Commercial Performance Optimization: targets and expectations

Jul 09, 2023

sales, marketing and service
data

Setting the right commercial targets is crucial for success. But knowing which targets to set – and how to achieve them – can be challenging. Commercial Performance Optimization (CPO) is a great way to define and refine your objectives and track your progress. Driven by data, CPO helps you focus on what matters and take relevant actions. Here’s how.

Blog series: getting started with CPO

We live in challenging times: customer expectations are sky-high, while resources – people, time, and money – are often limited. At the same time, there’s so much customer data available that sales, marketing and customer service teams can’t see the forest for the trees. Knowing what to focus on is half the battle. Being able to take decisive actions based on key data is nothing short of a superpower. That’s where Commercial Performance Optimization (CPO) comes in.

In this blog series, our experts take a deep dive into CPO, its main principles, why and how it works, and how you can get started. Keep an eye on our website and our LinkedIn page for regular updates on this exciting topic.

Discover the other blogs in this blog series:

Introduction to CPO: general principles and framework
Taking action: how CPO can help you reach your goals

1. Define your targets

One of the first steps in CPO is defining your commercial targets and expectations. This includes setting specific, measurable goals. For example, you may want to increase sales or margins by a certain percentage, or reduce costs by a specific amount. These targets should be realistic and achievable, but also ambitious enough to push your business forward.

However, just stating that you want to increase revenue by, say, 5%, isn’t enough. You also need to know how to get there. Will you raise prices by 5%, launch a new product, attract new customers, or focus on up- and cross selling? Setting relevant KPIs is crucial here.

How? The key is to take a bottom-up approach. For example, if your goal is to increase overall revenue by 5%, you first need to know the average revenue per customer. This will tell you how many new customers you’ll need to reach your goal, and which actions – e.g., sales or marketing campaigns you can take.

Of course, when setting KPIs, you also need identify the right customers for you, consider sales velocity, pipeline management, etc. You’ll quickly find that KPIs are communicating vessels, and changes to one will have an impact on others as well. An external expert view can help ensure you don’t overlook anything.

2. Identify improvement opportunities

Once targets are defined, it’s time to refine them. Analyze your current commercial activities to identify areas for improvement and make choices. For example, are your marketing campaigns generating enough leads? Is your sales team closing enough deals?

3. Take action / make data-driven decisions

By identifying the gaps, you’ll know what to measure, and which actions are required to get closer to your goals. For example, to increase repeat purchases from customers, rail service provider NMBS started by identifying specific customer segments – like business travelers. These could then be targeted based on their preferred channels – website, phone, app, etc. – and purchasing behavior.

Another example? As a B2B company working with independent partners, garden tool manufacturer STIHL Benelux knew little about its end users. To learn more about Belgian customers, the company combined a number of basic data sets, including transactional data, a dealership survey, and… the volume of gardening waste collected in certain areas. Armed with this info, STIHL could identify where new dealerships were needed.

4. Track your progress

When certain actions have been taken, the next step is to track your progress and make adjustments as needed. One way to do this is through regular reporting, e.g., spotting trends or patterns in monthly sales figures. This enables you to optimize your commercial activities and achieve your targets more efficiently.

In this way, CPO makes your sales, marketing and customer service departments measurable and steerable, enabling your business to address customer and market challenges swiftly.

Next up: what's the value of loyalty?

Keeping customers on board is one of the major challenges of any commercial operations. How can CPO help to decrease churn? Find out in the next article in this series.