Market to Customer
Clariant strives to understand customer needs along the entire value chain, develop solutions that address those needs, and capture the value created for profitable growth. Clariant Commercial Excellence helps the Business Units translate their strategy into actionable growth plans and continuously improve customer engagement and sales operations through ongoing dialog with customers and partners.
Market to Customer
Market to Customer includes identifying market attractiveness, developing a clear value proposition and articulating it to the customers, and capturing the value created through relationship building and the sales process.
1. Understanding customer needs – responding to market pressures
In recent years, a strong competitive and pricing pressure has developed in the specialty chemicals industry, mainly due to overcapacity created in Asia combined with a lack of innovation. This has resulted in a growing trend toward commoditization. In addition, the continuing increase and volatility in raw material prices has created margin pressure for Clariant’s Business Units. This uncertain business environment requires that Clariant pays close attention to cost and supply chain competitiveness on one hand, while having a clear focus on sales growth on the other.
The flagship label for sustainable products
At the end of 2017, 169 products carried the EcoTain® label for sustainability excellence. clariant.com/ecotain
Looking through a »customer lens« allows Clariant to understand changing needs for products and services, as well as the customers’ perception of Clariant, from the initial interaction to the purchase decision. For example, Clariant meets the increasing demand for materials and processes that address sustainability issues with its EcoTain® Label. This designation is awarded to sustainability excellence products and solutions that offer best-in-class performance. It sets an ambitious benchmark and distinguishes itself by exceeding market standards while considering the overall benefits and impacts across the entire life cycle, and contributing overall to the sustainability efforts of the company and customers. To earn this label, the products undergo a systematic screening process using social, environmental, and economic criteria. A corporate panel comprised of Corporate Sustainability & Regulatory Affairs, Group Technology & Innovation and Group Communications, with particular guest experts from Product Stewardship depending on product application, scrutinize each product and solution in order to ensure that the EcoTain® label requirements are upheld. At the end of 2017, a total of 169 products were awarded EcoTain®.
2. Interacting with customers along the digital innovation cycle
To systematically explore and capitalize on the opportunities of digitalization for all of Clariant’s Business Units and value creation phases, including the Market to Customer processes, Digital4Clariant was launched in 2017. One of the workstreams of the initiative encompasses the development of digital business models to explore new markets and spur growth FIGURE 001.
In 2017, three Business Units applied the rapid innovation method, which is widely used in the technology sector and consists of an innovation and incubation phase prior to commercialization. To guarantee new solutions satisfy customer needs, Clariant works closely with its customers. In the innovation phase, typically ethnographic interviews are conducted to explore customer needs. During the incubation phase, the number of customers that are willing to test a product or service provides further insights into the solutions’ desirability and the customers’ willingness to pay. This allows Clariant to focus on the most promising projects.
3. Designing a »Leading Marketing Organization«
Clariant’s Marketing Excellence Initiatives play a key role in driving value creation. These programs have developed into an essential building block for finding and capturing growth opportunities by providing the methodology to assess overall market attractiveness and identify profitable market opportunities and customer segments. Since 2015, overall growth benefits from 60 Marketing Excellence projects accounted for more than CHF 26 million in additional margin.
»We used the marketing excellence methodology to target the customer segments with the highest potential to win market share and grow our business in our key strategic segment of plastics in China.«
Alexandre Baron Regional Business Line Head for BU Pigments in the Asia-Pacific region
Based on this success, in 2017 Clariant launched the initiative »Leading Marketing Organization«.
This project aims to further anchor marketing within the Business Units and transition from a project-based approach to true customer-centricity. Commercial Excellence worked with the Business Units to develop these Marketing Organizations with tailored structures, highly skilled people, and clear responsibilities in place. In November 2017, all Business Units presented their operating models in the Objective Discussion, including capability-building activities for the marketing organization, and subsequently began implementation.
001 Digital Innovation Cycle
4. Translating customer needs into compelling value propositions
In line with its clear customer focus, Clariant’s ambition is to create strong, customer-oriented value propositions. The Marketing Excellence Foundation Training helps Clariant’s commercial organizations develop tailored value propositions that not only target the specific customer segment, but also the respective decision maker in the buying process. Furthermore, Commercial Black Belts and representatives from Business Units took part in a training on the newly introduced Value Proposition Canvas. It allows for an easier identification of the customers’ »jobs to be done«, as well as the associated pains and gains, and supports Clariant’s ability to differentiate offerings accordingly. It thereby increases business-winning opportunities and positively impacts Clariant’s market share gains.
