Executive | 140130 | Commercial Excellence: how to make it stick? | Presentatie | Onno Oldeman


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Executive | 140130 | Commercial Excellence: how to make it stick? | Presentatie | Onno Oldeman

  1. 1. Commercial Excellence How to make it stick? Workshop summary for distribution Onno Oldeman Juriaan Deumer Amsterdam, January 30, 2014 Amsterdam Office Barbara Strozzilaan 380 1083 HN Amsterdam, The Netherlands Tel: +31 (0)20 753 1253, Fax: +31 (0)20 753 1277 e-mail: onno.oldeman@simon-kucher.com Internet: www.simon-kucher.com
  2. 2. Simon-Kucher & Partners' profile World market leader in pricing No. 1 in "Marketing and Sales"* Competence ranking "Marketing and Sales" 1 Simon-Kucher & Partners 2 "world leader in giving advice to companies on how to price their products" "…the world's leading pricing consultancy…" Boston Consulting Group 3 Peter Drucker "pricing strategy specialists" McKinsey & Company Global presence 27 offices worldwide "... in pricing you offer something nobody else does." > 2,000 projects in the last three years Employees: 700 Marketing Boston Amsterdam New Bonn York Brussels San Cologne Francisco Miami Copenhagen Frankfurt Istanbul São Paulo London Luxembourg Santiago de Chile Madrid Milan Munich Paris Vienna Warsaw Zurich Beijing Tokyo Dubai Strategy Smart Profit Growth Sales Singapore Pricing Sydney * Source: Manager Magazin Aug. 2007-2011/IMB (Institute for Management & Consulting); survey among 400-500 top managers Commercial Excellence_20140130 -1-
  3. 3. Commercial Excellence at Simon-Kucher: Smart Profit Growth Commercial strategy Marketing Market strategy Brand portfolio management Brand and assortment strategy Assortment optimization Channel strategy Innovation management Pricing strategy Restore value programs Marketing Competitive strategy Marketing efficiency … … Strategy Smart Profit Growth Sales & CRM Pricing Value-based price setting Sales Pricing Category management Trade terms & discounting Key account management Pricing process and organization Management of distributors New revenue models/ (un)bundling Sales transformation Promotion management Value selling and monitoring … … Source: Simon-Kucher Commercial Excellence_20140130 -2-
  4. 4. Clients: Industry leaders and hidden champions Automotive Audi Continental Daimler Consumer Maserati MercedesBenz Porsche Renault Toyota Energy BP/Aral Conergy E.ON Financial Services EnBW RWE Shell Sunways Tank & Rast Yello Industrial Goods & Services Bosch Carl Zeiss Caterpillar Ad van Geloven Dr. Oetker Nikon Beiersdorf FrieslandCampina Nestlé Danone Nike PepsiCo Demag MTU Schaeffler Siemens Stork ThyssenKrupp Allianz ABN AMRO AXA Barclays BNP Paribas DB Express Generali Western Union Media & Entertainment Frankfurter John Wiley Pearson Reed Elsevier Sanoma Media Scholastic Pharma & Life Sciences Private equity 24 of the top 25 pharma companies 3i Credit Suisse CVC Retail The Economist WMG Wolters Kluwer Software & Technology Bol.com Castorama Delhaize Ebay Mediamarkt METRO MIGROS OTTO Rewe Telecommunication 1&1 DTAG E-Plus LinkedIn PayPal Qtel Citrix Google Intel Capiton Goldman Sachs Gilde Microsoft Novell Panasonic Halder Lion capital KKR SAP Semikron SunGard Transport, Logistics & Travel Skype Vodafone Xbox Live Accor DB Schenker DHL Germanwings KLM/Air France Lufthansa Thomas Cook TNT TUI Source: Selected references from Simon-Kucher project experience; confidentiality agreements prevent us from naming many other major partners Commercial Excellence_20140130 -3-
  5. 5. Simon-Kucher thought leadership Books (selection) Articles (selection) USA Brazil France USA Spain UK USA NL Hungary Japan Korea Germany China NL Germany Source: Simon-Kucher Commercial Excellence_20140130 -4-
  6. 6. Setting the scene: Necessity for Commercial excellence from daily practice "I never walk away at negotiations, no is not an option since we have to defend market share in a declining market." “We sell to much on price; we should be much more explicit on the value we deliver" “We have to monetize our services more explicitly, we give away to much for free” “Our price & discounting approach is mainly historically grown, cost-plus and complex " "We are in the middle of a storm: it’s a price war out there" “Our product has become a commodity, we have to position our added value more strongly” “Our commercial targets change with the season, in March it is margin and in October it is volume" “We systematically manage our sales funnel, to actively hunt for the potential in our priority growth segments" “We should differentiate our commercial approach more strongly, based on the segments we serve” Source: Simon-Kucher & Partners project database Commercial Excellence_20140130 --5 -5
