By Zlatica "ZK" Kraljevic
A multibillion-dollar U.S. engineering services company operating nation-wide was concerned about its narrow profit margins at a time the company was achieving record breaking revenues. The company suspected that operational redundancies or breakage in internal workflows were part of the problem. The company had, however, a strong corporate culture leading to smooth team work and effective coordination between functions and operations. It was unclear where to start identifying the sources of hidden costs and decided to call on The Anders Frontier Group (TAFG) to assist.
Over a period of six months, the TAFG team designed and implemented a company-wide program to identify and address sources of internal hidden costs. The initial phase consisted of mapping the company’s internal value chain, identifying the various professional teams that participated in the sales-to-service delivery process and customer satisfaction. Nation-wide operations required the existence of 6-8 large national teams of specialized professionals responsible for the prospecting to deal closing process. Several multi-functional teams were called upon to provide guidelines and insights on deal structuring, risk management, financial and legal matters, and negotiation.
Once the number and composition of the different teams involved in the internal value chain were clearly identified, the team designed and initiated a hands-on systematic evaluation of cross-functional interaction, both at home and in the field, while selling to prospective clients. The team worked with individual teams within a function and across functions to isolate possible breakage in procedures and/or communication that could inadvertently increase internal costs.
By accompanying multi-functional groups to prospective client presentations, the team was able to detect deviations between original service propositions and ‘real world” propositions, that is actual propositions agreed to with prospective clients during the sales-to-contract negotiation process. By directly interacting with prospective and existing customers, the team also uncovered unnecessary redundancies in the sales process.
This process uncovered the significant gap that existed between intended and actual service offerings, which was forcing post-contract customization of services by the engineering team responsible for delivering on contractual agreements. The identification of gaps between intended and delivered offerings helped quantify the cost of customization and resulted in increased awareness among team members of the impact that individual actions had on the overall efficiency of the sales and service delivery process. This phase also helped highlight that a case-by-case approach to sales and deal closing was also extending the length of the sales cycle by giving prospective clients ample room to negotiate highly specialized services.
This phase led to the identification of six solutions that effectively addressed the challenge:
- Increase awareness of the sales strategy throughout the organization – “open-door” regular meetings enabled every party involved in the process to understand the strategy ahead of time and provide an opportunity to voice concerns or advance suggestions to increase the impact of the sales process
- Quantify the added delivery cost associated with significant deviations between the intended and actual services packages offered to prospective customers.
- Build a strong Sales/Engineering team culture by establishing new communication channels between the front office (national sales teams) and back office (engineering teams responsible for contact execution) to better understand the challenges and constraints the different teams faces in their interaction with prospective and new customers
- Adopt a disciplined, standardized approach to sales that limited the number of service offerings to those that best leveraged the company’s strengths while decreasing the length of the sales cycle
- Strengthen the “one company” concept, establishing a new protocol to help sales team and functions better coordinate the interface with customers and prospective customers
During the discovery process, the TAFG team worked closely with each function to help assess the degree of readiness in adopting the new sales/delivery collaborative and the new cost-saving protocol. The team also assisted with enhanced utilization of the company’s Customer Relations Management tool to increase information sharing and enhance interaction with the customer base.
Within six months, the program was achieving the following:
- The Sales and Engineering teams had reached a clear agreement on the offerings to be presented to the market, which resulted in less customization and lower internal costs
- Internal cost reduction at 25%
- Sales cycles reduction by 50%
- Customer satisfaction up by 33%
Capabilities – Complex Project Management; Process Improvement; Strategic Sales; Customer Relations Management