Chemical players tend to have strong, ingrained sales functions. Over the past 18 months, however, a combination of long-standing internal issues and external shocks—such as the effects of inflation on chemical manufacturing and customer destocking—has caused revenues to plateau or even decline. In fact, our research shows that diversified chemical players saw year-over-year volume drop by as much as 10 percent in the first quarter of 2023, and specialty players saw a decline of 8 percent during the same period.
Chemical organizations are left contemplating how to create growth in this fraught environment. Global volatility and supply chain disruptions during the COVID-19 pandemic caused many companies to become “order takers” rather than “hunters.” As a result, the skills sales reps need to pursue new customers have weakened. And institutional knowledge regarding retaining existing customers is lacking because of high turnover in sales teams and disjointed customer data. Although some players have made efforts to collect more and higher-quality data, they do not know how to use it effectively. These challenges are further exacerbated by the tendency of some players to pursue inorganic growth by acquiring companies, which can increase the size and number of data pools while overlooking how to derive meaningful insights to better retain and acquire customers.
Our research shows that leading chemical companies have accelerated their core growth by reinventing their sales approaches. New commercial insights leveraging both traditional AI and generative AI (gen AI) are key to jump-start the commercial engine, but the lion’s share of the effort hinges on rewiring the organization, standing up a “win room” to mobilize frontline sales, and shifting engrained behaviors for sustained behavioral change.
Automating and enhancing commercial insights with gen AI
Today, companies are transforming their commercial performance through the use of gen AI tools. In terms of marketing and sales functions, our research shows players that invest in AI are seeing a revenue uplift of 3 to 15 percent and a sales ROI uplift of 10 to 20 percent.
Traditionally, chemical companies fall short on the adoption of sales and marketing technology, such as customer relationship management (CRM) tools. This is further compounded by inefficient cross-functional decision making between business units and functions (such as strategic marketing, pricing, and sales). For example, efforts related to organic-growth strategies often start with identifying and characterizing new market-segment growth opportunities; however, these strategies are rarely translated into specific prospects communicated to the frontline sales organization. Without rectifying these shortcomings, there are often limited linkages from strategy to commercial execution and a lack of transparency into resulting sales performance.
Furthermore, these companies have varying degrees of technological maturity, which doesn’t always correspond to the size of the organization or the IT budget (Exhibit 1). Size is not a reliable indicator of technology maturity: smaller organizations can have sophisticated analytics engines that already leverage AI, while larger organizations might be at the beginning of their CRM or tech acceleration journeys.
Regardless of where organizations are on the growth curve, leveraging gen AI across the customer life cycle—from customer acquisition to cross-selling, pricing, and retention—can accelerate the growth trajectory. For example, a gen AI solution can help reduce the time it takes sellers to identify and prioritize the next best customer opportunity by validating leads across multiple sources, identify product recommendations, and generate personalized emails.
One large specialty chemical company started its gen AI journey by focusing on building capabilities to identify, prioritize, and convert new customers in existing and new markets. Despite being the incumbent in several areas of the value chain, the company was still able to use gen AI capabilities to quickly scan for new market opportunities, identify prospects in these markets, and prioritize those prospects based on value potential and conversion likelihood. As a result, it created a direct translation of the growth strategy (which markets and customer segments to pursue) to sales execution (which specific prospects sales representatives should activate).
Ultimately, the company was successful, building a growth pipeline of approximately three times the revenues for the product lines addressed. Early conversion efforts have been consistent with delivery of 10 to 20 percent revenue growth within 12 months. Beyond utilizing gen AI for lead generation and prioritization, the company is exploring additional opportunities for deploying the technology, including conducting at-scale personalized outreach to quickly qualify prospects and deploying a sales “copilot” to aid representatives in articulating the company’s value proposition to potential new customers in new markets.
