So I think the idea that you, the premise from
Reid Hoffman on starting high, of course, that is the goal of a negotiation,
right? Sometimes you start high, you kind of feel where the market is, and
you negotiate down just like, as a buyer, they're going to want to start
low.

And see where, see where they can guide the negotiation starting from that
reference point. But I think the agreements between buyer and seller hinge
on value exchange. And I think as long as the distributors doing that well,
they can, they can, and if the service they're providing justifies the
price, they're going to be able to earn incrementally higher margins because
customers will be happy to call them to get great service.

Even if they know they're paying a little bit more than if they have to
worry about delivery or if they have to worry about getting a call back and
things like that. So I think pricing strategy depends a lot on the
capability of the business to deliver excellent service or above average
service.

Because if you want to get a premium price, you've got to offer that premium
service.

Karthik Chidambaram: Well, that's it, Scott. I think these loans can very
well be applied to the software industry as well, I think, because as you
rightly said, it all depends on the product you're selling, or it depends on
the software you're selling.

And if it's a premium product and not a lot of people are offering it,
obviously, you have the advantage to charge high. But then if it's very
competitive, then you just have to stay competitive and you have to price.
optimally so where, you know, what, there is a value exchange as you call
it. And also the service aspect matters a lot.

I think that's really well said, you know, because, hey, whatever product
you sell, and if it doesn't work then, you know, it's a problem. So like
talking about service, you know, I just got this DJI microphone, you know,
that's what I'm using to talk, you know, it works well, but I tried to call
the customer service and it was hard to reach them.

But yeah, I mean, you know, I paid about 300, 400, but I felt like, Hey, you
know, I could have got better service because we have questions, it's not
easy to reach them on the phone, but anyway, so I think it's interesting.

Scott Sinning: So along those lines, I could add, I think, you know, part of
a distributor's goal going forward with value is not all is to understand
how customers perception of value differs because different customers,
different people have different Definitions of value for some customers.

It might be, Hey, I want to get a good product at a low price. And if it
doesn't work, I'll just throw it away and I don't care. But there's other
customers and have the opposite view of value that, hey, I want a quality
product that's going to last for a long time and not cause problems or
issues for myself or my customer, and I'm willing to pay a little bit more.

So I feel like one of the next, the next frontiers for distributors that
want to do pricing well. Or above average. Well, is to not think about
pricing as just one size fits all. It really depends on your product
portfolio where you might price different parts of your portfolio
differently, different products.

As we're talking about, some might be more commoditized, some might be more
unique or higher value add. So you want to be conscious of that when you're
pricing and also understand that different customers perceive value
differently. And have a different willingness to pay. So you want to be
thoughtful about how you segment customers, how you understand what they
value and understand how to communicate that value and charge for it in your
price so that you can capture the margin needed to support the services that
you're offering.

Karthik Chidambaram: No, great Scott. So, pricing and profitability - they
go hand in hand. How can businesses improve profitability?

Scott Sinning: There's a lot of ways, but I will keep my answer limited to
sort of the pricing realm because you know, improving profitability can be
multifaceted as you know, but from the pricing realm, I really think of it
around the income statement.

Okay, you know, so I'm gonna jump into accounting one on one here. But I
think most of the listeners will understand this. It's really about sales,
cost of goods and net profit or gross margin and net profit. So three ways
you can increase profit typically is you increase volume, sell more, right,
and make more margin and hopefully that works out and you can grow your top
line as well as bottom line.

Another way is to cut expenses or to lower the cost of goods sold. So it's
another lever that management has a distributor to improve profitability, at
least in the short run, is to find ways to cut some expense out of the
business or negotiate with vendors on cost of goods sold for the materials
and find different platforms or ways to buy better.

And then either pass that along, pass some of it along, or Ask none of it
along, depending on the situation. So that's another way to increase
profitability, both of which can work. But here's the thing that I know you
know, and that McKinsey & Company, a prestigious consulting firm, wrote
an article about four years ago that pricing is the biggest lever for
profitability.

