Executive | 140130 | Commercial Excellence: how to make it stick? | Presentatie | Onno Oldeman

Amsterdam OfficeBarbara Strozzilaan 3801083 HN Amsterdam, The NetherlandsTel: +31 (0)20 753 1253, Fax: +31 (0)20 753 1277e-mail: [email protected]: www.simon-kucher.com

Commercial ExcellenceHow to make it stick?

Onno Oldeman

Juriaan Deumer

Amsterdam, January 30, 2014

Workshop summary for distribution

No. 1 in "Marketing and Sales"*

Simon-Kucher & Partners' profile

* Source: Manager Magazin Aug. 2007-2011/IMB (Institute for Management & Consulting); survey among 400-500 top managers

World market leader in pricing

"world leader in giving advice to companies on how

to price their products"

"pricing strategy specialists"

"... in pricing you offer some-thing nobody else does."

Peter Drucker

"the world's leading pricing consultancy"

Global presence > 2,000 projects in the last three y ears

Competence ranking "Marketing and Sales"

1 Simon-Kucher & Partners

2 Boston Consulting Group

3 McKinsey & Company

Smart Profit

GrowthStrategy

Marketing

Sales

Pricing

TokyoSan

Francisco

New

York

BostonBeijing

Sydney

Singapore

Miami

27 offices worldwide Employees: 700

Dubai

AmsterdamBonn

BrusselsCologne

CopenhagenFrankfurtIstanbulLondon

Luxembourg

Madrid

Milan

Munich

Paris

Vienna

Warsaw

ZurichSantiago de Chile

So Paulo

Commercial Excellence_20140130 - 1 -

Pricing

Commercial strategy Marketing

Sales

Commercial Excellence at Simon-Kucher: Smart Profit Growth

Source: Simon-Kucher

Stra-tegy

Sales & CRM

Marke-ting

Market strategy

Brand and assortment strategy

Channel strategy

Pricing strategy

Competitive strategy

Brand portfolio management

Assortment optimization

Innovation management

Restore value programs

Marketing efficiency

Value-based price setting

Trade terms & discounting

Pricing process and organization

New revenue models/ (un)bundling

Promotion management

Category management

Key account management

Management of distributors

Sales transformation

Value selling and monitoring

Pricing

Smart Profit

Growth


Transport, Logistics & Travel

Clients: Industry leaders and hidden champions

Source: Selected references from Simon-Kucher project experience; confidentiality agreements prevent us from naming many other major partners

ConsumerAutomotive

Financial ServicesEnergy

Media & EntertainmentIndustrial Goods & Services

Private equityPharma & Life Sciences

Software & TechnologyRetail

Telecommunication

AudiContinentalDaimler

MaseratiMercedes-Benz

PorscheRenaultToyota

BP/AralConergyE.ON

EnBWRWEShell

SunwaysTank & RastYello

AllianzABN AMRO AXA

ExpressGeneraliWestern Union

BarclaysBNP ParibasDB

BoschCarl ZeissCaterpillar

DemagMTUSchaeffler

SiemensStorkThyssenKrupp

AccorDB SchenkerDHL

GermanwingsKLM/Air FranceLufthansa

Thomas CookTNTTUI

Ad van GelovenBeiersdorfDanone

Dr. OetkerFrieslandCampinaNike

NikonNestlPepsiCo

24 of the top 25 pharma companies

CitrixGoogleIntel

MicrosoftNovellPanasonic

SAPSemikronSunGard

1&1DTAGE-Plus

LinkedInPayPalQtel

SkypeVodafoneXbox Live

Reed ElsevierSanoma MediaScholastic

The EconomistWMGWolters Kluwer

Frankfurter John Wiley Pearson

CapitonGoldman SachsGilde

HalderLion capitalKKR

3iCredit SuisseCVC

Bol.comCastoramaDelhaize

EbayMediamarktMETRO

MIGROSOTTORewe


NL

USA

Simon-Kucher thought leadership

Commercial Excellence_20140130


JapanUSA NL Hungary

Korea Germany GermanyChina

USA Brazil France

UK

Spain

Books (selection) Articles (selection)

- 4 -

Setting the scene: Necessity for Commercial excelle nce from daily practice


Source: Simon-Kucher & Partners project database

We sell to much on price ; we should be much more explicit on

the value we deliver"

"I never walk away at negotiations, no is not an option since we have to defend market share in a declining

market."

Our commercial targets change with the season, in March it is

margin and in October it is volume"

"We are in the middle of a storm: its a price war out there"

- 5 -

We should differentiate our commercial approach more

strongly, based on the segments we serve

Our product has become a commodity , we have to position our added value

more strongly

We have to monetize our services more explicitly, we give away to much for free

We systematically manage our sales funnel, to actively hunt for the

potential in our priority growth segments "

Our price & discounting approach is mainly historically grown, cost-plus and complex "

- 5 -

Commercial excellence is all about obtaining pricin g power


Source: Bloomberg.com, 2011

"The single most important decision in

evaluating a business is pricing power."

