Context

Out of the three RGM levers pricing is perhaps the most visible when things go wrong, but a tough one for manufacturers to fix as the ultimate control lies fairly and squarely with retailers. Also wouldn't it be satisfying if the world of business was linear, and ordered, so that solving a pricing issue could be made in a logical repeatable way. The fact is none of the RGM levers can be considered in isolation of the others. To drive sustainable profitable growth you need the right balance of pricing, portfolio and trade spend, and an efficient and effective sales operation to implement what was planned.

Client Issue

Work we undertook with a global beer company highlighted the interdependency of pricing and assortment decisions, and the crucial importance of a well-oiled sales machine to delivering tangible results.

As part of a broader review of their commercial operation we were asked to specifically assess the role of pricing, how it was impacting agreed RGM strategies and where the pricing strategy was falling short. It became clear very quickly that the heart of the problem lay not in the in-house analysis and work in setting Recommended Retail Prices (RRPs), but in the execution.

There was a wide disparity between the RRP’s and in-store pricing, and we traced this back to their sales model having lost its competitiveness in strategically important channels and outlets. The influence of the sales reps with their customers had weakened to a point where quality of in-store execution was well below agreed standards, specifically the new SKU introductions were 62% of target, and compliance versus RRP was at 55% . This was in turn driving down sales performance.  

What We Did

We then revamped the sales service model based on three pillars: Roles, Capabilities and Service, to ensure industry competitiveness and maximise available growth opportunities through better price compliance and SKU availability.

Roles

We differentiated the role of the sales rep and call centre more clearly based on a Push-Pull strategy:

• PULL: Trade Marketing Rep focused on more strategic outlet segments, with increased customer engagement time to drive availability of core SKUs, improving sell-out and RRP rates

• PUSH: order taking through an upgraded call centre operation (improved call routines, coaching and feedback sessions), focused on lower level strategic outlets

Capabilities

Implemented a company wide selling skills drive supported by on-line coaching tool

Built a library of one page selling presentations to address all PUSH & PULL opportunities, so the Trade Marketing Reps would have easy access to specific customer selling stories on:

• Every New SKU introduction

• Rationales for RRP’s across all price tiers

• Merchandising and display opportunities

Service

Overhauled sales force efficiencies, refocusing the Rep visits on more strategically important Attack and Defend outlet segments

• Time in Call

  • Maximised time in-outlet and selling time with customers to drive improved customer engagement and in turn profitable volume

• Frequencies

  • Refocused Rep resources in outlets segments with the greatest opportunity to grow our clients business. This was focused on high revenue potential outlets which had existing low company sales volume for Attack & Defend

Outcomes

Improved Price compliance on top 5 SKUs from an average of 55% to 85%

• Est. $2.6m incremental gross profit gain

Weighted Average SKU availability 64% to 76% on 4 strategic channels

• Est. $1.1m incremental gross profit gain

Increase call centre order percentage from 76% to 95% freeing up Trade Marketing Rep to focus on customer development

• Est. $0.9m annualised cost benefit