The distributors have. It simply adds much more to the bottom line or the
EBITDA margins than the first two that I mentioned. So 1 percent increase in
price. Will drop more to the bottom line of them. Will it 1 percent increase
in unit volume or 1 percent increase or I'm sorry, a 1 percent decrease in
costs or expenses.

And so if you're looking to really drive margin and profit to the bottom
line, think about how you can get a better price. Because to the extent you
can improve pricing, even just a little bit, even by a percentage or 2
percent points, almost all of that drops to the bottom lines, net profit or
EBITDA down margins.

So for that reason, pricing, I think, has become very important for leading
distributors and for distributors who are looking to survive and thrive for
years to come, many are now taking that journey on and seeing very good
results.

Karthik Chidambaram: Very interesting. So you talked about the McKinsey
report.

I was reading a global study from Simon Kucher that said that companies that
have a dedicated pricing team see about 14 to 30 percent improvement in
margins. So you led a dedicated team at Graybar. Not every distributor has a
dedicated team. So no matter what the size is, pricing is important. Tell us
what you think about this opportunity for distributors here.

Scott Sinning: Yeah, 100%. I agree with the Simon Kuchar article that unless
you're going to have somebody dedicated to this function in one way or the
other, and we'll talk a little bit more about that, it's hard to say that
you're going to be able to drive the results as well as you could otherwise.
Simply because it does take a certain skill set, it takes some experience,
it takes know-how, and it takes time to bring together a project that's
going to drive results for pricing.

It's hard. For that to be done part time, and it's hard for that to be
tucked into an executive's role, perhaps that has responsibility for many
other things, say, for example, in sales and marketing when pricing is
tucked into their role. It may or may not be able to get the attention and
time it deserves in comparison to other responsibilities.

So I'm a big believer in having a dedicated, at least one dedicated person
who sleeps, eats and breathes pricing and profitability, for that company.
And really, the other question I hear a lot is, well, how big should the
department be? Or how big, what's the size of the team? What skill set
should I be thinking about having or even where does it report to?

And so I can share a little bit about my story is that when I came into the
role of Graybar, and at the time was about a seven and a half billion dollar
revenue company, we had a very small corporate pricing team. You can count
it on 1 hand, basically predominantly of, you know, analysts specialists and
folks who had really a lot of experience around pricing in our ERP system
and how it was delivered out through to the sales team and managing that.

It also consisted of a group of field price managers that were embedded in
different trading regions or different regions across the country that were
the right hand of say the sales leadership in that region, but they had a
dotted line to corporate pricing for coordination, for resourcing for data
analytics and stuff like that.

So I just want folks to understand that just even the biggest companies out
there still have pricing as a relatively smaller team. So I think for me
what that means is you've got to think about pricing. It. Based on what your
goals are, what your needs are and where you are on that journey. And so
depending on the maturity of your sales leadership, the capability of maybe
your existing finance team to do analysis, there's, there's more than one
option for how you might conceive of a pricing team.

It's not just one way, but I think there are different factors to consider
around size, complexity, goals and how the sales force is deployed. And what
you're, what you're really trying to do with a pricing initiative. And I can
talk more about that if you'd like.

Karthik Chidambaram: Definitely. Right. So, I mean, you were running the
pricing strategy at Graybar, and that's a multi billion dollar company.

But then at what point do you think a distributor should get a dedicated
pricing team? You know, what do you think the revenue should be? You know,
should it be, let's say, if they're just doing 30 million dollars, does it
make sense for them to have a dedicated pricing team? Or what do you think
about that?

Scott Sinning: Yeah, I think that there is a- it's beneficial to have at
least somebody who is doing this as a dedicated role. Now, depending on the
size, it may limit your budget or the amount of dollars you can put into
this position. So it may have to start off with somebody who is part time
or, you know, or someone who's doing another role that knows the business,
that's trusted, that has relationships with leadership and the sales team
that can help put together the elements that need to be put together for
that distributor to improve.

