Background and Challenge
L.E.K. Consulting's client, a leading national distributor of electrical equipment and components, sought to transform its commercial approach in order to drive higher sales and margins, and improve its position in the marketplace.
The company had grown through acquisitions and had a product-centered value proposition that was increasingly under competitive pressure.
The business was experiencing slow growth, declining margins and mixed sales force productivity performance, and lacked a clear strategy to prioritize targeted customers with a compelling value proposition.
Approach and Recommendations
- Evaluated verticals to prioritize based on recent performance and market trends
- Identified a key need to transition from product-oriented sales to a value-added solution provider
- Identified opportunities to improve how sales resources could be deployed to more effectively reach different sets of targeted customers
- Uncovered areas of margin leakage and how pricing and discounting controls and processes could be improved
- Assessed sales force performance to identify best practices and behaviors that should lead to higher sales
- Developed an implementation path forward that defined work streams and teams to capture the performance improvement opportunities
The commercial excellence project yielded a number of benefits for our client, including:
- Increased senior management awareness of opportunities to improve sales and margin performance
- Mapping of customers to market verticals, and an assessment of vertical performance relative to market verticals
- A clearer view of the developing competitive landscape and the need to offer value-added services
- Optimized sales organization that more strategically allocates sales resources to targeted customers
- A better understanding of margin leakage (e.g., customer segments, sales personnel, etc.) and where improvements can be made
- Identification of top-performing sales rep behaviors, which could quickly be propagated throughout the sales organization
An actionable path forward was developed, with key activities, deliverables and timelines that can be leveraged to quickly capture the benefits identified. Quick wins were targeted, and the impact of the opportunities was estimated to improve overall gross margin by more than 5%.