No Match Found
Unlock the value of a recently acquired holding company
Private Equity (PE) firms (at least the successful ones) are experts at identifying latent value. Sometimes this value involves the carve-out of an underperforming division or a recombination of assets to support a new business model. More often than not, it has to do with the identification and remediation of organizational and operational inefficiencies. And that was the case here. Our original client was a PE firm who asked us to perform due diligence on a potential target who had a valuable business, but one that had grown through multiple acquisitions over the years. The target had kept the acquired companies operating as stand-alone units even though their markets, portfolios and channels were complementary. This was a familiar story. We had seen it many times before, as had our client. We both knew what to do. Our client went through with the acquisition and we then began working with the new management team of the acquired company to execute the Sales and Marketing transformation we had discussed during the due diligence process.
“In many respects, our client’s company was a transformation waiting to happen. The acquisition proved to be the catalyst that enabled them to make the necessary changes to their Sales and Marketing model, and management and staff were very active and willing partners with PwC. Our experience working with clients on similar Sales and Marketing Excellence transformation helped us to accelerate the process and the benefits for the client.”
Leverage PwC’s Sales and Marketing Excellence methodology to effect client transformation
To say that we had seen this before is an understatement. Sales and Marketing inefficiencies in all types of organizations are so pervasive, so common, that we’ve developed a methodology called Sales and Marketing Excellence for dealing with them. To be fair, part of the issue is that the sales and marketing disciplines have gone through a massive transition over the past 15 years, primarily driven by technology and customer experience. Many organizations are caught with one foot in the more traditional model and the other utilizing a more modern approach based on sales and marketing automation and customer experience. Sure, they are in transition, and change doesn’t happen overnight, but the overhead, inefficiency and opportunity cost associated with being stuck in an outdated sales and marketing model is huge, and it drains value from the rest of the organization. You need a hard cut-over and a go-forward plan. And that’s where our Sales and Marketing solution came in.
The acquired company had five operating silos, each with its own sales and marketing organization, each using a different set of sales and marketing tools, and each with different sales processes and their own management structure. And that was just the tip of the iceberg. Across the five legacy business units, there were 41 different lead status values, 47 different opportunity types, 92 different opportunity stage values and 128 different account types. Added to this, the sales organizations were top heavy, the compensation plans incentivized renewals over account growth, and there was zero cross-selling. No wonder that new logo bookings had declined over 50% in two years.
Using PwC’s Sales and Marketing Excellence framework, expertise and perspective as a guide, we developed an organizational design that would allow the client to unify the five units into one, with a rationalized go-to-market and segmentation model, and a consolidated management structure and selling model. We looked at sales roles, compensation, the selling process, channel structure, sales and marketing technology, and pricing. We established global client teams to design a common “gold standard” and gain consensus on how teams would operate to drive revenue and customer impact. We helped recruit new leaders with a fresh perspective to build a high-performance sales culture that focused on accountability and pay for performance.
That’s not to say that what we found was all bad. Even though each of the operating units had their own marketing automation tools, CRM systems, and sales processes our analysis found that there were aspects of these technologies and processes that would enhance the unified go-to-market model. We recommended to the client that they leave the marketing automation stacks in place for the time being to minimize disruption and focus instead on converging on Salesforce as a single CRM. The existing marketing automation tools were familiar to the staff and could be easily integrated with Salesforce. PwC helped implement a preconfigured Salesforce solution, tailored to provide a common platform for capturing customer segmentation, pipeline, lead and opportunity stage, and revenue.
This approach resulted in standardizing 41 lead status values to five, standardizing 47 different opportunity types to three, standardizing 92 different opportunity stage values to six, and 128 different account types were collapsed to five. Life just got a whole lot simpler for the sales team. We also helped the client reduce management overhead, add external sales reps, shift hybrid sellers into more focused roles, add high-velocity inside sales reps, and add more technical sales and backend support.
In addition, given this streamlined go-to-market model, we were able to help the client greatly simplify the compensation structure. We simplified the number of measures in the compensation plan from 212 to two, collapse 78 comp plans into 12 plans globally, add a growth component to all plans and greatly accelerate the speed at which the reps get paid. The client became a selling machine.
Unified Sales & Marketing organization optimized around winning and new logo growth
Working with our client, our solution team was able to execute a major Sales and Marketing Excellence transformation in a relatively compressed timeframe. We unified the five discrete sales teams into one, with the ability for the first time to cross-sell across product portfolios. We increased sales and support capacity while eliminating management bloat and streamlining operations. In the process, we were able to eliminate $15M in labor costs within the sales force.
And it doesn’t stop there. While the client is just in their first year of operating under the new model, having done similar Sales and Marketing transformations with other clients and having conducted extensive benchmarking, we think we know what this client can expect: a 10 - 15% increase in total revenue, sales per customer and deal conversion; 25 - 50% faster sales cycle time; 10 - 20% better customer satisfaction; 5 - 10% higher gross margin; and a 20 - 35% increase in cross-selling and upselling.
Sales and Commercial Transformation Partner, PwC US
Principal, Salesforce Advisory, PwC US