That might be also somebody who's particularly good at analytics. We're
crunching numbers out of the ERP system managing data. It also needs to be
someone who can work effectively across your organization, even if it's a
small organization, or depending how large it is, pricing is a cross
functional team sport.

So no matter what you do, you really, in my opinion, anyway, it's better to
have someone that's in that role that sees the whole playing field. Not just
the finance aspect or not just the IT aspect or not just the analytics
aspect, or not just the sales aspect, but understands what the pricing is
all about, which is to.

The moment of truth when you present a price to a customer that they say,
yeah, that sounds good. Let's buy it. I'm gonna buy it at that price. And to
be able to do that at scale in the distribution business with all the
complexities we have going on, I think takes at least a part time of a
person that eats, sleeps, drinks, and breathes pricing and thinks about it.

But also I would say that somebody who is teachable and willing to learn. So
many people like myself who come into pricing And this is not just in
Wholesale, this is everywhere, as I've spoken at pricing conferences over
the years, most people who are in pricing roles. Were either volunteered or
voluntold very few although it's changing, but very few pricing
professionals intended to get into pricing.

They typically come from other disciplines, other backgrounds, but there's
that combination of sales, finance, commercial knowledge, and instinct
around how to work and drive change. So those, that's the kind of the
characteristic of the people I would look at for the role, no matter whether
it's one person or more.

And lastly, I would just offer the idea that. There are resources out there
for distributors who may or may not have the full bandwidth to want to hire
a position in or promote somebody from within because if the question is,
you get to know what you're looking for and what you need before you just
post a position for a pricing manager.

So that's 1 of the things I do with clients is that, you know, help them
understand where they are, where they want to go and build a plan. And part
of that plan is to think about how that's going to get staffed in their
business, whether it's. A part time person, a full time person or a small
team and to be sort of that, that external partner that can help
distributors navigate that decision.

Karthik Chidambaram: Yeah, I think pricing is a very interesting job. You
price something and you see if it works or not. And hey, does it really
improve the margins or not? Or how do you adjust? Yeah, I think it's very
interesting. So Scott, everyone loves a checklist. So can you share a couple
of examples of what makes a good pricing strategy?

What are the two top items on it, right? So what are the top two items on
it? All

Scott Sinning: right. I love it. And, and the list could go on, right? But
you want to, the two big ones for me are that, you know, realizing or
understanding that pricing strategy derives from corporate strategy. And it
derives really from sales and marketing strategy.

So if you're going to have a build a pricing strategy for your company,
think about how it's going to align with everything else you're doing.
Because if you try to have a pricing strategy that does not fit what your
business model is or what your goals are, or what your corporate strategy
is, it's going to be really pretty well impossible to make that succeed.

So maybe that's a very basic answer and it's an obvious answer, but I find
that it's something that's worth talking about because You want to make sure
that your pricing strategy supports the other parts of your business that
the CEO or the board of directors has already decided is the direction of
the company, the strategy of the company, the goals of the company and make
sure that your price strategy fits within that as much as possible to drive
those outcomes.

And otherwise, this can be a tough put. The second thing is, Is really
around CEO visibility and executive leadership support on a sustained basis.
One of the things we had at Graybar and, and our CEO is great at it, was
sustained communication, and sustained persistent communication to
leadership that we can do profitable growth.

It's not just selling a lot at a lower margin or selling less at a higher
margin. It's, do both. It's the old ‘walk and chew gum at the same time’
thing. And that for a lot of distributors is a change of mindset because the
thinking is, well, hey I can price higher, but I'm going to sell less or I
could price lower and I'll sell more.

But the idea of how do I increase sales? How do I drive revenue up while
also, excuse me, incrementally improving gross margin rate. Which can drive
a ton more to the bottom line that helps the business reinvest for the
future and reinvest in capabilities to serve customers. So I feel like those
are the 2 alignment with corporate strategy and then having a sustained
support of the CEO where that's.