  7. 7. Commercial excellence is all about obtaining pricing power "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 Source: Bloomberg.com, 2011 Commercial Excellence_20140130 --6 -6
  8. 8. Do you have pricing power? Ø33% of companies claim to have pricing power Chemical products Commodity products Construction materials Consumer goods Electronic goods & computers Energy and utilities Industrial goods Machinery Pharmaceuticals & biotech Banking & financial services Industrial services Insurance Media and entertainment Retail Transport and logistics Travel and hospitality 36% 18% 34% 34% 27% 35% 40% 42% 45% 26% 30% 24% 30% 29% 27% 31% Overall = 33% Source: Simon-Kucher & Partners Global Pricing Study 2012 Commercial Excellence_20140130 --7 -7
  9. 9. (Reported) reasons for low pricing power 1. "We are a commodity" 2. "Our competitors are stupid" 3. “Our training is not tailored" Source: Global Pricing Survey 2012 Commercial Excellence_20140130 --8 -8
  10. 10. Real reasons for lack of pricing power 1. Strategy and leadership deficits 2. No systematic commercial approach 3. Insufficient commercial knowhow (methods, people, "real" value pricing) Source: Simon-Kucher Commercial Excellence_20140130 --9 -9
  11. 11. Power pricing and profits jump when leadership takes active role High Pricing Power Companies with C-level involvement in pricing 135 Ø EBITDA of last 3 years 35% Companies with high pricing power 100 100 26% Companies with high pricing power 136 55% -25% 35% All others 15% Expected EBITDA coming 3 years All others 75 11% 36% All others 100 41% C-level involvement in Commercial Excellence significantly increases pricing power, and companies with high pricing power make clearly higher profits. Commercial Excellence_20140130 --10 -10
  12. 12. Different leaders, different strategies "We have a policy of keeping prices stable to protect our brand. When demand goes down we reduce production but don’t lower our prices." Wendelin Wiedeking, CEO Porsche 1992-2009 Operating margin %* 20% 15% 10% 5% Year 0% "Fixed costs are extremely high in our industry. We realized that in a crisis we are better off with lowering prices than reducing volume." '00 '01 '02 '03 '04 '05 '06 '07 '08 -5% -10% -15% Richard Wagoner, CEO GM 2000-2009 * for Porsche partly estimated Commercial Excellence_20140130 - 11 -
  13. 13. What is Commercial Excellence? Typical questions we encounter TYPICAL COMMERCIAL EXCELLENCE QUESTIONS Where are my biggest sales opportunities in the market, and how do I direct my team to go after them? 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? How do we set prices and discounts to maximize profits and customer loyalty? What type of templates and tool support can help me to bring more structure, grip and focus on my sales work? Which KPI would steer the right kind of behavior? What training curriculum and development paths do I need to develop the well-rounded sales person I look for? Source: Simon-Kucher & Partners project database Commercial Excellence_20140130 - 12 -
  14. 14. Commercial Excellence is all about boosting fundamental capabilities Share vision & targets Commercial excellence ambition Provide direction Commercial strategy and competitive positioning Commercial targets Commercial vision Commercial leadership Growth: Market development Develop capabilities Manage change Efficiency: Commercial organization Profitability: Margin management Channel management Customer and key account management Funnel management … Commercial structure Commercial process Commercial capabilities … Price list management Discount & bonus optimization Project pricing … People & talent development Systems, tools & templates Market segmentation Competitive positioning Portfolio and route-to-market strategy Mindset: Value selling Value selling argumentum Systematic peer pricing Price defenses & nego … Performance management Source: Simon-Kucher & Partners Commercial Excellence_20140130 - 13 -
  15. 15. Our view on success factors for a Commercial Excellence transformation Experience from >300 Commercial Excellence projects in the last 3 years Make Commercial Excellence a leadership priority, part of the MD agenda ‘We 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 Commercial Excellence champions ‘We 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 wins ‘There are many initiatives in our organization at the moment, we need to work on early successes as a vehicle to propagate Commercial Excellence’ Source: Simon-Kucher & Partners Commercial Excellence_20140130 - 14 -
  16. 16. Summary Starting point for improvement Setting commercial ambition Establishing common commercial language Defining commercial improvement priorities to make it stick Commercial Excellence_20140130 - 15 -
  17. 17. Thank you! Commercial Excellence_20140130 - 16 -