Cretex Companies: Shift to Value-Based Pricing Positions Cretex for Another Century of Success

Business Challenge

Business in a Changing Environment

“We knew market dynamics were changing,” says Steven Ragaller, Vice President and CFO, Cretex Companies. “There was a squeeze from multiple directions and we knew we couldn’t continue to do things the way we'd always done.”

Cretex Companies has a 100-year tradition of quality. A diversified family of manufacturing companies serving the medical, aerospace & defense, infrastructure, and industrial industries, the four branches of Cretex are united by a common set of values. In recent times, markets have shifted, and the organization faced new challenges, including increased pricing pressure. As a result, Cretex recognized an opportunity to pivot its approach to pricing -- from cost-based to value-based. This new approach would enable the company to strategically manage pricing to defend, and in some cases, increase profitability. To implement value-based pricing, Cretex needed to understand how it could change its customers' perceptions of the value delivered as well as how to determine alternatives to competing on price alone.

Cretex corporate headquarters in Elk River, Minnesota
Cretex corporate headquarters in Elk River, Minnesota


Quantifying Value

Cretex understood this was a complex initiative, and sought an external partner to ensure success. “We felt we needed to seek some outside expertise to help us understand the true value we create and help us figure out how we sell that to our customers,” says Lynn Schuler, President & CEO of Cretex Companies. This business need led Cretex to the Carlson School. Carlson Executive Education’s team designed a top-down learning journey to explore the value Cretex provides.

Cretex’s senior leadership team was first introduced to value-based pricing concepts in a half-day experiential learning session. Steven Ragaller praised the hands-on experience: “It exposed our leadership team to some of these concepts and principles and we walked out of there going ‘Wow, we just scratched the surface.’ We knew this could be beneficial to our business, and that we needed to both go deeper into these topics and pull in more people.”

The next step was the creation of a multi-cohort program for additional leaders, which would build common knowledge and language of value-based pricing across Cretex. Professor Mark Bergen, James D. Watkins Chair in Marketing at the Carlson School of Management and thought leader in the world of value-based pricing, brought his passion and years of expertise in the field, while Professor Pri Shah taught a module on negotiations to help participants learn how to best position Cretex’s value to outside parties.

Lynn Schuler was committed to bringing this change throughout the entire organization. “We said, let’s include our leadership, sales directors, and business unit directors, so they’re the champions of this and can help drive this through the organization. We also need to include several emerging leaders, who are in line for additional responsibility down the road.”


Prof. Mark Bergen in session with leaders from Cretex Companies
Prof. Mark Bergen in session with leaders from Cretex Companies

A New Paradigm

The program is ongoing, but the benefits are already emerging. A culture shift is readily apparent and will help position Cretex for another century of success. When asked if he’s seen a change at Cretex, Lynn Schuler says, “No question. It’s really exciting to see some of the changes and we’re just in the infancy stages. First, we’re trying to get them to think about the services we provide and how we charge for them, now we’re trying to get everyone to totally change their paradigm.” Steven Ragaller agrees. “We’re so used to our old way of thinking; now with Carlson Executive Education’s help, we’re thinking about things in a new way. It’s opened our eyes.”

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