Godrej Interio (Institutional Business)
Godrej Interio, a business unit of Godrej & Boyce Mfg. Co. Ltd., is India’s largest furniture company. It is also one of India’s premium furniture brands and in addition to retail consumers, it serves a large number of institutional segments including office spaces, healthcare, laboratory, education, etc.
Unlike the consumer segment sales, institutional sales processes are characterised by much longer enquiry to order cycle with many customer touch points. This means that acquiring a customer is a long and time-consuming activity. At the same time, acquired customers’ order to collection cycle is also fairly long with many tasks involved to ensure good after sales experience. Consequently, like most companies engaged in B-B business, Godrej Interio’s sales team too faced a perpetual conflict. On the one hand sales teams must meet new customers to establish new business, and on the other they must focus on support activities and current leads to ensure monthly order booking and sales targets. Most of their capacity was earlier taken up by current customers and leads. Consequently, there was a constant pressure from sales teams for addition of team members. Also, there were frequent requests for discounts, non-standard products, etc. to enable the team to secure sales through shorter number of customer interactions. Subsequently, severe pricing pressure resulted in their institutional overall revenue stagnating in their historically stable segments. At the same time the growth from new segments was not catching up.
However, by implementing TOC thinking in their sales processes as well (already implemented in operations), the company successfully addressed this conflict between developing new customers and pursuing current leads! Redesigning their sales process and releasing as much as 30% capacity from the same team, now allows the company to enter early in the enquiry stage and partner their customers in identifying suitable furniture solutions. The company now find that their realizations have improved and growth rates and market share in new segments are increasing substantially.
The following are the results experienced so far –
Video Case Study
Transforming Sales and Business Development
Mr. Anil Mathur, COO, Godrej Interio, discusses they solved a perpetual conflict that B-B sales teams face – the dilemma between developing new customers and pursuing current customers or leads. On the one hand sales teams must meet new customers to establish new business, and on the other, they must focus on support activities and current leads to ensure monthly order booking and sales targets. Most of the sales team capacity tends to be taken up by the second!
The biggest challenge we felt was that in the segments where we were strong, there was competition coming in; and we had to either drop prices or lose orders. At the same time, we were not growing in the new segments where we really wanted to grow.
The biggest challenge we felt was that in the segments where we were strong, there was competition coming in; and we had to either drop prices or lose orders. At the same time, we were not growing in the new segments where we really wanted to grow. This was leading to two problems. One was, there was a drop in price realization, and, hence, pressure on profitability. The second was that there was constant pressure to increase the sales staff to cover the market right, which would add to the fixed cost. And, as a result of this, the ratio of fixed cost to the revenue would be unfavourable.
We said let’s observe a day in the salesmen’s life, and understand how he spends his time. We realized that the salesperson was spending more time in backend operations which are not the core selling operations, but operations related to quotation making, payment reconciliation, follow up for some dispatch, etc. And they were happy doing that work because they also felt that the customer wanted a Single Point of Contact (SPOC). So, we asked ourselves, “Is the customer really looking for a SPOC or is he looking for someone who could proactively respond to his needs?” So, we started a centralized cell at the corporate office that would take care of all the customers’ other needs, and release the salesmen from their activities connected with quotations making, reconciliation, etc. Now this, helped us in releasing capacity of salesmen.
First is that our own salespeople are happy that they are doing the core business. And we are also happy that we are able to use their skills and their capability in the right manner. The second is that the sales team is able to cover the market more effectively, and we see that the business is improving now. We are able to generate better enquiries, better orders. The customers are quite happy that they are getting a response to their queries faster. Faster than from salespersons, who at times they had trouble contacting.
What we found was that while we had sorted out one problem, the other problem of a long-term development in segments like MNCs, private customers, architects where more value selling is required was not really happening. And very often the sales people were trying to get into a short-term objective of trying to again go in for high discounts, or trying to sell APO (‘As per Order’) items or customized. This was leading to a vicious circle in manufacturing and the whole way of operations- with realizations not really coming, and the customers still treating us as a commodity seller rather than as someone who’s actually giving them real value.
So, we started looking at this problem. While we had released the sales person’s capacity, we had not really solved the problem to the full extent. We then decided that we should have a separate team who would be working on it. Because one aspect we discovered was that whenever the sales people were asked to develop new customers and also sell to existing customers, it was always a short-term vs long term conflict. The sales people were happy to reach their targets to a short-term solution rather than going for a long-term solution that would bring in sustainability to the business over a long period of time. So, I think that was one of the problems that we had.
So, we then decided that we would go in for a separate team to do business development. Thankfully, the capacity that we released by having the backend processes taken away from sales people, was gainfully deployed for this. We did not have to go in for additional people.