From falling demand to rising profit
As hyper-competition drove down demand, a faltering unit of a global process industry company began to believe that the only way forward was to improve its margins. Two quarters after the firm began its collaboration with August, management had made permanent structural changes that boosted EBITDA by two percentage points.
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Challenge
One division of a global process industry company was suffering from insufficient profitability due to declining demand and a highly competitive market. Profitability improvement was also targeted in the sales function; the paradigm had to be changed from volume to profit seeking behavior. Management wanted to understand the profit improvement potential on customer level and realize the potential in the upcoming commercial negotiations.
Brave the future
To become more profit driven sales management created a more strategic view on the customer portfolio that emphasized profit improvement potential in different customer segments. The segmentation helped management to set targets for pricing, volume and other key profit improvement levers on customer level. With the support from August, account managers created more analytical and detailed customer plans than before, which ultimately played a key role in helping sales conduct negotiations successfully and pull the right levers to improve profits.
The impact
The new – more analytical and profit seeking – approach to customer planning and customer negotiation execution yielded tangible profit improvement in the form of a two percentage point EBITDA increase. Furthermore, permanent changes to the sales management processes and tools were implemented.