With the introduction and adoption of gen AI, chemical companies can improve connections between business units and systems in a quicker, less-resource-intensive way and can start producing insights with a level of precision and foresight previously thought impossible. In other words, gen AI can bring a company’s IT closer to the business, driving new ways of working, with IT viewed as a business partner versus a cost center.
Mobilizing frontline sales by standing up an insights-driven commercial ‘win room’
From acquisition to retention, AI-powered insights allow chemical companies to move beyond pure pricing strategies, not only helping to create substantial growth in top-line performance and a reduction in churn rates but also increasing market share and customer satisfaction.
Insights from gen AI would likely fail without the frontline adoption of pragmatic behaviors, and the value derived from these insights would only be sustained for a short period of time without implementing the right operating model. Many commercial executives in chemicals cite a lack of data on and transparency into near-real-time performance. What’s more, the amount of time chemical sales teams have to analyze data can be limited. Even when they have all the time they need, turning insights into action requires behavioral change as well as a proactive focus on account management. Siloed organizational structures can limit collaboration, slow the pace of decision making, and reduce incentives for sharing an unvarnished view of commercial performance, giving executives an incomplete understanding of growth potential and risks.
Centralized commercial “win rooms” can be a critical step in addressing these points before a more robust, permanent sales muscle is established. A commercial win room is an agile, cross-functional team that rapidly mobilizes and arms the front line with tactical insights and commercial opportunities across the sales pipeline. And while previous McKinsey articles have covered win rooms as a critical lever for quickly and effectively lending focus, transparency, and structure to the implementation of next steps, it’s increasingly obvious that, aside from AI enablement, win rooms need to evolve from a short-term emergency intervention into a constant operating model and organizational muscle.
Successful commercial win rooms create an iterative loop between customer opportunity prioritization, action planning, tech and data science integration, and performance management to turn insights based on market feedback into tactical decisions, such as determining which opportunities to pursue with the right value proposition (Exhibit 2):
- Customer opportunity qualification. Cross-functional teams prioritize tangible customer opportunities to leverage gen AI capabilities (for example, flagging critical opportunities in the CRM as “must wins” based on targeted segments, opportunity type, or potential). Successful win rooms use granular analytics to see where the opportunity is, hear what the customer needs are, and create a customer-backed value proposition. After pursuing the opportunity, win rooms then collect more information from the field to create a feedback loop and codify learnings.
- Action planning. Teams can be paralyzed by a desire for perfect data transparency instead of having a “bias for action” and charting a path forward. Successful win rooms emphasize taking tangible steps, rather than staying purely analytical.
- Performance management. Successful win rooms operate at a pace that has more frequent interaction points with the field as well as effective cross-functional dialogue.
- Action-oriented sales support team. Bringing together the right people is critical, but the makeup of a win room can vary based on the goal. For example, if a chemical player is launching a new product, they may want to consider adding someone from the product marketing team. Team members familiar with gen AI are vital to bringing together granular account-level insights. Customer insights and marketing team stakeholders can provide customer-backed insights and market intelligence to build the right value proposition and tailored collateral. Sales team members drive the actual deal flow. And stakeholders from supply chain or operations can help ensure delivery.
- Tailored training across the organization. Standing up an integrated feedback mechanism such as a periodic pulse survey for win-room participants coupled with tactical skill building improves the overall chances of the win room’s sustained impact.
- Technology and insights integration. Finally, without actionable metrics and near-real-time reporting, organizations cannot identify the issues to be addressed. The technology to drive the analytics is foundational.
Although win rooms can be essential to growth, success is not guaranteed. Sometimes the call to action is not at the C-level and the win room itself is not sponsored by an executive. Other times, employees are not truly subject matter experts or lack institutional knowledge. But if leaders integrate the six points outlined above, their chances of success will likely increase.
It is important to keep in mind that those that initially saw top-line growth after standing up a win room sometimes struggle to maintain those results. One common pitfall is organizations ending the win room too quickly and reverting to previous ways of working. This often results in infrequent refreshes of insights to pinpoint customer opportunities, a lack of systematic cross-functional performance management cadence, and C-level executives who disengage too early. As a result, it can take longer to embed and sustain the skill sets the win room seeks to build in the organization.
