With quality products and a substantial and loyal customer base across its businesses, ChemicalCo* was well-positioned to be a market leader. However, the company did not always maximize value from its differentiated products and strong relationships and it also struggled to properly reflect the rapidly changing price of raw materials in its own pricing.
Bain brought a sharp focus on the commercial aspects of doing business to help ChemicalCo get closer to its customers and more disciplined about dynamically matching prices with customer needs, product value and underlying costs.
Commercial excellence depends on having the right tools and deploying them correctly
Working closely with members of the ChemicalCo team across the globe and its different businesses, Bain supported a number of initiatives to help the company bring its client base to full potential and instill value and discipline in pricing.
- Assessed sources of value and customer needs: A survey asked customers about their needs and top criteria in purchasing decisions which yielded the insight that price was the key criterion and that the chemicals company was often out-of-step with its competition.
- Enhanced customer management: Bain developed new tools, processes and offers to ensure the company tailored products to specific customer needs.
- Revamped pricing strategies and tightened discipline around pricing changes: We created new processes, clear pricing rules and guidelines to implement strategic pricing in order to capture appropriate value from differentiated products.
- Focused product innovation on cost reduction: In addition to increasing revenue, Bain also looked for opportunities to use new materials and processes to lower production costs.
ChemicalCo also needed to couple their focus on commercial excellence with a careful rollout plan. Bain understood that many companies invest significantly to develop tools and processes only to see them deployed ineffectively and used infrequently. Our team came prepared with the best practices from our experience to help ChemicalCo avoid these pitfalls.
Bain analysis uncovered new sources of value that aligned manufacturer profits and customer savings
With a better understanding of customers' needs and ChemicalCo's opportunities, Bain developed a number of recommendations for the organization and its new owners:
- Pricing: Based on input from the ChemicalCo team, Bain created a new monthly pricing process to ensure price increases occur at the appropriate times, with clear rules including price targets and price floors. At the same time, Bain helped segment customers to offer premium services to those in highly technical industries while lower cost alternatives—with lower service requirements—catered to more price-sensitive customers.
- Customer management: Bain encouraged ChemicalCo to implement a new key account approach based on priority customer relationships. We helped the company put an engagement plan in place that set priorities and next steps to advance their most important relationships.
- Innovation: In support of the pricing improvements, Bain developed new tools to assist ChemicalCo in monitoring pricing and customer management, including a value pricing tool and a performance-tracking dashboard.
To achieve full value from the investment in these tools and processes, ChemicalCo also considered how to deploy them across the organization. Bain helped the company work with the front line to properly tailor and refine the tools as necessary, and ensure the teams were comfortable using them.
Bain's support helped ChemicalCo and their new private equity owners on their journey to growth, improved profits and enhanced capabilities.
ChemicalCo capitalized on their significant opportunity in sales and marketing with new tools and processes and a disciplined and dynamic approach to pricing. Combined with the company's quality and differentiated set of products, the work delivered value almost immediately: more than $10 million in the first month alone.
Bain also helped the company achieve its objective to improve capabilities across the organization with custom coaching sessions for frontline personnel and account and relationship managers.
With initial success and a strong foundation, ChemicalCo turned its attention toward capturing more than $100 million in margin opportunity that lay ahead from its newfound commercial excellence.
* We take our clients' confidentiality seriously. While we've changed their names, the results are real.