Sales & After Sales
The sales & after-sales activities of many companies operating in the industrial environment still hold significant improvement potential. Management still focuses too strongly on development, production, and assembly (upstream segments) and neglects other segments.
Because purely technology-based product differentiation is becoming increasingly difficult and also harder to communicate, management must emphasize sales & after-sales topics more and more.
By implementing the appropriate downstream business designs, it is possible to achieve EBIT margins of 10 to 20 percent - an aspect that most companies are aware of. However, most companies find it difficult to realize their earnings and growth potential. Only 25 percent of companies earn more than 20 percent of their revenue with downstream business activities (spare parts, service, financing, maintenance, etc.). In many instances, after sales is not industrialized as a separate business. Consequently, it is not supported, operated, and managed by the appropriate (global) processes, organization, leadership, systems, and tools.
Oliver Wyman has developed a systematic approach for identifying and evaluating downstream opportunities. The following are the core elements of this approach:
- Rigorous analysis, including evaluation of the market potential of downstream business segments and the prerequisites for unlocking this potential
- Analysis and evaluation of the processes and the current performance of the downstream business - e.g. by conducting benchmark studies
- Development of an expanded value proposition for the customer as well as the necessary internal process parameters (KPIs)
- Preparation of a detailed business plan which incorporates possible growth opportunities and the necessary investments
- Definition of measures and detailed implementation plans to build the required competencies, processes, systems, and structures
A second large field of action for industrial companies is to improve the performance of their sales operations (sales effectiveness), rather a dire necessity than an opportunity. Customers have become more demanding and increasingly require a sales process that is more geared to providing advice. In addition, ever more sales staff can no longer deal with the growing number of products, and are unable to market differentiating innovations adequately - a major risk in stagnating markets. Channel conflicts between suppliers and distributors can hamper the sales process. Furthermore, companies usually lack efficient processes and sales management tools - a deficit which can easily grow exponentially in a globalized world. Most salespersons, for example, spend far too much time on activities that do not create much value, and too little time with the customer.
We believe that clearly defined levers exist and that these can significantly improve sales performance:
Strategic focus: Which are the most profitable and attractive customer groups? What are the best channels for serving them? What value proposition is differentiated in the long term?
Sales processes / management: How can the organization and processes be optimized? How can the sales staff be adequately allocated? Who assumes which role?
Infrastructure / systems: Which are the appropriate management indicators? What is the best compensation and incentive system? Which tools and training methods are suitable?
In the last five years, Oliver Wyman has carried out hundreds of sales effectiveness projects for a broad range of clients. The following are some representative results:
- Increase in sales by 10 to 20 percent and concurrent staff reductions
- Increase in the sales rate by 250 percent
- Improvement of the average margin per customer by 50 percent
Contacts
Contacts
Wolfgang Weger
Partner, Munich
Email >