Visible to them and that they speak about regularly and have a leadership
team that's bought in and also is on the same page with communicating that
change, because the reason those two are the biggest change are two biggest
things on my checklist, Karthik, are that, for me, pricing is- it's a change
management project and predominantly specifically, it's a change management
project for distributors because distributors historically have delegated
their role of pricing to the front lines with little or no data to work
with.

And a blank and an order pad to say, Karthik, go get them, you know, and
don't sell below this and, you know, make your budget. And that was kind of
the marching orders and the guides that for many, many generations in the
distribution business. That's what the sales reps got. So they figured out
how to make the best of what they had.

And I can't blame them. But the idea is to drive change from those decades
of old habits to something that is, Hey, we're going to allow an analytics
platform or a tool or a matrix or a sophisticated optimization software of
some kind. We're going to start using that data and that analysis and that
model to yield price suggestions through to the order entry screen, that
takes a leap of faith for sales reps to trust that.

You know, the, and because their trust, they're, they're used to saying,
hey, I got to figure out my cost. I want to figure out about my margin rates
that I'm comfortable with, where I think I can win. And off we go. And that
works, but it tends to work sub optimally because Even the smartest and even
for the sales reps have this who are really smart and have a good memory.

Nobody can remember all the prices that are paid in the market for the
thousands and products that the distributors sell, but software can and so I
think for people who are out there thinking about doing it, who are doing
pricing, doing a pricing project, thinking about a pricing project, maybe if
I could ask you for a third thing on that checklist is invest.

In the idea of change management, think about how you're going to
communicate this to your organization, how it's going to make sense for
people, why it's going to make life better, how it's going to improve
results. Because if you just drop in the technology and hope that somehow
magically that's going to work on its own.

I know just, you know, this is very well, it doesn't and it fails and people
say, well, geez, the technology must not have worked really well. No, it's
not that it's most of the time. I think what happens is, and I'll just speak
for distributors is, and you mentioned this at the top of our conversation
Karthik, software is expensive and pricing optimization software is
expensive now, it could be argued that it's worth it, right?

Because if you do it, right It's going to yield many many many times over
the roi that you invested but when you're sitting there writing that check
for the Setup fee and the licensing. It's like Oh, my gosh, that just wiped
out our budget because we've never spent this much on our pricing
initiative.

And then when it comes time to implementing, you know, having the right
people, having enough people investing in the communication and change
management aspects, there's no money left. So it's like, well, just work
with what you got. And then it becomes a big struggle. So if I could add a
third thing to the checklist, it would be besides the software, if you're
going to implement software or a technology tool of some kind, that's great,
it's important.

Find the right one that fits your business. Pay for what you need, not for
what you think you might want to have and allow for budget to be spent over
time on the pricing team or the people or the travel or the training that's
going to be necessary to drive change. So that would be my third piece that
I think brings together the alignment and the CEO and leadership support is
view.

This is a change management project that happens to involve pricing. It
happens to involve typically some kind of data analytics and technology.

Karthik Chidambaram: No, great advice. Scott, I'm just curious. So what
advice would you give the CEO there? How often were you meeting with Kathy?
What should be the cadence and everything? So how often or how involved
should the CEO be? And what is the, is that a weekly cadence or do you meet
monthly?

Scott Sinning: I think that's going to vary depending on the company, the
culture, the preference of the CEO and in terms of having that sort of
cadence. I think there's also just speaking generally, not really about my
gray bar experience, but speaking generally it's good optics for the pricing
leader to have a relationship with CEO either directly or indirectly.

Because other people look around and say, geez, the pricing is reporting to
the CEO. It must be important. Right? Even if that means the functional work
that's done is with other executives or with other business leaders, the
optics are important. There could be other situations where maybe. In a
distributor, the CEO has been the de facto pricing leader because that maybe
that's one of the reasons they're CEOs.

