- Harvey Mackay
The significance of sales and marketing management has grown in the past few years. Companies no longer strive towards improved results only by pruning costs but also by paying attention to pricing and effective management of the customer interface. Although the production side has long been managed by clearly defined indicators and established practices, the development of sales management has lagged behind.
We employ an analytical approach to sales and marketing development. The transparency of sales and marketing management sets the basis for actions and the development of long-term steering practices.
Pricing development in a global process industry company
A global process industry company had set higher profitability targets and was looking for ways to reach them. Pricing practice development was concluded to be a key way to reach the new EBIT targets. The company wished to find ways to harmonize pricing across its businesses and regions and to apply a new pricing model, which would better consider both customer value and costs. August was chosen as the consultant for the definition project.
August consultants first analyzed the client’s current pricing methods and evaluated best practices to be used in the new pricing model across the client’s businesses. A common pricing model was defined together with top sales management and piloted in two businesses. For example the launch of new service adders was agreed and an improved pricing process defined. August evaluated improvement potential related to the new, improved pricing practices. Significant profit improvement potential was found to exist from applying the new service adders and implementing volume based price differentiation. August developed a roadmap for rolling-out the benefits throughout client’s organization. Additionally, August team defined a multidimensional pricing reporting solution to provide visibility to pricing and profitability for both group and business management.
After the definition project, a roll-out program was started to implement the new pricing model to client’s other businesses. August consultants worked with small teams from all the businesses and trained the new pricing model, evaluated profitability improvement potential and defined the pricing process in detail per business. Detailed definitions included price list communication methods and pricing authorization process and responsibilities. August team also built a complete sales force training plan and defined IT implementation requirements.
Our projects helped the client to implement the new pricing practices faster and gain the profitability improvements earlier than would otherwise have been possible. August built commitment to the change program through numerous training sessions, workshops and management meetings throughout the organization.
Price management development for a metal processing company
The company operated in Pan-European markets producing metal components for various applications in the construction and engineering industries. Pricing practices were heterogeneous and varied across countries and client segments. In addition, volatile raw material prices were making pricing more difficult. New management wanted to get a better grip on top-line performance and launched a project to develop price management.
The project covered comprehensive analyses on current pricing practices. The purpose was to identify potential leakages in price realization and improvement needs in price setting. New alternative pricing models were developed in collaboration with sales management.
The key outcome of the project was a harmonized pricing model for the key client segment covering all countries. In addition, concrete recommendations for price changes were drawn up, based on the analyses. The price changes approved by the management had a significant impact on the company’s profitability. The new way of pricing was supported by an IT tool and documented in a ‘Price Guide’ presentation, which sales personnel and client service center workers were trained to use.
Updated strategy and annual planning support for a financial firm
A financial client company had streamlined its organization and strategic goals in the previous year. The goals set were ambitious and expectations were high. The new management team in charge of the customer relationship management was in need of new insights into strategy updating and annual planning.
During the first stage of the project, August assessed the development of the customer relationships and the market as well as the company market potential. We defined clear service concepts, service promises and competitive tools to support success on the market for each client segment. The delivery of the service promise was outlined from the perspectives of services and customer relationship management. In terms of annual planning work, the sales and marketing received tasks that would enable the client company to achieve its strategic targets. We also created tools for follow-up on the achievement of the targets.
To measure the impact of the sales and customer relationship management measures outlined for different client segments, we introduced concrete indicators and reporting functions based on them. In the year following the completion of the project the client reached and even exceeded the targets set for the sales and customer relationship management. In the future, the new strategy will free the company from the prevailing price competition.
Sales KPI development for consumer products company
A consumer products company with international operations had failed to generate growth over the past few years. New management wanted to accelerate growth and bring focus to sales by launching new Key Performance Indicators (KPIs) for the sales organization.
August was contracted to define new sales KPIs, performance management practices and a roadmap for implementing the new metrics. The project was carried out in collaboration with the client’s sales executives. New KPIs were defined and selected by creating a good understanding of the key drivers the sales organization can influence in order to grow the value of the business. A key outcome of the work was the targeted set of sales KPIs and a plan for how to link the KPIs to the organizations existing management practices. Also during the projects, detailed KPI definitions and reporting layouts were produced.
The company’s top management approved the recommended KPI set and implementation roadmap. On August’s recommendation, implementation of the highest priority KPIs began immediately after the project.
Development of sales management in the processing industry
Our client had carried out a substantial reorganization of its sales during the economic recession. The new organization created a new opportunity to develop sales management to better support profitability management. The senior management found the situation problematic as there was a lack of transparency in price development. This lack of transparency was an obstacle for operative management and hindered providing investors with adequate information on the company’s prospects.
August helped to create an extensive sales management model including target setting, contract negotiations and performance follow-up. This required the development of a new tool for gathering contract and sales information in one place. The tool was designed and it was piloted on one of the company’s market areas.
Once a sufficient amount of information had been collated with the aid of the tool, a new target-setting model was defined for sales. The process and responsibilities were defined, emphasizing collaboration between sales and controlling. Controlling could produce analyses on the various sales options to support decision-making in sales. For sales, KPIs were created to steer them towards selecting the most profitable sales opportunities.
The annual and quarterly negotiation periods had a great significance on the client’s business. A tool and meeting practices were created for the negotiation process to help the management keep close tabs on the development of the market prices and closed deals. Clear practices were also created for sales tracking and performance management.
As a result of the project, our client achieved a clear operating model for setting targets and preparing for the contract negotiation period. It allows them to focus on the most profitable sales opportunities and to ensure harmonized pricing. Thanks to the new steering model, the previously highly volume-oriented sales organization adopted a new approach based on profitability.