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Improving sales efficiency in a highly competitive market

16 June, 2017

The client
Our client is an international manufacturing company, providing high-end products and services to customers both directly and via a network of distributors. The company has long enjoyed good profit margins and a strong market position owing to its product superiority and brand recognition. However, the market is changing, putting its market position and financial performance under threat.      

Situation and challenge
Challenges in the market are arising from changes in consumer behavior and increased competition:

  • Customers purchase these high-end products for varying reasons, putting pressure on the sales force to understand and present offers in different ways.  
  • Competitors are investing in both production capacity and the development of offerings, which will increase availability of the product in the market, leading to increased price pressure.
  • Customer consolidation will reduce sales opportunities and increase competition.
  • Volumes in preferred industry sectors are decreasing because of changes in end-consumer behavior. This will require our client to find additional volumes elsewhere.

Instead of waiting for the impact of the above issues, our client took a proactive decision to establish a strategy and sales tactics to ensure it is prepared for these approaching challenges. 

The objective of the sales strategy was to increase sales efficiency, i.e. maintain profit margins whilst replacing volumes from declining markets and industries with sales to other growth sectors. An additional goal was to increase sales volumes through efficiency improvements in production.

To ensure an efficient sales approach and tactics, we addressed two key challenges:

  • How to identify and prioritize sales opportunities; find a way to focus on leads with a higher hit rate and profit margins (while walking away from other, less promising leads).
  • How to enable an efficient sales approach (way to engage); to ensure prioritized leads are approached with the right kind of offer in the right way with the right capabilities (resources).

Our role in and approach to the assignment
Our approach to strategy development and the design of sales tactics always starts with the customer in mind. Using interviews and workshops, we mapped the value chain and the range of customer needs and behaviors. The outcome was a holistic sales process with at least three different sales channels, often with more than one customer (direct and end) involved in the purchasing process. This emphasized the need for an efficient sales approach, since taking market share from competitors would require significant sales resources.

Another insight was that customers buy products for different reasons and in different ways, adding even more complexity to the sales process.  

The value chain illustrated that customers purchase the products to satisfy a range of different needs. With this as a basis, we designed a segmentation model, the purpose of which was to separate deals based on:

  • Drivers of needs and requirements;
  • Ways to purchase;
  • Potential of sales and customers.

We designed the segmentation model, a two-by-two matrix, answering two key questions:

  • What value are customers willing to pay for?
  • How do customers want to source the product?

The challenge was to identify axes that sufficiently distinguish different types of sales (or customers) in order to prioritize and address them in different ways. This required several iterations and interviews with various stakeholders to ensure we found a model that works. 

Results and benefits

Once the design was agreed, we had a model that everyone in the sales organization could relate to and use as it reflects their customers’ needs and behaviors.

The segmentation model included three dimensions:

  • Transactional or Complex Approach: to guide sales teams on how best to use opportunities and engage customers.
  • Added-Value or Cost Focus: to guide sales teams on what key messages and benefits to focus on when communicating with customers.
  • Potential: to compare the potential of opportunities and customers to guide the sales management team in prioritizing opportunities and customers.

Besides the model itself, we developed a comprehensive description of each segment, including the drivers behind the needs of customers and key stakeholders along with messages, offerings, ways to make sales and critical internal resources required to leverage opportunities. This will provide the sales teams and other departments with a powerful tool.

The segmentation model provides our client with numerous benefits:

  • A common view of and nomenclature for the market and customers across the organization.
  • A shared tool for marketing, product development and sales, enabling product development and marketing messages tailored for each segment.
  • A prioritization and resource management tool for the sales management team.
  • A tailored approach on how to engage and who to involve when approaching different segments; account team, inside sales or direct sales?

Together, this provided a comprehensive sales model for the sales management team and marketing and sales teams, enabling a more efficient approach to sales.

The next step for our client is to roll out the model and related tools through training, coaching and by raising awareness of the tool. The aim is to ensure the sales teams can apply this in full, identifying and addressing different segments in an efficient and productive way.

Why Ascend?

Ascend knows about sales excellence and how to drive change and transformation. Our consultants successfully coach sales leaders and teams to achieve complex sales transformations across several industries. We know it takes the right combination of industry knowledge, project management skills, value realization capabilities, innovation and creativity, as well as people and change management skills, to help our clients prepare for the challenging market of today and tomorrow. 

Don’t hesitate to contact us to discuss ideas about how to make your change journey a little less challenging.

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