Executive Summary

This client “tuned” its sales force efforts by embracing a refresh of its cost to serve understanding. We used this robust understanding of margins by product segment and trading partner to increase focus on growing and profitable segments. This allowed the client to align its efforts with those distributors which were driving the consolidation of the industry. The result was double digit cost savings, renewed market share, and a refocus on higher margin products. 

This enabled a “growth rupture” – a simultaneous increase in both margins and market share in a mature market.

Key learnings:

  • Cost to serve vs achieved price can effectively highlight opportunities to “tune” the sales force’s efforts by adjusting levels of sales investment
  • Combining this with growth potential and the client effectively “picked the winners”
  • This enabled my client to increase market share and profitability simultaneously

Cost to Serve: Not the End but the Foundation

To fine tune the client’s cost to serve understanding, we brought cost to serve down to the SKU level and added achieved net price by SKU and retailer to create almost a P&L for each SKU by distribution point. This allowed us to aggregate commercial margin by distribution partner by product segment, and became our foundation for further analysis.

Channel Leverage

We then combined the commercial margin figures with various company and market metrics to understand which players in each segment were growing and profitable – therefore worthy of greater focus, vs those targeted for greater efficiency either through mix or decreasing sales focus.

Sales Force Retargeting

The final step was to refocus the sales force based on the identified areas of focus, which then allowed the client to deploy a range of methodologies and sales tools (call planning strategies as well as hardware / sales tools) to assist and measure that focus.