Amsterdam OfficeBarbara Strozzilaan 3801083 HN Amsterdam, The NetherlandsTel: +31 (0)20 753 1253, Fax: +31 (0)20 753 1277e-mail: [email protected]: www.simon-kucher.com
Commercial ExcellenceHow to make it stick?
Onno Oldeman
Juriaan Deumer
Amsterdam, January 30, 2014
Workshop summary for distribution
No. 1 in "Marketing and Sales"*
Simon-Kucher & Partners' profile
* Source: Manager Magazin Aug. 2007-2011/IMB (Institute for Management & Consulting); survey among 400-500 top managers
World market leader in pricing
"world leader in giving advice to companies on how
to price their products"
"pricing strategy specialists"
"... in pricing you offer some-thing nobody else does."
Peter Drucker
"the world's leading pricing consultancy"
Global presence > 2,000 projects in the last three y ears
Competence ranking "Marketing and Sales"
1 Simon-Kucher & Partners
2 Boston Consulting Group
3 McKinsey & Company
Smart Profit
GrowthStrategy
Marketing
Sales
Pricing
TokyoSan
Francisco
New
York
BostonBeijing
Sydney
Singapore
Miami
27 offices worldwide Employees: 700
Dubai
AmsterdamBonn
BrusselsCologne
CopenhagenFrankfurtIstanbulLondon
Luxembourg
Madrid
Milan
Munich
Paris
Vienna
Warsaw
ZurichSantiago de Chile
So Paulo
Commercial Excellence_20140130 - 1 -
Pricing
Commercial strategy Marketing
Sales
Commercial Excellence at Simon-Kucher: Smart Profit Growth
Source: Simon-Kucher
Stra-tegy
Sales & CRM
Marke-ting
Market strategy
Brand and assortment strategy
Channel strategy
Pricing strategy
Competitive strategy
Brand portfolio management
Assortment optimization
Innovation management
Restore value programs
Marketing efficiency
Value-based price setting
Trade terms & discounting
Pricing process and organization
New revenue models/ (un)bundling
Promotion management
Category management
Key account management
Management of distributors
Sales transformation
Value selling and monitoring
Pricing
Smart Profit
Growth
Commercial Excellence_20140130 - 2 -
Transport, Logistics & Travel
Clients: Industry leaders and hidden champions
Source: Selected references from Simon-Kucher project experience; confidentiality agreements prevent us from naming many other major partners
ConsumerAutomotive
Financial ServicesEnergy
Media & EntertainmentIndustrial Goods & Services
Private equityPharma & Life Sciences
Software & TechnologyRetail
Telecommunication
AudiContinentalDaimler
MaseratiMercedes-Benz
PorscheRenaultToyota
BP/AralConergyE.ON
EnBWRWEShell
SunwaysTank & RastYello
AllianzABN AMRO AXA
ExpressGeneraliWestern Union
BarclaysBNP ParibasDB
BoschCarl ZeissCaterpillar
DemagMTUSchaeffler
SiemensStorkThyssenKrupp
AccorDB SchenkerDHL
GermanwingsKLM/Air FranceLufthansa
Thomas CookTNTTUI
Ad van GelovenBeiersdorfDanone
Dr. OetkerFrieslandCampinaNike
NikonNestlPepsiCo
24 of the top 25 pharma companies
CitrixGoogleIntel
MicrosoftNovellPanasonic
SAPSemikronSunGard
1&1DTAGE-Plus
LinkedInPayPalQtel
SkypeVodafoneXbox Live
Reed ElsevierSanoma MediaScholastic
The EconomistWMGWolters Kluwer
Frankfurter John Wiley Pearson
CapitonGoldman SachsGilde
HalderLion capitalKKR
3iCredit SuisseCVC
Bol.comCastoramaDelhaize
EbayMediamarktMETRO
MIGROSOTTORewe
Commercial Excellence_20140130 - 3 -
NL
USA
Simon-Kucher thought leadership
Commercial Excellence_20140130
Source: Simon-Kucher
JapanUSA NL Hungary
Korea Germany GermanyChina
USA Brazil France
UK
Spain
Books (selection) Articles (selection)
- 4 -
Setting the scene: Necessity for Commercial excelle nce from daily practice
Commercial Excellence_20140130
Source: Simon-Kucher & Partners project database
We sell to much on price ; we should be much more explicit on
the value we deliver"
"I never walk away at negotiations, no is not an option since we have to defend market share in a declining
market."
Our commercial targets change with the season, in March it is
margin and in October it is volume"
"We are in the middle of a storm: its a price war out there"
- 5 -
We should differentiate our commercial approach more
strongly, based on the segments we serve
Our product has become a commodity , we have to position our added value
more strongly
We have to monetize our services more explicitly, we give away to much for free
We systematically manage our sales funnel, to actively hunt for the
potential in our priority growth segments "
Our price & discounting approach is mainly historically grown, cost-plus and complex "
- 5 -
Commercial excellence is all about obtaining pricin g power
Commercial Excellence_20140130
Source: Bloomberg.com, 2011
"The single most important decision in
evaluating a business is pricing power."