Sustaining growth through ongoing performance management, capability building, and change management
Expanding the win room’s success to become a long-term muscle for the sales organization often requires tech-enabling revenue acceleration across three areas: commercial excellence, portfolio and markets, and innovation and business building. In focusing on these areas, a chemical player can build a strong insights-driven foundation; drive near-term growth via a win room and institutionalize the muscle; and ultimately accelerate revenue growth and sustain lasting commercial excellence.
Chemical organizations that do this well have typically learned to consistently cascade insights from the front line to sales management to executive leadership. What these touchpoints look like varies widely from organization to organization and within each organization based on region or business unit. For example, one large specialty chemical organization conducted biweekly regional “execution engine” meetings with the CEO and CFO, as well as monthly subregion and regional pipeline reviews.
Establishing a consistent performance review “drumbeat” with a standardized agenda while leveraging a single source of truth (ideally in a CRM tool or sales dashboard) can help ensure all teams are aligned and focused on key priorities. Companies can create a rich, integrated view of forecasted performance by using pipeline data from the CRM (or Excel in a low-tech environment), invoices from the organization’s data platform, and manual inputs from the business (such as price and currency adjustments and realization rates) to establish a growth bridge to reveal current gaps in the path to reaching the annual (or quarterly) target. These estimated gaps to annual or quarterly targets can be used to recalibrate targets at the sales rep level and identify potential areas of performance improvement. Aligning on two to three specific goals (such as increasing share of wallet with a specific customer group, introducing a new product, or recapturing churned sales) can help identify critical pathways.
Extending sales meetings to include cross-functional stakeholders (such as product managers and strategic marketers) for discussions specific to pipeline review can transfer the silo-breaking habit from the win room to the broader organization. Including data scientists in the win room can also help with the iteration and continued improvement of insight quality. It is also vital that organizations supplement this performance management cadence with clear CRM standards that are tied to KPIs and that align routines across commercial teams, as well as with targeted training and capability-building programs to make these changes stick.
Moreover, one-on-one coaching sessions by sales leadership with frontline reps can not only motivate reps and bolster their development but also hold individuals accountable for their performance goals. Therefore, it’s important for sales managers to regularly reinforce specific KPIs and underscore the importance of all opportunities being in the CRM.
Targeted training and capability building across all sales teams is also critical because it embeds skills, mindsets, and behaviors from the win room. Reinforcing behavior through capability building drives sales teams to understand how to leverage commercial insights, identify and prioritize new opportunities, use the CRM, and effectively manage performance.
As an example, a global specialty chemicals player aimed to restart its commercial engine by establishing end-to-end commercial insights and standing up a win room to generate new leads and identify short-term customer opportunities. Doing so entailed building an end-to-end technology stack that enabled enterprise-wide data and analytics. The company embedded behaviors from the win room by redesigning the commercial drumbeat and creating and deploying capability-building modules to the sales team as well as town halls between executives and the commercial team to support change management. These moves identified nearly $500 million in new customer opportunities, a 65 percent increase in year-over-year opportunities in the pipeline, and an approximately 60 percent increase in deals closed. Furthermore, consistent CRM practices led to 90 percent of active opportunities with close dates in the future and also shortened timelines for accelerated resourcing and strategic decisions from more than two months to a matter of days.
In our experience, players can take the first step by launching a data-driven assessment to understand the growth drivers, including churn, cross-selling, and new customers. They can then pilot the win room in one division or business unit, focusing on the areas with the most near-term top-line potential. The next step typically entails cascading learnings from the win room pilot to other business units to build sustainable capabilities and upgrade the data and technology stack. Ultimately, these steps can help build a solid foundation for chemical players looking to achieve self-funding impact through revenue acceleration efforts.
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