Commercial excellence is a hot topic in the specialty chemicals industry. With investors focusing ever more on companies with a profitable growth strategy, businesses are becoming increasingly interested in ways to profitably step up organic growth.

The recent study "Commercial Excellence - How to Balance Intuition and Facts" addresses this topic and analyzes what makes companies focus on commercial excellence and how they go about it. Some 62% of the companies surveyed operate in the specialty chemicals industry, making this sector the clear focus of the study. To ensure comparability with other industries, only companies with innovative products and a multichannel distribution strategy were included in the study.

Key To Success

The findings of the study strongly emphasize the importance of commercial excellence. Of all respondents, 82% see commercial excellence as a way to increase organic growth, with 34% even viewing it as the main means of doing so. What is most surprising here is how great respondents across all industries expect the potential effects of commercial excellence on revenues and profits to be. Companies in Europe anticipate 7% to 9% higher revenues and 4% to 6% more profit. The majority of American study participants would even go so far as to put the possible revenue and profit uplift resulting from commercial excellence at more than 10%. Specialty chemicals companies tend to anticipate a more positive effect on revenues and profits than do other firms.

Methods And Means

When it comes to selecting the most important ways of improving commercial excellence, participants from all industries agree that adapting the product portfolio to customer needs, ensuring the focused deployment of sales resources for customers in target groups, and reinforcing selling skills are the most important aspects. Contrary to expectations, the majority of study participants do not think that the newly emergent topic of digital sales and marketing has any particular role to play in enhancing commercial excellence.

Asked to name the most important distribution channels, respondents said: people in technical sales, traveling sales reps and key account management, with people in technical sales believed to play a bigger role in the specialty chemicals industry than in others. Interestingly, these are the same distribution channels in which study participants perceive the greatest potential for improvement.

Focus on Key Account Management

In view of the great importance and the diversity of key account management as a distribution channel, it is particularly interesting to look at precisely how companies structure their key account management. It was especially noticeable here that the traditional methods still clearly predominate. Traditional methods of key account management include presenting one face to the customer, implementing master agreements with fixed pricing, and wining and dining customers to strengthen relationships. On the other hand, product solutions specially adapted to key account management, and cooperations in research and development and the distribution processes are also innovative methods. In the specialty chemicals industry in particular, there is an unmistakable trend toward more innovative solutions. Of respondents, 16% already cooperate with their customers on research and development, far more than in other specialized B2B industries (7%). American specialty chemicals companies apply innovative methods to a much greater extent than do European businesses.

Significant Regional Differences

Given the range of different participants from around the globe, the study also facilitates an interesting regional comparison between North America, Europe and Asia. The regions differ significantly in what they believe to be the best means of improving commercial excellence. North American companies rely mainly on improving the key marketing and sales processes, European firms focus on strengthening selling skills, and Asian businesses regularly adapt their price-control mechanisms to their target customer group.

It bears mentioning that Asian and American firms have higher-than-average expectations regarding the potential of commercial excellence to increase revenues and profits. American businesses exhibit a clear trend toward using more innovative methods in key account management and in managing the distribution channels compared to the situation among the Europeans. Besides these differences in the methods employed, North American companies also view their value chain as much more advanced, in that, for them, considering and including direct decision makers and indirect influencers in purchases is all part of the regular procedure.

When it comes to the successful implementation of commercial excellence projects, it is crucial to have a single language of commercial excellence that everybody speaks regardless of their location. Analyzing tools, methods and processes cannot be the focus, because different regions all have a different understanding of them. The study demonstrates that sharing good practices and potential solutions should be the priority in centrally managed commercial excellence initiatives.