Of course, one monetary goal that often motivates the further development of corporate strategies is to increase turnover. However, in the vast majority of cases, the aim is to increase margins, contribution margins or EBIT. However, this goal is then almost just as often given to sales alone. A mistake! Because increasing margins or contribution margins is an interdisciplinary task:
A modern B2B sales strategy consists of a uniformly coordinated focus of the entire company on the target customers and the market.
In other words, the realignment of sales to increase the margins of products or services will only be successful if the sales strategy is integrated into the corporate strategy.
A holistic corporate strategy in this sense can be implemented in five steps. You should ensure
- that your business model is resilient,
- that you formulate clear corporate goals and
- develop a holistic corporate strategy,
- that you communicate the strategy to your employees in all departments and
- that you implement your strategy with the active involvement of all departments.
You can read below what this looks like in detail.
But first, two more requests:
Please remember that the explanations below simplify matters greatly. The topic of increasing margins as a company target is actually much more complex, as various areas of the company are involved and/or directly affected by it.
And please remember that the explanations are all examples. Every company "ticks" differently. Some are completely bare bones and make their strategy "while brushing their teeth in the morning". Others have constantly adapted their business model and strategy to internal and, above all, external influences. What is right for one cannot be transferred to others without further ado.
1. Ensure the resilience of your business model.
Before you start developing a holistic corporate strategy, you should check very carefully whether your business model is resilient, i.e. whether it can adapt flexibly and quickly to rapidly changing environmental conditions. Otherwise, your corporate strategy would be built on a solid foundation and further development would not be successful.
The best way to do this is as follows:
Describe your business activity.
As a first step, clearly describe the core of your business activity. This description should not only take into account the structures, processes and players in your value chain, but also
- your mission - what your offering consists of and what factors make it a success - as well as
- Your vision - why your company should still be operating in the future.
Evaluate the resilience
In a second step, evaluate the resilience of the business model. The key criteria here are the following questions:
- Does my target group actually benefit from buying or using my products or B2B services?
- Do we as a company have unique selling propositions (USPs) that actually make us unique?
Make your business model resilient if necessary.
If your business model is not clearly resilient, you should make it so in a third step by finding an answer to the questions just mentioned.
2. Define a clear corporate strategy.
The basis of any sales strategy that noticeably increases margins in B2B business is the alignment of your company as a whole with customers and markets. The first step is to ensure that your corporate strategy is clearly formulated.
If you do not yet have an explicitly formulated corporate strategy, but have rather developed your approach on an ad hoc basis, you should do so at this point. Because without a clear corporate strategy, your company will not be able to position itself in its sector in the long term - and will be even less equipped to deal with future crises.
In addition, a clear corporate strategy has a positive influence on the respective corporate culture. A positive, transparent and appreciative corporate culture in turn promotes the development of a competitive corporate organization that attracts and retains competent and highly motivated employees.
An essential component of a clear corporate strategy is the formulation of clear corporate goals: After all, a strategy is nothing more than a description of the path to the next goal. The key aspects here are:
- You should derive your corporate goals from your mission and vision defined in the business model.
- You should not be modest: ambitious (but achievable) goals stimulate progress.
- The formulation of corporate goals should be in no way inferior to the formulation of the corporate strategy in terms of clarity. Accordingly, they will contain sub-goals (measurable and non-measurable) in a wide range of areas, such as market/target customers, products, technology, processes and employees.
3. Align your company with target customers and markets.
Now align your company with your markets and target customers by integrating your B2B sales goals into your corporate strategy. I would take three steps to do this:
Make an as-is assessment of your company.
You want to increase the margin in B2B business? To do so, you need to know what your company is capable of achieving in its respective environment. So start by taking stock of your company:
- First carry out a SWOT analysis of your strengths and weaknesses, a Porter analysis of the competition, an analysis of customer and market requirements over the next few years and the like.
- Next, review your product and customer portfolio. It is not the turnover that is decisive here, but what remains at the end.
- Also look for areas of innovation and future-proof sectors: Can you expand existing business areas? How promising is the development of completely new business areas?
- Finally, set realistic corporate goals for the next three to five years. Distinguish between monetary goals - e.g. share of sales, increase in sales or EBITDA - and non-monetary goals - such as corporate culture, sustainability, digitalization.
You should include all departments when assessing the current situation. For example, it can be useful to hold workshops using the Business Model Canvas, which can be used to visualize and structure business models. In interdisciplinary teams, the workshop participants not only analyze your current business models, but also those that are feasible and innovative or future-oriented.
