Blog, Pricing

The Evolution to Commercial Excellence 2.0

By Stephan Liozu
May 14, 2020

The experts have spoken. It will take 18 to 36 months to renew the demand levels and growth rates we experienced in 2019. There is a long road ahead. Many of the same experts anticipate that business as usual is gone forever and firms will be on high alert to make the changes that are needed.

I have written a lot about pricing in the past and how the function is going to become key to enabling sales. However, the sales and commercial functions are also going to go through a transformation. Commercial intelligence and excellence as we knew them will morph into something else.

7 Ways Commercial Excellence Will Evolve 

  • Support all current bids and contract negotiation. No doubt the focus is on closing the current deals in the pipeline and on making sure they do not evaporate. That might require a few more concessions, short-term changes in proposed business models, and pricing engineering.
  • Focus on controlled and profitable growth. This is one of the biggest changes. We have to say goodbye to explosive growth. We have to anticipate that businesses will scale back and might focus on profitable growth, sales opportunities close to the core business, or sales from adjacent innovations. For the last decade, the focus was on “growth at all cost” because the stock market expected that. Profitable growth is the new name of the game.
  • Increase customer retention efforts. We all know that the core business is the profit fuel of any business. It makes customer retention and core customer focus the biggest commercial priorities of the next two years. I anticipate that sales leaders will allocate their best talent and most of their resources gaining back these customers at the expense of non-essential segments.

Also read: 4 Early Warning Sins You May Lose a Customer

  • Focus on return on assets. Sales strategies will be impacted by severe reductions in CAPEX budgets, greater focus on cash flow, and higher ROI expectations for technology investments. We might witness a rationalization of investments in commercial excellence and sales enablement technologies. However, at the same time, the best platforms with superior ROI should thrive.
  • Zero in on sales efficiency. We should also expect a rationalization of headcount allocation and distribution between all relevant commercial functions: sales, sales ops, strategic account management, customer services, sales engineering, etc. Sales leaders will have to demonstrate the payback of each additional sales resource and the impact to short-term commercial goals. We might move away from a long-term orientation for a few years.
  • The emergence of customer success and value consulting. Companies that will win during this delicate period are those that can demonstrate concrete and justified customer value. There is no more room for impact fuzziness or vague contribution to customers’ bottom line. Both customer success and value consulting roles will become key players at the commercial excellence table.
  • More proficiency in pricing and analytics. In the future, sales reps need to be able to access and interpret sales and pricing analytics. Because of the previous 6 points, the level of expected sophistication is going to rise. What was once an option before because of robust growth is now a requirement to make the right decision on what customers to serve, at what price, and with what level of cost-to-serve. I believe we are entering an era of data-centric commercial decision-making.

This crisis has created a new sense of urgency to deploy new commercial solutions, new data analytics process, and a more robust prioritization process. It’s commercial excellence 2.0.

If you are in sales today, be ready for a new way of working and a new level of pressure for short-term impact. Managing profitable growth and cash flow at the same time creates tension between multiple functions. This is going to be the new normal. Expect more rigorous budgeting and forecasting processes. Expect to have to learn new technologies and to be much more agile. Disruption offers both challenges and opportunities. Your company needs you. Step up your game today!

If you’d like more information on navigating risk and accelerating through the current economic downturn, join Vendavo Commercial Excellence Month LIVE. For the month of May, we’re hosting a series of interactive, virtual forums that include expert panels, keynotes, Vendavo solution deep dives and customer case studies. Register today.

  • commercial excellence , customer retention , pricing , pricing analytics , sales efficiency

    Stephan Liozu

    Stephan M. Liozu, Ph.D. is the Chief Value Officer of Thales Group and is the Founder of Value Innoruption Advisors, a consulting boutique specializing in pricing, value, and change management. Stephan holds a Ph.D. in Management from Case Western Reserve University where he researched the topic of transformational change and leadership in pricing.