They're smart and they pay attention to the numbers and they understand how
this stuff should work. Ideally. And so I think maybe in a lot of cases, the
CEO or another senior executive owns pricing simply because they, maybe they
did it before. They understand that they know it's important. And so
they're, they're going to be highly engaged, so I feel like the pricing
leader, to the extent they report into a CEO or have a relationship at the C
suite level is key. The one thing to avoid, and again, my opinion only, is
you don't want to bear your pricing role so far into the organizational
chart that nobody knows who they report to, and it's viewed as sort of a
back office function not strategic.

So while tactical support and back office support is, it's really, really,
really important on pricing. So much of the stuff gets done behind the
scenes. You want somebody who's also thinking about the strategic value of
pricing and how to drive that across an enterprise across the sales
organization.

So I think depending on the answer to your question, depending on the
situation, it might be weekly. It might be a monthly staff meeting. It might
be a monthly update or something like that. I feel like it is an appropriate
cadence to keep the CEO and the executive team aligned and informed and to
be open for feedback to course correct along the way is one thing.

That's- it's true. I think in a company almost any size there are biases.
There are habits. There are sensitivities. There are political landmines,
you know, when you start cutting across functions. And saying, oh, we're
gonna have a pricing person or we're gonna hire a pricing analyst or a
pricing manager, whatever it's going to be that that person needs to
understand that.

Well, there's other people who already feel they own pricing. So, you want
to make sure you understand who those folks are and that you're working with
them and for them, not against them and build the capacity of the
organization beyond just whoever the pricing leader is, but to use that
pricing leader as the catalyst for change that magnifies the capabilities of
the organization.

And so that's how I think distributors can overcome the idea that they don't
need a big pricing department to succeed or to certainly to make progress.
Start small, but leverage the internal resources you already have. At your
front line at your CSR and sales desks at your branch in a region or
corporate levels.

There's, trust me, in most distributors, there's people who get it who are
really good at it. And if you just ask them for their opinion and ask them
to help, they will. And so I think that's what you want on a pricing leader
and a distributor is someone who's going to have some of the answers,
hopefully, but mostly they're gonna have questions and they're going to be
willing to go out and find the answers.

From people who are doing the jobs every day to listen to customer feedback
and to take that all in, synthesize it and then come up with a plan that's
right for business.

Karthik Chidambaram: Thank you, Scott. A few last questions. The theme of
this podcast is driven and you worked at Graybar for over 30 years. And then
you decided to start your own company. You are the CEO of Pricing for
Distributors. You are helping distributors with their pricing strategy.

So my question to you is, what drove you to start Pricing for Distributors
and how are you doing?

Scott Sinning: Well, thank you. That's a good question. And it's really
three reasons. One is I've always had an entrepreneurial itch, and even
though I worked for a large company for 30 years, as you mentioned, it
wasn't as if I had one job for 30 years.

I was very blessed with being presented with opportunities to do a lot of
different things, to move around the country, to take on different roles.
And so, many of those roles were entrepreneurial in nature. They were not
projects that people had done before, or they had a job description, so to
speak.

So I felt like in some ways, even though I wasn't working in a very big
structured environment, I had the opportunity to be a little bit of an
intrapreneur and try new things and innovate, but there's only so far you
can do that within a large company before you have to say, Hey, I want to do
something on my own and now's the time to do it.

And so I decided to scratch the entrepreneurial rich about two years ago and
retired from Graybar and started my own consulting business. So I'm also
doing it. The second reason I think is because I love pricing. I love
pricing for distributors. It's something I get. It's something I've learned
lessons about, sometimes the hard way, sometimes through success, sometimes
through failure.

But nevertheless, I've learned a lot and really feel that that's something
that I can offer as a service to others. And to help them do things better,
faster than I was able to do because I was, I had a learning curve. So I
really want to help accelerate learning curves for distributors who are
themselves driven to strengthen their business and improve profitability
through better pricing.

And the last thing is maybe a practical business concept is I just felt
there was an unmet need. I still think there's not that need. So as you were
mentioning, you know, making between some of the big consultancies like
Simon Kutcher or McKinsey and the largest distributors out there, but
they're pretty well served.

