Match Point Management - Roland Berger

Match Point Management
Strategies for profitable growth
Competence Center Marketing & Sales
Munich, August 2008

Our understanding of Marketing and Sales goals: Exploit
hidden customer potentials and optimize sales efficiency
Goal
CUSTOMER CENTRICITY
Realign organization
towards CUSTOMER needs
>
.
Channel Management
> CRM
> Communication
MATCH POINT MANAGEMENT
Exploit hidden CUSTOMER & SALES potentials
Enhance internal efficiency of
SALES activities
> Sales organization
> Process optimization
> Sales controlling
> Incentive systems
EFFICIENCY
Market share
(in %)
SG & A
(in % to revenues)
Source: Roland Berger
2

Only about one forth of the companies grow profitable
meaning increase turnover and profit simultaneously
Panel study 1.700 companies – Ø growth 1996-2006 [arithm. mean % p.a.]
100
Increasing
EBIT 0
Decreasing
19%
26%
32% 18%
-100
-30 -20 -10 0 10 20 30 40 50 60 70 80 90 100
Decreasing
Increasing
> Period of 13 years under
review
5% > 2000-0303 as years of a weak
economic environment are
included
> Calculation of growth
figures through arithmetic
mean and median of
cluster analyses
(industries, regions),
respectively
Decreasing Increasing p y
TURNOVER
= Outperformer – only these companies grow profitable
Source: Survey Roland Berger 2006
3

Many times companies see difficulties in projects
combining cost cutting and turnover increasing
Conflicts arise, if…
PHARMA
A
> …Marketing
spendings are
defined as cost not
as investment
> … increase in ROI is
planned
> … additional
employment of staff
is necessary
> …direct effects on
the customers exist
Very
often
Often
Seldom
N.A.
25.0%
12.5%
25.0%
37.5%
Frequency of answers of
companies participating
IT
> …cost intensive
project are about to
start
> …long-term
planning interferes
with short-term
company goals
> …reduction in staff
is planned
> …focus is mainly on
internal resources
Very
often
Often 0.0%
Seldom 8.3%
41.7%
N.A. 50.0%
Frequency of answers of
companies participating
Source: Survey Roland Berger 2008
4

To grow profitable the potential of customers and
efficiency have to be harmonized and exploited
Paradigm Shift
TRADITIONAL APPROACH:
Seeding before harvesting
CHALLENGE:
Profitable growth
Market share[%] Market share [%]
Increase efficiency/
Utilize scale effects
Grow
Optimize customer
centricity and
efficiency simultanously
Invest
SG&A in % to revenues
SG&A in % to revenues
Source: Roland Berger
5

The Roland Berger Match Point Management approach
offers an integrated controlling- and implementation tool
Modules of Match Point Management
Best
in
class
Market share [%]
1
MATCH - CEO Report (external)
Roland Berger
Integrated measuring of market and cost
Matchpoint Index = 100
performance compared to its competitors
through Match Point Index (MPI)
Company B is
lean but is not
successful in the
market
Company A is
market leader but
does not exploit its
efficiency potential
Company C has to
boost efficiency and
market share
SG&A in % to revenues
2 POINT – Internal Analysis
a) Internal performance benchmarking
of corporations
b) Quick check of performance levers
c) If required: ancillary benchmarking
3
MANAGEMENT - MPM Toolbox
Short- and long-term exploitation of
identified potentials
Source: Roland Berger
6

1 MATCH - CEO Report
Marketing and sales performance of Company A reveals
further space for improvement
Pharmaceutical key players by MPI in 2006
Market share[%]
8%
7%
6%
5%
4%
3%
2%
1%
Match Point Index = 100 (88)
(84)
(32)
(34)
(80)
(31)
(49)
(45)
COMPANY A
(54)
(39)
28% 30% 32% 34% 36% 38%
SG&A in % to revenues
APPROACH
> MPI-Report for CEO or Head of Marketing &
Sales is based on external sources
> Base: External sources
> Point out potentials and need for action
Decision about internal MPI-Analysis
RESULT
> Company A MPI of 54 (out of 100)
> Company A rank 4th in competition
> Average MPI of Top 10 in 2006: 54
> Market capitalization as function of
MPI(r=0 0.5): improvement of one MPI point =
850 m €
Source: Pharmaceutical Execeutive, IMS Health, annual reports, Roland Berger
7

2a
POINT – Internal Analysis
The MPI can be applied to internal benchmarking by
comparing regional entities or branches of an organization
Project example of an manu. of security systems
Market share [%]
14,0
10,5
Finland
Portugal
Sweden
Belgium
Poland
Hungary
7,0
Denmark
Netherlands
France
Spain
3,5
Norway
Czechia Italy
South
Germany NSO 1)
UK Africa
0
0 10 20 30 40
Relative Total Costs 2)
APPROACH
> Determination ti of company's match
point is based on its best practices
internal-wise
> Internal performance indicator will
gain higher acceptance
> Ranking of regional
entities/branches with strongest
need for action
> Starting point for detailed analysis
per regional entity/branch
Volume of Sales to Third Parties [EUR ‘000] 1) Excluding BT business 2) Cost of Organization as share of Sales to Third Parties
Source: Roland Berger
8

2b
POINT - Quick Check
By analyzing the financials and business processes the
MPI-Gaps can be turned into concise levers of optimization
REVENUES
COSTS
MARKETING
SALES
MARKETING
SALES
Key Account Mgmt.
Sales Reps.
Sales
support
Trade Marketing
Product
Marketing
Communication
Trade Marketing
Product
Marketing
Communication
Key Account Mgmt.
Sales Reps.
Sales
support
Finance/
Controlling
Sales
Management
HR
MANAGEMENT
IT
Logistics
Customer/after Sales
service
OPERATIONS
Finance/
Controlling
Sales
Management
HR
MANAGEMENT
IT
Logistics
Customer/after Sales
service
OPERATIONS
Source: Roland Berger
9

3 MANAGEMENT – MPM Toolbox
A broad toolbox is available to exploit identified potentials
over the short- or long-term
Short-term levers
Mid-/Long-term
levers
MATCH POINT
MANAGEMENT
> Marketing
approach and
target segments
Focus on market/
customer needs
PERFORMANCE
1
2
3
Sales Up!
Channel mix
optimization
Sales incentive and
remuneration systems
4
5
6
International
Key Account Mgt.
CRM / Customer
segmentation
Value-based
customer servicing
> Structure and
business
processes
Increase efficiency
and effectiveness
COSTS
7 10
Sales efficiency
8
Sales steering
Sales benchmarking
9
12
processes Sales terms Sales processes
11
Sales organization
Source: Roland Berger
10

Roland Berger Sales Practice Group is prepared to
optimize your Match Point
Contacts
Björn Reineke
PARTNER
CC Marketing & Sales
> 10 years of consulting experience
> Marketing & sales excellence
> Customer relationship management
> Sales optimization
Lars Luck
PRINCIPAL
CC Marketing & Sales
> 7 years of consulting experience,
3 years in private equity
> Expert multi-tier distribution networks /
Channel Management
> Customer Relationship Management
> Sales optimization
11