Andrea Ioannilli: A Customer-Centric Approach to Commercial Excellence

Recently, oil and gas companies have been moving away from operational excellence and focusing more heavily on commercial excellence. Andrea Ioannilli, a partner with Bain’s Oil & Gas practice, shares some critical factors companies should consider when pursuing a commercial excellence program.

Read the Bain Brief: A Customer-Centric Approach to Commercial Excellence

Read the transcript below.

ANDREA IOANNILLI: Traditionally, oil and gas and chemical companies have really focused on operational excellence. That's been the key motive, and really driving productivity improvement and safety improvements, which were absolutely critical. More recently, they really shifted their focus to commercial excellence, really thinking about a number of levers to make money from the other side of the coin.

You know, how do we sell the products?

There are many levers there. Some of the critical ones for these kinds of companies are where we place those volumes. And where can mean in terms of geography, and market and industries, or specific customers or customer segments. Not all of them give the same value. The cost to serve them is not all the same.

Another key lever is pricing. Again, there's a tendency to price the product all the same all across, but companies have come to realize that the pricing power they have in different segments is different, and the value that the product delivers to those different segments can be different. And again, how can we extract that value from those customers, and those segments?

A third lever is classic salesforce effectiveness. So thinking about the tools that the salesforce has, their ability to target specific accounts, penetrate those accounts, and really deliver the full product breadth and value proposition to those specific accounts.

I think there are a couple of critical things for companies to consider when they tackle commercial excellence. The first one is to understand that it's a multiyear journey. This is not one single project. You'll be ... multiple projects, multiple initiatives, over time. It's critical to articulate that program so that people can have a vision of what's about to happen, and they don't get distracted and start running in all directions.

And the second one, in recent times, is digital. Digital is making a massive difference to all the areas, to operational excellence as well, and it's making the same impact on commercial excellence. And what it can do is it can accelerate results, and can make the implementation more robust, because it embeds those approaches and techniques into tools that are somewhat people independent. And so make it [possible] to implement in a robust way that is not dependent on people coming in and out. All together, these kinds of initiatives can drive a 20% to 25% improvement in EBITDA, which is a fantastic result in itself, a fantastic return on the investment.

Read the Bain Brief: A Customer-Centric Approach to Commercial Excellence