SHB graduate develops successful sales campaign
What’s the best way to sell business-to-business (B2B) products that need careful explanation and emphasize the value they add? What are the challenges faced by a differentiated premium supplier in showcasing the value it adds? Why is that suppliers with superior solutions have to compete on price with companies with inferior solutions? These were the key issues looked at for a project carried out by Oliver Heininger, a Steinbeis University Berlin (SHB) graduate. The name of his project: Business Field Development – Security. Heininger worked on a series of transfer projects and his master’s thesis as part of a Master of Business Administration (MBA), which was sponsored by the security systems provider Bosch Sicherheitssysteme GmbH.
The Bosch security systems specialist is a manufacturer and supplier of solutions used in buildings. These include fire alarm and voice alarm systems, as well as intrusion detection systems, video surveillance systems, and access control solutions. In recent years, the security business field had not met the commercial expectations of the company, particularly for core security products (intrusion detection systems, video surveillance systems, and access control solutions).
This was the challenge Heininger decided to take on for his degree project. His aim was to raise the market share and profit margin in Bosch’s Security division. Drawing on a McKinsey problem-solving method, Heininger first of all came to the following conclusions: The Bosch video surveillance systems and access control solutions offer added value in a number of ways versus the competition’s solutions, which are often just low-performance, low-cost alternatives. Conversely, even the most simple option offered by Bosch provides added value versus the competition’s solutions. Despite this, when an offer is submitted, customers often fail to perceive this added value. As a result, on the one hand contracts are won by competing on price – so in essence clients buy Bosch because they get the lowest price but they still benefit from added value, which they may not realize when they buy. This basically hands away any opportunity to generate higher sales revenues, and the higher profit margin is lost. On the other hand, Bosch loses the opportunity to gain market share. If another supplier succeeds in communicating the value added by the solution they are offering, the customer will often decide not to buy Bosch.
For Heininger, it was clear from his analysis that his project would need to revolve around clearly communicating added value to the customer. To this end, he worked out three actions that needed to be taken:
- Raise market share by improving product marketing
- Raise market share by communicating benefits and added value
- Raise profit margins
To see if these actions were actually realistic on a practical level, Heininger implemented his ideas in his sales region over the course of his degree project. His numbers were successful, confirming that his logic was right: He successfully raised the number of incoming orders by 65% with a 350% rise in the share of new accounts. The (direct) margin contribution was two to four times higher, depending on the category. A comparison with other sales regions in Germany showed that his achievements were above average. For example, compared to the average, the share of new accounts was 170% higher and the margin contribution was 46% higher. Qualitative feedback from customers and other members of the team also underscored the success of the actions implemented by Heininger.
The SHB graduate will now continue implementing the successful results of his project: In his new role as Sales Manager for Europe in which he looks after “new verticals,” he will apply his new action plan to new business models and vertical markets.