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Achieving Commercial Excellence in Chemicals

A Libyan chemicals company, recently acquired by private equity, enlisted Qabas to help establish a foundation for growth, improved financial performance, and enhanced operational capabilities. Initial research identified significant opportunities in sales and marketing. Qabas aimed to refine product pricing and sales strategies to better align with dynamic market conditions and the distinct value of its products.

The Situation

ChemicalCo*, recognised for its high-quality products and dedicated customer base, occupied a strong market position. Despite this, the company often struggled to maximise the potential value of its specialised products and maintain the strength of its customer relationships. Compounding these issues was the difficulty in adjusting pricing strategies in response to the ever-changing costs of raw materials.

The challenge lay in aligning the company’s pricing with the fluctuating costs while maintaining the perceived value of their products. This misalignment often led to periods where the profitability of products was not optimised, impacting the company’s overall financial health. The fluctuations in raw material costs created a dynamic environment where the existing pricing strategies proved inadequate, requiring a more responsive approach to ensure that the company could navigate these changes effectively.

The inability to maximise the value from its specialised products meant that ChemicalCo was not fully leveraging its market position. The strong customer relationships, while a significant asset, were not being utilised to their full potential due to the lack of a coherent strategy that connected customer needs with the product offerings. This disconnect resulted in missed opportunities for upselling and cross-selling, further limiting the company’s growth prospects.

ChemicalCo’s situation highlighted the need for a robust mechanism to track and respond to market changes. The company required a strategic overhaul to align its operations with market realities, ensuring that its product pricing was both competitive and reflective of true value. The dynamic nature of the market necessitated an approach that was both flexible and precise, capable of adapting to real-time changes and ensuring that the company remained profitable despite the volatility of raw material costs.

Our Approach

Collaborating closely with ChemicalCo’s senior leadership, we supported several initiatives to help the company realise the full potential of its client base and instil value and discipline in its pricing strategies.

  1. Better Customer Management: We introduced new tools, processes, and customised product offerings to better address specific customer needs and enhance overall customer satisfaction.
  2. Cost Reduction through Innovation: In addition to increasing revenue, we identified opportunities to reduce production costs by incorporating new materials and processes, thereby enhancing overall efficiency and profitability.
  3. Strategic Pricing Improvements: We developed new pricing processes, established clear rules and guidelines, and implemented strategic pricing to ensure ChemicalCo captured appropriate value from its differentiated products.
  4. Value Assessment and Customer Insights: We conducted a customer survey which revealed that price was the primary purchasing criterion, and identified that ChemicalCo often lagged behind its competitors in this aspect.

ChemicalCo required a meticulous rollout plan to effectively implement its focus on commercial excellence. Our expertise ensured adherence to best practices, avoiding the common pitfalls associated with underutilised tools and processes.

This approach ultimately uncovered new value sources that aligned manufacturer profits with customer savings, creating a harmonious balance that benefited both the company and its clients. Through careful planning and execution, we facilitated a seamless transition towards enhanced commercial performance, laying a robust foundation for sustained growth and profitability.

Our Recommendations

With a better understanding of customer needs and ChemicalCo’s opportunities, we made several key recommendations:

  1. Customer Relationship Management: Our proposed key account management strategy prioritised vital customer relationships, implementing a full-engagement plan designed to foster and enhance these connections.
  2. Innovation and Tools: To bolster pricing enhancements, we implemented advanced tools for monitoring pricing and customer management, including a value pricing tool and a performance-tracking dashboard to ensure precision and accountability.
  3. Pricing Strategy: We established a new monthly pricing process, ensuring timely price adjustments aligned with well-defined targets and price floors, and segmented the customer base to offer premium services to highly technical industries while providing cost-effective solutions for price-sensitive clients.

To ensure the tools and processes delivered full value, we assisted in their deployment across the organisation. The frontline teams tailored and refined the tools as necessary, ensuring they were proficient in their use.

The Results

Under our guidance, ChemicalCo, along with its new private equity partners, set a course for accelerated growth, enhanced profitability, and fortified capabilities. This strategic direction was shaped by a deep understanding of market opportunities in sales and marketing, coupled with the deployment of advanced tools and methodologies. ChemicalCo adopted a sophisticated and agile pricing strategy, designed to dynamically respond to market conditions and customer needs.

The initiative, grounded in the company’s exceptional and niche product offerings, delivered significant financial impact swiftly, realising over LYD12 million in the inaugural month. This immediate success underscored the effectiveness of the strategic adjustments and the inherent value within ChemicalCo’s product portfolio. Additionally, the enhancement of organisational capabilities was a key focus. We spearheaded bespoke coaching programmes tailored for frontline staff and key account managers, ensuring that the team was equipped with the necessary skills and knowledge to drive and sustain growth.

This comprehensive approach laid the groundwork for ChemicalCo to unlock substantial margin potential, estimated to exceed LYD120 million. The alignment of strategic initiatives with market dynamics and organisational capability building has firmly established a path towards sustained commercial excellence, positioning ChemicalCo for long-term success and industry leadership.

*We take our clients’ confidentiality seriously; whilst names are changed, outcomes remain real.

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