Key components of excellence are rapidly becoming table stakes. Companies need to raise the bar to keep Commercial Excellence "excellent."
Over the past decade, most in the materials industry have encountered at least one company with a strategy pillar in commercial excellence. In recent years, progress in commercial excellence has entailed: executing a value selling system, implementing a CRM and leveraging it to boost sales activity, enlisting strategies to drive pricing discipline, and building digital marketing assets to enhance the customer buying journey.
While significant strides have been made in developing commercial excellence, we believe these efforts are table stakes in today's rapidly changing industry. In fact, the cracks are already showing, with a 2020 McKinsey study indicating that the chemical industry has underperformed the global economy in recent years, missing on both ROIC and growth since 2015.
Competition will only intensify as industry players step up their game. We know that achieving even today’s level of commercial excellence requires not only that firms establish a new infrastructure, a huge undertaking of its own, but also that they successfuly get team members to buy into new systems, another challenge. This investment is well worth it for many companies in the middle market, and it should be especially commended when made by companies undertaking this work from the ground up.
According to a 2020 Gartner study, B2B buyers spend only 17% of their time with client selling teams and by 2025, 80% of B2B sales interactions between suppliers and buyers will occur in digital channels.
While product value propositions still play a role in the sales process, they aren't as critical to the customer buying journey as they one were. Sales strategies should reflect this reality.
With customers increasingly reporting feeling overwhelmed by the volume of product information at their disposal, the way to sell more is not to talk more about product attributes. Instead, it is now more important than ever to implement tactics and target behaviors which may be unrelated to the product but material to the buyer's purchasing decision. For example, it's important to understand customer pain points and help customers frame their issues in a way that differentiates your company from the competition.
Standing out from the sea of competitors requires next-level sales and marketing capabilities, including:
In our work with clients, we have seen that on average firms can increase their growth rates by 50-100% over their baseline growth by implementing these approaches. Only through these steps can firms spend less time focusing on product and more time focusing on solutions.
Firms can stay where they are by sending reps out in a sea of other reps discussing their products and focusing solely on value. But doing has big risks:
The result is weaker growth prospects, which directly affect the value of the enterprise.
Alternatively, by implementing a range of approaches that extend beyond product, firms can unlock significant improvements in their growth rates. While there is no one-size-fits-all solution, the right conversation is one that begins with clarifying the objectives and identifying the obstacles standing in their way.
Over the past decade, most in the materials industry have encountered at least one company with a strategy pillar in commercial excellence. In recent years, progress in commercial excellence has entailed: executing a value selling system, implementing a CRM and leveraging it to boost sales activity, enlisting strategies to drive pricing discipline, and building digital marketing assets to enhance the customer buying journey.