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.