You know, they have a lot of software companies and consultants advising
them and chasing them down for business, but you get below into the small
midsize distributor and and and I from, in my opinion, they're underserved,
but yet they still have the same needs. So what I think for my business, one
of the things that drew me to it is I think there's a market for it.

I think there's unmet demand and I think there's an opportunity to really
help distributors and in a way that is meaningful for them. And your next
question was what drives me and there's a lot of things I suppose that I
could think about, but it's, it's really that the idea of. I want to help
others. I want to serve others in some way, whatever I can do to help.

And that might mean mentoring. That might mean teaching that might mean
advising through a consultancy, but my goal is to help other people and
really give back. To an industry that's given me so much over my career that
I've fallen in love with. As well, and so I feel like my way of giving back
is through helping companies that are maybe earlier on in their pricing
journey, and they want someone to boost up and help them do it faster and
more successfully.

So those are the things that drive me in a nutshell.

Karthik Chidambaram: No, I love the name of Pricing for Distributors. It's
very simple. And that's the name of your company and it exactly tells what
you do. So it's an awesome name. So Scott, as a part of the Driven podcast
we interview a lot of leaders and we ask them this question, what is the
question you would like to ask the next guest in our podcast?

And we recently interviewed Mike Marks, the founding partner of the Indian
River Consulting Group. And the question he asked was about mentoring and
you were talking about mentoring as well. So mentors can provoke excellence.
Maybe you don't see that at the time, but you look back and you realize the
great value that mentors had provided you.

So who do you see as mentors that have helped shape your experience or your
career?

Scott Sinning: Well, let's thank Mr. Marks, the outstanding Mr. Marks for
the question. He is- I look forward to seeing his podcast with you. I liked
his term when I read this question about ‘mentors provoke excellence’. So I
was thinking to myself, well, provoke has an interesting insinuation around
it.

Typically, it means, excuse me, that to provoke something is you're
stimulating a reaction or an emotion in another person. That is maybe not
welcome. You know, you're provoking somebody to do something and it's like,
geez, that's annoying. I don't like that. But I was thinking about if Mike
used that word on purpose because many times mentors do provoke you to be
better by being annoyingly honest about telling you the hard truths.

Maybe about yourself teaching you about the business and telling you things
that other people cannot or will not tell you to have a certain amount of
courage to be able to just be straight up honest with you about how you can
get better or maybe set an example for you that can be followed as someone
who's being mentored.

Does that make sense? And so I like the word provocative because or provoke
because maybe that's the role of mentors to shake things up a little bit.
So, and to challenge that their mentees to be better to be their best self.
The other thing that occurs to me on that question is, because, first of
all, I would say much of my success, or maybe even a lot of it, most of it,
is attributed to people I've learned from along the way. I was very
fortunate to have many from my first supervisor up through my last. And my,
during my career, I had mostly really, really good bosses, really good
colleagues and, and mentors that were either mentors formally, or they were
just people I looked up to and I observed and I learned from.

They may not even have known that I was, that I Sitting there watching them
learning, but there's other times where I clearly felt that someone kind of
took me under their wing and it was helping me learn the business and, you
know, kind of come up through the ranks. But I would also offer the idea
that I think it's key to be open to mentorship.

So if you want to have a great mentor, or if you want to be mentored, be
open to being a good mentee. Or be, be open to learning, be open to
constructive criticism be open and driven to getting better at what you're
doing because a, a really good or a great mentor is not going to have time
for somebody who doesn't care, or it's not asking questions, who's not
curious, who's not putting in the work.

So I think it becomes a synergy where a good mentor wants to have a good
student or a good mentee, just as much as the mentee wants to have someone
that they can look up to and learn from. And in my experience as being both
a mentor and mentee, it's a great type of when it, when it can, it happens,
there's magic there and it's hard to describe, but it can make a difference
for both people in that journey.

