Anyone who has looked for a new job in the recent years knows that commercial awareness about the business vertical and the company he or she is applying for is an increasingly important prerequisite. But basic commercial awareness is a good life skill even if you are not looking for a job and there are plenty of websites which offer sound advice around improving basic numeracy skills, getting a voluntary role or learning about world business in media such as The Financial Times or The Economist.
But how do you build that extra commercial nous when your day job is to spot new opportunities in the market which a product can address, or to conceive new ways to sell an existing product?
Commercial nous and proposition development are like salt and pepper – you cannot cook a decent dish without applying the right amount of both.
To nurture the commercial talent in my team, I guide my colleagues through those five key steps:
Find out the top 5 products or services which bring the most revenue to your company (or the one your are applying for) and the top five that generate the most profit.
This will help you orient yourself in the product portfolio, no matter whether the company is a small startup with a handful of offerings or a big corporate with thousands of products and services on their list.
It gives you clues which products and services are likely to attract highest product development spend and but also strategy focus in the near future.
It shows what part of the portfolio keeps the company profitable (and pays your salary).
Identify the main clients of your company and what products and services they buy from you
For companies that sell products to big corporates, I apply the 80/20 rule. Find the twenty clients that generate 80% of your revenue, what is common about them, what are the volumes they purchase or rentals they pay for subscription, what service wrap they get on what terms.
For retail companies – I encourage my team to uncover what groups of retail customers find value in what you offer – a decent market research on consumer or business segmentation has a good cross section of personas, habits, propensity to purchase trends and many other useful information on the customer dynamics.
Build strong understanding why those clients buy from your company versus any competitor and how they use your products.
By joining Sales reviews with those clients or speaking to Sales Relationship managers in your company you will learn tons about what sets you apart from the competition but more importantly what makes your products unique and desirable.
What is more, by interacting with customers directly you gain invaluable insight about how your products or services are used in real life and what can be improved upon – features, user experience, pricing, anything.
If you are new to the company or applying for a job and have no internal view, you can gather similar insights from product forums, customer reviews and feedback which is available online for most companies.
Find out how those top performing products in step 1 are priced and how their commercial model works.
After you have learned about who buys what from the company and why, my favourite next step is to get the detail on the pricing models tried and tested in your market segment as well as the commercial structure applied.
Some questions for more in-depth analysis are: What are the implications of a rental model vs. one-off fees in this market? What are the subscription criteria? How has the company structured their commercial model to take their customers from a value product to a premium product?
As a proposition development expert, this step gives you not only a benchmark for any new proposition development but also brings to light how the market works and how clever new ideas can be tested – both as pricing and as completely new product offerings.
Get the most up-to-date view of the product development pipeline and what new products or offers are coming to market in the next 3-6 months.
For an outsider, you may think this information is a very highly guarded secret, but you are wrong. Most product or service pipelines follow an evolutionary path, rather than create a revolution with every release. A good comparator are competitors and their recent product launches. Also, press news are abundant on company product announcements or major market developments that impact the evolutionary path in products or services.
This pipeline view is a like a mirror into the company which shows you what capabilities and commercial models have passed through more rigorous testing with customers and have the potential to bring market share and ultimately profitable revenue.
And I may sound a bit biased, but in addition to all tips above one more way to build your commercial acumen is to sign up for my blog and get extra tips on commerciality every week.
If you have any questions, or you want to share stories, lessons learned around proposition development and commercial innovation please feel free to leave a comment.
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