Like most enterprise technology endeavors, Commercial Excellence is a journey, not a destination. I know you’ve heard that a lot, so back away from the ledge.
It’s also not an all-or-nothing thing. As I talked about in my last post, Commercial Excellence is built from four major pillars: administration, segmentation and optimization, execution, and analytics. There are certainly other tangents off of these but these are, in my opinion, the cornerstones. As a presales business consultant here at Vendavo, it is my job to work with prospects and customers to get to the bottom of how they should start(for most) or continue (for a few) their “journey”. In this discussion, I am going to talk about some of the things to consider when embarking on this road.
As I implied, most of the folks that I talk with are just starting this process. At least the technology part of it. The bulk of companies do some sort of this today but it appears to be a very disjointed and very manual process. Whether it is execution being done through email and MS office or analytics being attempted with a traditional BI tool or Excel, the companies I speak with realize that this is less than optimal and are trying to learn how they can solve these problems with technology.
The Good News?
The good news is that there is some great tech that can not only automate these necessary cycles but also improve them. And that is an important point. This isn’t just about automating bad process but much more importantly about improving those efforts and helping the company gain back margin and, in many cases,, gaining additional profit. The goal for this is to gain anywhere from 1-3% return on sales. Depending on how large an organization, this can equate to millions or tens of millions.
But again, this doesn’t require the whole shebang. I have seen customers gain this back by just using analytics to better identify where there is margin leakage, where there is opportunity to move price for certain markets or products, or how mix is affecting profits and where to focus to improve that. In my opinion,analytics and segmentation are two areas that are relatively easy to improve as both of them rely wholly on a customer’s data. Since everyone has that and lots of it, it is a great approach to identify where the dam is leaking so they can focus the repairs on the right places.
Execution and administration are a little more involved but for different reasons. Execution is a critical part of Commercial Excellence since without it, you may have a fabulous strategy but no way to get that directly into the hands of the people who need to deliver it. It is also the area that generally requires some cultural change and that is a little more cumbersome.
I, however, believe this is one of the most important areas as once it is in place; a customer can feed strategy in without any bumps and the gains go up quickly. Administration is really about managing the policy or price and fits very nicely into an organization that has already set aside a team to do this and wants to now give them technology to allow them more flexibility and control. Quite a few companies I speak with aren’t at this point yet.
Again, I just wanted to talk about what I am seeing in the market in regards to Commercial Excellence and also bring to your attention that it is built up one pillar at a time and not a massive shift. So if you’re mulling this over, I suggest you get started. We can help.