The COVID-19 pandemic is creating unprecedented disruption for businesses from every industry worldwide. The paramount concern for all companies is the safety and well-being of their people, customers and communities. At the same time, they are also having to respond to the sharpest commercial downturn in living memory.
Beyond mitigating the immediate impacts of that decline, what steps can businesses take to ensure they emerge stronger and more resilient on the other side of the crisis? This report sets out six elements essential to optimising your commercial capabilities – ensuring your business is future-proof and ready to hit the ground running when the recovery eventually comes.
Short-term measures, longer-term thinking
The breakneck speed at which COVID-19 has upturned the global economy will inevitably mean that commercial controls have been relaxed, particularly for non-essential goods, as many sales teams chase volume without always assessing profitability.
That said, relaxing commercial controls – through, for example, increased discounting – will only work while customers are actually buying or still able to buy. In cases where entire markets are shut down, this approach does little to stimulate demand. Supply chains will also have been disrupted and production assets mothballed as an immediate response.
The length and type of the downturn will vary from industry to industry, ranging from slowdown to a complete stop in activity. The risk for those businesses hit hardest is that commercial behaviours learnt during the crisis end up becoming entrenched. When the upturn does finally arrive, these businesses could remain fixed in a downturn mindset and miss the opportunity to rebuild their profitability.
The situation will often be complicated further by an inexact view of true commercial performance. This is largely because ‘standard’ cost models will not capture the current positions. The impact of commercial decisions taken under pressure in a fast-moving, unpredictable environment will therefore not become apparent until further down the road, with the potential risk of damaging consequences emerging later on.
Moreover, the recovery, whenever it comes, will not happen at the same speed in every location. Businesses will need enough flexibility in their commercial strategies to deal with differing levels of supply and demand within and across geographies and segments.
This paper therefore sets out the commercial capabilities and operating model that businesses should be investing in now to ensure they are ready to thrive when the recovery comes.
Six steps to improving your commercial capabilities
There are six main areas that companies need to focus on in order to enhance their future commercial capability. Click through each of these sections below to understand more:
How do you clearly define your commercial goals, in terms of revenue, margin and market share?
What should your business guidelines be in terms of setting prices, discounts, rebates, trade terms and other commercial incentives?
Who does your business sell to most effectively and via which channels?
How do you measure success in your business and continually refresh your commercial strategies?
Do you have the right organisational structure – and what steps do you need to take to equip your people and effectively incentivise them?
Which technology, tools and, above all, data do you need in place to optimise your commercial capabilities?
Pulling in the same direction
As we’ve seen, each of these six areas needs to work in concert with the others in a single integrated commercial operating model within your business. If any one area is out of step, it can undermine or destabilise the rest. Optimal prices, for example, cannot be set without the context of the local commercial strategy and cannot be executed in that marketplace unless the sales team follow the guidance given.
Likewise, organisational silos should be linked through effective processes and automated – wherever cost effective – using the right tools and technology. This will help drive efficiency, reduce errors and improve the sales/service customer experience across your organisation.
Read the next section: COVID-19: The value of improving commercial capabilities