Commercial strategies for sustained growth

Executives are navigating challenging times marked by a confluence of factors including geopolitical crises, raw material price shocks, inflation, digitalization, the emergence of disruptive business models and the ongoing struggle for talent. These dynamics increasingly strain classical business models, prompting executives to reevaluate their sustainability and effectiveness both in terms of revenue generation and margin preservation. Leaders should be asking themselves: Where will our future growth originate, and how can margin erosion effectively be stopped along the way?

New and innovative solutions offer executives hope—strategic levers that foster agility and enable companies to capitalize on emerging opportunities to achieve sustainable growth.

Unlock untapped margin potential

Innovative revenue and monetization models have the power to revolutionize the commercial landscape for both B2C and B2B enterprises, and executives should take note as they are key to long-term resilience. These innovative models represent a departure from the conventional, offering a paradigm shift in how enterprises engage with their customers. Picture personalized pricing structures tailored to individual preferences, cultivating strong customer loyalty while at the same time fortifying satisfaction levels.

At the forefront of these transformative models lies the concept of recurring revenues, a prime example of innovative thinking in action. Yet, the landscape extends far beyond this single notion. Consider options such as pay-per-use, pay-per-outcome, or gain sharing—each offering unique avenues for revenue generation while aligning closely with customer needs and desires. Aligning these models with customer preferences becomes a strategic imperative, eliminating barriers such as initial investments. In addition to that, these models also pave the way for a seamless integration of value-driven services and therefore offer promising opportunities for profitable cross- and up-selling.

Reevaluate commercial models

Executives should also place a strategic focus on reevaluating their commercial models and value chains. This entails a thorough examination of where and how money is flowing within the organization. By discerning shifts in market dynamics and consumer behavior, companies can adapt their commercial models to align with emerging trends and capitalize on previously untapped profit sources. This proactive approach not only ensures financial resilience but positions businesses to thrive in an evolving landscape by staying ahead of the curve in profit optimization.

In the realm of strategic pricing, transparency is paramount for optimizing the gross-to-net price waterfall and uncovering untapped margin potentials. A vigilant approach involves continuous monitoring of market prices to sustain competitiveness. Active lifecycle pricing, driven by market- and value-based gross price logic, ensures dynamic alignment with product value and market demand. Tailoring price levels to regional willingness to pay and strategic calibration against competitor price benchmarks further enhance the effectiveness of pricing strategies. Consistency across various dimensions, such as product groups and customer segments, forms a solid foundation for clear communication and perceived price fairness. State-of-the-art condition schemes have to incentivize high performance while historically grown legacy conditions that may hinder optimization need to be rectified.

Moreover, a clear pricing governance acts as a safeguard, mitigating the risk of inflated order-specific discounts and fostering a disciplined and consistent pricing approach. These key components collectively shape a resilient and effective pricing strategy, vital for navigating uncertainties and driving sustained profitability in today's challenging business environment.

• Behavioral pricing. In the quest for sustained growth and profitability, companies are increasingly turning their attention to innovative strategies such as behavioral pricing. Recognizing that consumer behavior plays a pivotal role in shaping purchasing decisions, businesses are leveraging behavioral economics principles to refine their pricing models.
  
  Behavioral pricing involves the strategic adjustment of prices based on consumer psychology, preferences, and decision-making patterns. By understanding how individuals perceive value and make choices, companies can tailor pricing structures to influence buying behavior positively. This distinct approach not only enhances customer satisfaction but also opens avenues for optimizing revenue streams.
  
  Incorporating behavioral pricing into the broader framework of commercial strategies allows companies to establish a more nuanced and responsive connection with their target audience, ultimately contributing to the overarching goal of profit expansion.
  
  
• Dynamic price management. In today's fast-paced market environment, the concept of dynamic pricing has emerged as a critical tool for businesses navigating the challenges of fluctuating raw material costs and evolving market conditions. The ability to swiftly adjust prices in response to these changes is no longer a luxury but a necessity for staying competitive. Dynamic price management, as it's often termed, offers a strategic approach to addressing these challenges. It enables companies to adapt their pricing strategies in real-time, ensuring alignment with current market dynamics and customer expectations.
  
  By dynamically adjusting prices based on internal capacity utilization and external demand signals, businesses can optimize resource allocation and maximize revenue potential. During periods of high production capacity and low demand, adjusting prices downwards can help stimulate demand and prevent inventory build-up. In essence, dynamic pricing represents more than just a tactical approach to pricing; it's a strategic imperative for businesses looking to thrive in today's dynamic marketplace.

Optimize cost-to-serve

In today's competitive landscape, the optimization of cost-to-serve has become a paramount objective for businesses seeking sustainable growth and profitability. This endeavor involves a strategic overhaul of customer interaction models to ensure maximum efficiency and value delivery.

Implementing hybrid models, which seamlessly integrate digital and traditional channels, enables businesses to cater to diverse customer preferences while minimizing operational costs. By automating recurring revenue streams, companies can establish a steady income flow while reducing administrative burdens. Embracing e-commerce solutions further enhances cost efficiency by expanding market reach and streamlining transaction processes.

Additionally, strategic initiatives such as reducing free-of-charge services and trimming marketing expenditures contribute to a leaner and more agile business model. However, optimizing the cost-to-serve is not merely about cost-cutting; it represents a holistic reevaluation of how businesses engage with customers and deliver value.

Sustained growth and greater resilience is achievable

Executives will continuously be compelled to chart new courses for sustained growth and resilience in the face of unrelenting disruption. With innovative revenue and monetization models, companies across industries can unlock from 3 to 5 percent of additional margin potential. The journey toward ensuring long-term commercial resilience will demand agility, collaboration and a strategic mindset. By rethinking traditional approaches and capitalizing on emerging opportunities, businesses not only weather the storm but emerge stronger and more adaptable.

Authors

Daniel Antolin: Managing Director – Accenture Strategy, Corporate Strategy & Growth

Dr. Sven Kühlborn: Managing Director – Accenture Strategy, Corporate Strategy & Growth