Part 1 of 4: Emerging from the Storm: How Leading Customer Organizations Reignite Growth: Findings from the 2010 Customer and Channel Management Survey
About the Survey: The 2010 Customer and Channel Management (CCM) Survey provides an up-to-date perspective on the practices of top-performing CPG companies across the following dimensions: sales strategy, pricing and trade investment, strategic customer collaboration, and complexity management. This year’s survey was conducted in spring 2010 and is produced in collaboration with the Grocery Manufacturers Association (GMA), McKinsey & Company, and The Nielsen Company. Approximately 220 CPG executives from more than 50 companies with close to $160 billion in U.S. manufacturer sales—in the food, beverage, personal care, and home care categories—participated.
Despite the challenging economic environment in 2008 and 2009, winning CPG companies increased sales faster than their category peers while decreasing selling costs. Winners achieved these results by focusing their resources on high-growth channels such as dollar and discount stores as well as Walmart.
These players also strengthened their go-to-market models, developed winning and highly capable sales leadership teams, and tailored their account teams to address the needs of priority retailers. Last, top-performing companies captured efficiencies in warehousing and transportation that lowered their overall selling costs. The companies that won in sales strategy used multiple strategies to achieve these outcomes and to realize this growth.
Make big, forward-looking bets to unlock growth. The survey revealed that winners are seeking to solidify gains made during the crisis and preparing for even stronger performance coming out of this period; 70% of these top performers (versus 17% of others) are reshaping their go-to-market models. Accordingly, in the next 12 to 24 months, more than half of the winners plan to boost their field sales organizations and merchandising resources, and one-third of winning companies also plan to increase their use of brokers and to combine broker and retailer resources to reach more outlets.
To ensure that their bets are aligned with changing high-growth opportunities, winners continually evaluate resource investments by channel and customer. For example, in the past survey, winners invested heavily in a rejuvenated grocery channel. However, our 2010 survey reveals that winners have stopped expanding grocery resources and instead increased resources in the highest-growth channels of discount, club, and Walmart. For example, in dollar and discount stores 63% of current winners increased customer-facing resources in this channel while over half of others in their categories did not. Similarly, 89% of winners increased customer-facing resources at Walmart Stores, versus 64% of others.
Winners also report that they perceive higher-growth retailers such as Dollar General, Costco, and Kroger are more willing to collaborate with them. Moreover, top-performing CPG manufacturers pull multiple levers to build stronger relationships with key retailers. Not only do they make a greater resource investment in priority retailers, they also take a collaborative approach to growing a category or solving business issues, sharing mutually beneficial insights and data with their retail collaborators.
Build a strong sales leadership team, next-generation capabilities, and cross-functional collaboration. Winners ensure that they staff the right sales leadership resources to ensure future growth, emphasizing deep category expertise, customer knowledge, and a strong strategic perspective. Our survey also revealed that winning companies are constantly improving their team’s capabilities by investing in customer profit and loss (P&L) management, pricing analytics, and strategic collaboration. In contrast, their category peers are still working on improving basic capabilities such as financial analysis and marketing knowledge. In addition, winning CPG organizations report a high level of internal collaboration and more effective relationships between sales and other key functions including marketing, finance, and supply chain. In particular, collaboration between sales and marketing appears to be critical to winners.
Create customer-focused account teams as part of a winning sales organization. While all survey respondents deploy sales teams of similar sizes, winners’ teams have a high percentage of customer-aligned functional experts in areas such as pricing, category management, and trade marketing versus their category peers. As we have seen in the past, winners also tailor their customer teams to the unique needs of each priority retailer. In addition, winning CPG organizations report a high level of collaboration and more effective relationships between sales and other key internal functions including marketing, finance, and supply chain. In contrast, in the grocery channel, winners deploy more of these functional experts to support their retailers.
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