The profitability of a medium-sized basic chemicals company with two production sites in Germany had come under pressure in 2022 due to massive increases in raw material costs and declining demand caused by the economic situation. The management tasked the current interim manager and sales expert with restoring profitability.
Clients and customers affected by rising prices due to the crisis
The expert faced two main challenges in this task. Firstly, the company's customers were also affected by the slowing economy. Secondly, there were numerous existing customers who had previously provided the company with good profits and therefore could not be lost in the future. In order to increase the margin again, the interim manager therefore relied on implementing moderate but effective price increases with the customers. The aim was to increase customer profitability by adjusting prices selectively without losing volume in order to ensure the company's profitability.
Customer groups segmented and dynamic market-oriented price elements developed
As the company did not have a customer relationship management system (CRM) with systematic records of customer interactions, the interim manager began by collecting the most important information through internal research and interviews. He systematically compiled the data and segmented it according to customer needs and their profitability. During this survey, he found, among other things, long-term supply contracts with key accounts with historically grown price structures. These contained outdated price elements and price formulas that did not reflect the current cost increases for products and services. These included, for example, the extreme spikes in logistics and energy costs in 2022.
The interim manager developed new dynamic cost and market-oriented price elements for key accounts in particular. He also variabilized individual price elements in order to be able to react more flexibly to costs and market dynamics in the future. He assigned the small customers without special supply contracts to new segments and standardized the price structures in line with demand and results.
Sales coached to implement the new pricing
In order to successfully implement the new conditions, the expert coached the key sales person on price negotiations and price management. The extensive coaching made a significant contribution to the sales team being able to successfully implement the new pricing with customers on their own.
The interim manager also contributed to the results by insisting on contractual obligations from customers. This included adherence to payment terms, punctual returns of returnable packaging and compliance with monthly purchase quantities.
Customer profitability secured in less than six months and sales planning fulfilled
In just a few months, the interim manager significantly improved the profitability of the company's customers. By the end of the mandate, the sales revenue planning exceeded the agreed budget - and no volumes were lost.
The coached sales person will further increase profitability with the new skills in contract design, price management and negotiation tactics.
Overall, the company now has sales structures that enable profitable growth in customer numbers and sales.
