10 questions your Commercial Strategy needs to answer

Commercial Strategy has traditionally been the role of Corporate, producing a 500 page report which goes into a drawer. Nowadays having a clear strategy to inform the plan your Sales and Marketing teams will execute is the foundation of any serious effort at growth. While developing a detailed Commercial Strategy can be a major investment of time and resources, answering the below 10 questions based on available information can reveal major opportunities – or identify the major risks to your business.

Have I correctly defined the market? Any attempt to put numbers to your strategy is doomed to failure unless you have the right market definition. You need to understand who your competitors are and where you have potential customers. The graveyard of large companies is full of those who famously go this wrong. One way of testing whether you are looking at two markets or one is to test the degree of cost sharing in serving the market and the overlap in customers. If you have a high level of cost sharing and many of the similar customers, it probably is one market.
What are the market dynamics? Do you understand the market’s size, growth and major trends? Porter’s five forces can be a useful tool to assess where the power is: Competition, risk of new entrants, supplier power, customer power and substitution threats
What are the market segments? In common with market definition, mis-categorising your segments can be a terminal mistake. For the purpose of a commercial strategy, you want a behavioural segmentation of your customers to inform how interesting they are and how you will win/ serve them. A simple solution like main product, company size or industry can work, but can set you back if this dimension isn’t what defines how your customers are different to you, then your sales efforts will be handicapped. Another common mistake is to categorise your customers by multiple dimensions in a matrix or multi-dimensional structure with different teams taking different cuts (e.g. account management, sales team, customer service). Our experience has been that even an imperfect segmentation is better than attempting to be all things to all people.
Do I understand our competitors? What is their market share, profitability and growth? How many and which customers do they have, what do I know about their customer share of wallet? What are they good at and how does their go to market strategy work? What does their ownership and financial situation say about their inclination to invest, expand, focus management attention on segments relevant to us?
Which assumptions are most critical in my strategy? Answering the above questions will always involve some element of guesswork. It’s important to understand which guesses you’ve made have the greatest impact on your conclusions for you to attempt to increase your confidence level and to be clear on the underlying business logic in case of changes. In terms of customers, a rule of thumb is that if you don’t have a full list of your potential customers and some estimate of their wallet then you are taking major risks in your commercial strategy. In recent years the growth of data services like Dun & Bradsheet and its deployment in CRM systems to inform day by day sales and marketing activities has raised the bar in competitiveness.

Where will growth come from? What are my priority segments? How much growth will I see in each? Where will growth come from increase in share of wallet versus new customers? What kind of retention/ customer loss can I expect?
How will I sell my products? How will I price to customer value? What are my key value propositions for each of my target segments? How will I package and position my product?
How will I create demand? What activities will generate leads? What can the sales department expect from marketing? What is the end to end process for a lead and opportunity?
What resources will I deploy? Your knowledge of your target segments and your sales objectives should inform your organisation structure, the design of sales & marketing roles as well as the quantity of each needed. How will resources by allocated by/ across segments, and what form of territory alignment is required (geographical, industrial, etc.). Critical to getting the right deployment of resources is making sure to think in terms of market potential/ target instead of the status quo today.
What is the role of Commercial Operations? Commercial success nowadays is a team sport. CRM and other technology platforms, external data, analytics as well as more traditional Sales Ops support like marketing collateral and reliable reporting all need to come together to make your plan work.

Recast Partners are specialists in creating practical Commercial Strategy which drives a concrete plan of action for Sales and Marketing for B2B companies. Contact us for a discussion of how we could help you refine yours: Whether that’s through a workshop, a short desktop exercise or a more thorough strategy development exercise including primary data gathering.