The decisive factor in all of this, however, is always the market and therefore your target group, i.e. what the market needs today and tomorrow and what the target customers want. You can have a great margin for a product - but if the market doesn't need it, you haven't won anything! That's why the customer should be at the center of every strategy. After all, it is the customer who pays you and thus contributes to the margin.
Prepare the implementation of the corporate strategy
Next, prepare the implementation of your strategy. To do this, define in one- and five-year stages on a rolling basis how the company wants to be equipped for the future. Depending on the situation and environment, the focus will be on different areas: Innovations, processes, personnel, customers, finances and so on.
Cluster your strategy.
And thirdly, you should cluster your strategy top-down:
- from corporate strategy
- über die Geschäftsbereichsstrategie und
- die Abteilungsstrategie, each with definition of the responsible persons,
- down to the level of individual employees.
4. Communicate the holistic corporate strategy.
Before you can initiate the implementation of the reformulated corporate goals, you must communicate the strategy clearly within the company. As every company has different structures and processes, the internal communication channels will also be different. However, two things are crucial.
The key point can be summed up as follows:
Communicate the corporate strategy to all employees by means of project planning and ACCEPT it!
Which in turn leads to the second point:
Don't forget the corporate culture, because: Culture eats strategy for breakfast!
An essential part of a motivating corporate culture is a positive error culture. Allow mistakes to be made and never ask the question: "Who is to blame?"
Why not? Mainly because this will prevent responsibility on the part of your employees. Who likes to make decisions here and now only to have to justify themselves to management if they make a mistake? Believe me: this person will never take on responsibility again, but will instead work to rule and sit out everything else.
Instead, take people with you, communicate openly and honestly and also allow constructive criticism.
5. Implement the margin increase at department level.
To implement the strategy to increase margins in the specialist departments, you should proceed as follows:
Define department performance
In the first step, define the corresponding expected performance of the respective department for each corporate goal that has been issued. Let's assume the company goal is
Increase margin by x percent
The internal sales performance could be, for example:
Calculating market-driven prices of high-yield products
This case study illustrates what constitutes a realistic departmental performance:
- It is derived from a company-wide B2B sales target.
- It specifies the targeted margin increase at department level.
- It is aligned with the target customers.
- It is not isolated, but interlinked with the services of other departments. (In this example, it is the basis for the performance of all other departments along the entire product creation process.)
A correct definition of departmental performance can also be used to determine the criteria for the success of a department. Here, for example,
- the identification of high-yield products,
- determining the willingness of the target group and target customers to pay,
- calculating corresponding prices.
By the way: You can (or should) take the opportunity to make department-specific sales targets part of the individual target agreement of your managers.
Develop departmental strategy
In order to concretize their departmental strategies, all departments should first determine
- what services they offer,
- for which stakeholders or internal customers these services are provided and
- what significance these services are likely to have in the future.
This can then be used to derive corresponding measures, which could look like this, for example:
- reduce material and production costs and/or adjust external prices and/or control loss carriers,
- the cost potential analysis required for that cost reduction from development, production and supply chain management, and
- identify the necessary high-runners and loss-makers.
Adapt existing processes
The implementation of company-wide sales targets is a cross-departmental task. The individual departments will therefore have no choice but to enforce their collaboration and coordinate with each other to define interfaces and pool resources.
Procedures and processes will almost inevitably be questioned as a result, usually adapted to the sales strategy and ultimately often simplified and optimized - which provides an opportunity for the digital transformation of processes en passant, so to speak.
Releasing departmental strategies
In the final step, it is up to the company management - after the timetables have been defined for the respective projects based on the final measures and the necessary resources and budget have been allocated -
- to finally release the departmental strategies,
- monitor adherence to the schedule and
- monitor the implementation of the measures.
Conclusion
In B2B business, increasing margins is an essential monetary goal.
However, this goal (which can be essential for the continued existence of a company in the medium to long term) can only be achieved if the sales strategy is embedded in a holistic corporate strategy and the activities of all departments and specialist areas are aligned with target groups and markets.
The design and implementation of such a sales strategy must take into account the strengths and weaknesses of the company and its performance capabilities, as well as the prevailing industry and market mechanisms. The realignment of B2B sales, which noticeably increases margins and contribution margins, is strongly situation-dependent. Implementation measures must be designed, evaluated and implemented against the background of the respective company's level of evolution and maturity.
In addition, the integration of the sales strategy into the company's overall strategy is highly complex: measures and processes, some of which are interlinked and some of which are interdependent, must be coordinated across specialist departments.
In any case, there is no one-size-fits-all solution.
To strengthen your team with an external specialist therefore makes sense in all phases of such a project: in the conception as well as in the operational implementation.