As far as personal mentors, I would just have to say it's largely people
that are in my professional life or who were in supervisory roles during my
corporate career. I can't think of any names or I wouldn't necessarily give
any names. They're not public figures, but they're folks who had a good
heart, who were smart, who really worked hard.

And through their life and their career had learned things that were
valuable and that they were willing to pass along to the young generation.
And so I've kind of got old enough now that I'm that guy that hopefully can
pass some of those lessons down to the next generation as well.

Karthik Chidambaram: Yeah, no, thanks for paying it forward.

And it's also mutual learning, you know, when it comes to mentors and
mentees, right? So it's not just mentees learning from the mentors, but
mentors also learn from the mentees. So it's a mutual learning. Thank you so
much, Scott.

So now it's your turn to ask the question. What question would you like to
ask the next leader we interview?

Scott Sinning: Well, you know, I had to think long and hard about this
because this is an important question to be on your podcast and be able to
ask the next guest who I don't know a random question about distribution.

But the 1 thing that comes to mind for me that I think, this is not pricing
related, but is about the generational shift at distribution the aging, so
the aging workforce and the pending retirements of so many, so many people
that have already. Moved on to their next phase, or that they're going to be
in the next 5 or so years really leaves most distributors with a major
challenge of how to fill those spots with the same driven type of people
that they're going to need to continue to grow.

But to replace all that institutional knowledge that has been gained over
decades of doing the job and kind of handing the reins over to a younger
generation. That's much more technically savvy. And maybe had very different
ideas of what work and what the workplace should be for their career path,
then, then someone like myself had coming up.

So the question would be, what are you doing to inspire the next generation
of your leadership to be as driven as you are in the distribution industry?

Karthik Chidambaram: That's a great question, Scott. That's an answer
everyone wants to know. So we will be sure to ask the question to our next
guest.

Scott, I would like to end with this question. What book are you reading
right now?

Scott Sinning: Well, I've read a lot of pricing books, but recently I
decided I was going to read something else. This is by singer songwriter,
Jimmy Buffett. It's called ‘A Pirate Looks at 50’. He wrote this about 25
years ago. And for some reason or not, even though I'm a Jimmy Buffett music
fan. I never got into his books and something happened.

Like we were talking about the mentor relationship. It's, you know, when, as
they say, I don't know who said this, but they said ‘when the student is
ready, the teacher will appear’. And so for some reason I thought it was
time to read some Jimmy Buffett and this is a great book.

It's really about his life and adventures as he was approaching the age of
50 and his life and times traveling in the Caribbean with his family on a
seaplane and a sailboat. And I find a lot of little life lessons. It's
beautifully written and I can't help but read every page with a grin on my
face, living vicariously through his stories. and maybe in some ways
relating his experiences to my own as one approaches 50 or beyond. So that's
what I'm reading right now, and I'm about halfway through it, but enjoying
it thoroughly.

Karthik Chidambaram: No, that's great. Books can also be, you know, great
mentors in a way.

So the book I'm reading right now is ‘Essentialism’. It's written by Greg
McEwan. It just talks about how can you be an essentialist? You don't really
need a lot of things. You just subtract, keep subtracting, keep things
simple. So yeah, so it's been, you know, it's been a great read. I've really
enjoyed reading it. And it also reiterates your learnings.

So, Scott, I just want to say thank you. I've really enjoyed this pricing
conversation on pricing, profitability. You know, we talked a lot on how to
price and you offered great advice. And also you talk through your career. I
found your career to be really inspiring. You know, you just started doing
anything and everything you did it all, and then that drove you to pricing.
It's a very fascinating story. I really enjoyed listening to it. Scott,
thank you so much for joining the Driven by a DCKAP podcast.

Scott Sinning: It's been my pleasure, Karthik. Thank you very much.

Karthik Chidambaram: Thank you, everyone. Thanks for listening. Thanks for
joining Driven by DCKAP and that's Scott Sinning for you and signing off and
see you on the next show. Thank you.