Warren Buffett

Pricing power is the ability of a

company to get the price it deserves

for the value it delivers

- 6 -- 6 -

Do you have pricing power?


Source: Simon-Kucher & Partners Global Pricing Study 2012

36%

18%

34%

34%

27%

35%

40%

42%

45%

26%

30%

24%

30%

29%

27%

31%

Chemical productsCommodity products

Construction materialsConsumer goods

Electronic goods & computersEnergy and utilities

Industrial goodsMachinery

Pharmaceuticals & biotechBanking & financial services

Industrial servicesInsurance

Media and entertainmentRetail

Transport and logisticsTravel and hospitality

Overall = 33%Overall = 33%

33% of companies claim to have pricing power

- 7 -- 7 -

(Reported) reasons for low pricing power


Source: Global Pricing Survey 2012

- 8 -

1. "We are a commodity"

2. "Our competitors are stupid"

3. Our training is not tailored"

- 8 -

Real reasons for lack of pricing power



1. Strategy and leadership deficits

2. No systematic commercial approach

3. Insufficient commercial know-how (methods, people, "real" value pricing)

- 9 -- 9 -

Power pricing and profits jump when leadership take s active role


35%

26%

Companies withC-level

involvement inpricing

All others

35%

55%

41%

Companies withhigh pricing

power

All others

36%

15%

11%

Companies withhigh pricing

power

All others

-25%

High Pricing Power EBITDA of last 3 years Expected EBITDA coming 3 years

100

136

75

100

C-level involvement in Commercial Excellence signif icantly increases pricing power, and companies with high pricing power make clearly high er profits.

100

135

- 10 -- 10 -

Different leaders, different strategies


* for Porsche partly estimated

"We have a policy of keeping prices stable to protect our brand. When demand goes down we reduce production but dont lower our prices ."

Wendelin Wiedeking, CEO Porsche 1992-2009

Year

Operating margin %*

-15%

-10%

-5%

0%

5%

10%

15%

20%

'00 '01 '02 '03 '04 '05 '06 '07 '08"Fixed costs are extremely high in our industry. We realized that in a crisis we are better off with lowering prices than reducing volume."

Richard Wagoner, CEO GM 2000-2009

- 11 -

Source: Simon-Kucher & Partners project database

What is Commercial Excellence? Typical questions we encounter


How do I organize my sales force to maximize sales, and increase efficiency?

How do I develop an effective key account program, to put my resources where they matter most?

What type of templates and tool support can help me to bring more structure, grip and focus on my sales work?

How do we set prices and discounts to maximize profits and customer loyalty?

Where are my biggest sales opportunities in the market, and how do I direct my team to go after them?

Which KPI would steer the right kind of behavior ?

TYPICAL COMMERCIAL EXCELLENCE QUESTIONS

What training curriculum and development paths do I need to develop the well-rounded sales person I look for?

Growth:Market

development

Profitability: Margin

management

Mindset:Value selling

Efficiency: Commercial organization

Commercial excellence ambition

Channel management Customer and key

account management Funnel management

Price list management Discount & bonus

optimization Project pricing

Value selling argumentum Systematic peer pricing Price defenses & nego

Commercial structure Commercial process Commercial capabilities

Commercial strategy and competitive positioning

People &talent development

Systems, tools & templates

Performance management

Market segmentation Competitive positioning Portfolio and route-to-market strategy

Commercial targets Commercial vision Commercial leadership

Commercial Excellence is all about boosting fundame ntal capabilities


Source: Simon-Kucher & Partners

Sharevision & targets

Providedirection

Managechange

Developcapabilities

Our view on success factors for a Commercial Excell ence transformation

Source: Simon-Kucher & Partners

Make Commercial Excellence a leadership priority, p art of the MD agendaWe want countries to learn from each other and have one shared approach towards Commercial Excellence. It should not be a one-off, but results that stick

Co-create solutions, methods and know-how with Comm ercial Excellence championsWe want to develop Commercial Excellence based on co-creation with the organization. We suggest to select a combination of countries with the highest potential and Commercial Excellence champions, to ensure we leverage best standards and ensure buy-in

Ensure early success stories, deliver quick winsThere are many initiatives in our organization at the moment, we need to work on early successes as a vehicle to propagate Commercial Excellence

Experience from >300 Commercial Excellence projects in the last 3 years


Summary


Setting commercial ambition

Establishing common commercial language

Defining commercial improvement priorities to make it stick

Starting point for improvement

Thank you!


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Executive | 140130 | Commercial Excellence: how to make it stick? | Presentatie | Onno Oldeman