Warren Buffett
Pricing power is the ability of a
company to get the price it deserves
for the value it delivers
- 6 -- 6 -
Do you have pricing power?
Commercial Excellence_20140130
Source: Simon-Kucher & Partners Global Pricing Study 2012
36%
18%
34%
34%
27%
35%
40%
42%
45%
26%
30%
24%
30%
29%
27%
31%
Chemical productsCommodity products
Construction materialsConsumer goods
Electronic goods & computersEnergy and utilities
Industrial goodsMachinery
Pharmaceuticals & biotechBanking & financial services
Industrial servicesInsurance
Media and entertainmentRetail
Transport and logisticsTravel and hospitality
Overall = 33%Overall = 33%
33% of companies claim to have pricing power
- 7 -- 7 -
(Reported) reasons for low pricing power
Commercial Excellence_20140130
Source: Global Pricing Survey 2012
- 8 -
1. "We are a commodity"
2. "Our competitors are stupid"
3. Our training is not tailored"
- 8 -
Real reasons for lack of pricing power
Commercial Excellence_20140130
Source: Simon-Kucher
1. Strategy and leadership deficits
2. No systematic commercial approach
3. Insufficient commercial know-how (methods, people, "real" value pricing)
- 9 -- 9 -
Power pricing and profits jump when leadership take s active role
Commercial Excellence_20140130
35%
26%
Companies withC-level
involvement inpricing
All others
35%
55%
41%
Companies withhigh pricing
power
All others
36%
15%
11%
Companies withhigh pricing
power
All others
-25%
High Pricing Power EBITDA of last 3 years Expected EBITDA coming 3 years
100
136
75
100
C-level involvement in Commercial Excellence signif icantly increases pricing power, and companies with high pricing power make clearly high er profits.
100
135
- 10 -- 10 -
Different leaders, different strategies
Commercial Excellence_20140130
* for Porsche partly estimated
"We have a policy of keeping prices stable to protect our brand. When demand goes down we reduce production but dont lower our prices ."
Wendelin Wiedeking, CEO Porsche 1992-2009
Year
Operating margin %*
-15%
-10%
-5%
0%
5%
10%
15%
20%
'00 '01 '02 '03 '04 '05 '06 '07 '08"Fixed costs are extremely high in our industry. We realized that in a crisis we are better off with lowering prices than reducing volume."
Richard Wagoner, CEO GM 2000-2009
- 11 -
Source: Simon-Kucher & Partners project database
What is Commercial Excellence? Typical questions we encounter
Commercial Excellence_20140130 - 12 -
How do I organize my sales force to maximize sales, and increase efficiency?
How do I develop an effective key account program, to put my resources where they matter most?
What type of templates and tool support can help me to bring more structure, grip and focus on my sales work?
How do we set prices and discounts to maximize profits and customer loyalty?
Where are my biggest sales opportunities in the market, and how do I direct my team to go after them?
Which KPI would steer the right kind of behavior ?
TYPICAL COMMERCIAL EXCELLENCE QUESTIONS
What training curriculum and development paths do I need to develop the well-rounded sales person I look for?
Growth:Market
development
Profitability: Margin
management
Mindset:Value selling
Efficiency: Commercial organization
Commercial excellence ambition
Channel management Customer and key
account management Funnel management
Price list management Discount & bonus
optimization Project pricing
Value selling argumentum Systematic peer pricing Price defenses & nego
Commercial structure Commercial process Commercial capabilities
Commercial strategy and competitive positioning
People &talent development
Systems, tools & templates
Performance management
Market segmentation Competitive positioning Portfolio and route-to-market strategy
Commercial targets Commercial vision Commercial leadership
Commercial Excellence is all about boosting fundame ntal capabilities
Commercial Excellence_20140130 - 13 -
Source: Simon-Kucher & Partners
Sharevision & targets
Providedirection
Managechange
Developcapabilities
Our view on success factors for a Commercial Excell ence transformation
Source: Simon-Kucher & Partners
Make Commercial Excellence a leadership priority, p art of the MD agendaWe want countries to learn from each other and have one shared approach towards Commercial Excellence. It should not be a one-off, but results that stick
Co-create solutions, methods and know-how with Comm ercial Excellence championsWe want to develop Commercial Excellence based on co-creation with the organization. We suggest to select a combination of countries with the highest potential and Commercial Excellence champions, to ensure we leverage best standards and ensure buy-in
Ensure early success stories, deliver quick winsThere are many initiatives in our organization at the moment, we need to work on early successes as a vehicle to propagate Commercial Excellence
Experience from >300 Commercial Excellence projects in the last 3 years
Commercial Excellence_20140130 - 14 -
Summary
Commercial Excellence_20140130 - 15 -
Setting commercial ambition
Establishing common commercial language
Defining commercial improvement priorities to make it stick
Starting point for improvement
Thank you!
Commercial Excellence_20140130 - 16 -
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