This has been a vital focus, most of all in the fast-growing markets such as the Asia-Pacific region, where business opportunities are large. In 2017, after facing declining sales in previous years, Clariant’s Pigments Unit in China applied the marketing excellence methodology to assess the overall market attractiveness and run a needs-based customer segmentation. In-depth interviews with customers, industry experts, and potential leads helped clarify the customers’ buying process and develop customer-focused, compelling value propositions.
5. Demonstrating additional value
To reap the fruits of improved value propositions, strengthening the ability of Clariant’s account managers is imperative to better understand customers’ needs and demonstrate the value of Clariant’s products. Usually, this articulation of the additional value that Clariant products offer happens in comparison to the second-best alternative – a process that is supported by Clariant’s value calculator. In the future, the systematic roll-out of a value-based selling approach is expected to drive profitability, particularly in conjunction with Clariant’s new Pricing Excellence Initiative. This initiative focuses on the Value Stream Design of Clariant’s pricing process and on a more transparent, faster, and more effective way of pricing execution in the end market. This is based on a change in raw material costing due to the increase and high volatility of prices, which has put margin pressure on the Business Units since 2016.
To strengthen Clariant’s sales capabilities, its 80 best regional sales managers completed a specific sales training in 2016 – 2017. The focus of the training was identifying growth opportunities, improving value propositions, channel management, and pricing. Each participant was required to design and drive a major growth project. The projects were then presented to a member of the Executive Committee during the training and are followed up on regularly.
6. Leveraging customer satisfaction for continuous improvement
515
Interviews with 515 customers provided valuable insights.
Customer engagement is the core of Clariant’s commercial strategy and the key to profitable growth. Clariant Commercial Excellence emphasizes continuous improvement in customer engagement and sales operations through ongoing dialog with existing customers, new prospects, and other partners along the value chain. In 2016, Clariant undertook its biannual customer satisfaction survey and received feedback from more than 2 500 customer contacts. The results revealed that Clariant had gained a reputation as an »innovative solution provider« and improved its net promoter score to 37%. Clariant has taken the results of this survey as a means to improve customer engagement in 2017.
As part of all Commercial Excellence projects, Clariant conducted 515 customer interviews and 59 interviews with industry experts in 2017. In addition, customers completed scorecards to evaluate Clariant’s performance compared to competitors. The gained insights guide both Clariant’s commercial and innovation activities.
Input
Performance
34
Marketing Excellence projects
People
515
Customer interviews in Marketing Excellence initiatives
80
Sales managers participated in a specific sales training
59
Industry experts interviewed
Planet
Output
Performance
12.3
Additional margin in CHF m from Marketing Excellence projects
169
EcoTain® products at the end of 2017
People
Planet
The value chain describes the series of steps in the production process, from raw materials through the various intermediate stages to the finished end product. VIEW ENTIRE GLOSSARY
Market to Customer includes identifying market attractiveness, developing a clear value proposition and articulating it to the customers, and capturing the value created through relationship building and the sales process. VIEW ENTIRE GLOSSARY
Management body of joint stock companies; at Clariant the Executive Committee currently comprises four members. VIEW ENTIRE GLOSSARY
The pool of funds available to the company for use in the production of goods or the provision of services. This can include funds obtained through financing, such as debt, equity, or grants, and funds generated by the company, for example through sales or investments. VIEW ENTIRE GLOSSARY
Knowledge-based intangibles used and created by the company, often in collaboration with partners. This can include intellectual property, such as patents, trademarks, copyrights, software, rights, and licenses, and »organizational capital« such as tacit knowledge, systems, procedures, and protocols. VIEW ENTIRE GLOSSARY
Manufactured physical objects such as buildings, equipment, and products. These can include objects that are available to the company for use in the production of goods or the provision of services, or that the company produces for sale to customers or for its own use. VIEW ENTIRE GLOSSARY
The company’s staff and its composition, competencies, capabilities, experience, and motivation to innovate. This can include employees’ alignment with corporate values and their ability to understand and implement the company’s strategy. VIEW ENTIRE GLOSSARY
Key relationships including those with significant groups of stakeholders and other networks. This can include shared values, the trust and willingness to engage that the company has developed, and related intangibles associated with its brand and reputation. VIEW ENTIRE GLOSSARY
Renewable and nonrenewable environmental resources and processes that support the past, current, or future prosperity of the company or are affected by it. Examples can include resources related to air, water, and land that are utilized or impacted for example by emissions. VIEW ENTIRE GLOSSARY