Even today, Dayton Kellenberger marvels at his good fortune in having landed inside the corporate finance department of Coleman Company.
Of course, like a lot of career success stories, this tale had timing as a large contributor, especially inasmuch as a little more than 10 years ago, Coleman was experiencing declining gross margins across its business.
To Kellenberger, a recently hired business analyst, Coleman’s shrinking gross margins seemed to present not only a problem-solving challenge but also an opportunity to help to rewire a renowned brand’s customer best practices.Read More
“When you’re part of a consumer packaged goods (CPG) company, you basically have one shot at the beginning of the year to do an annual line review with a customer,’” explains Kellenberger, who adds that at the time, the process might have involved having a “seller” from, for example, Cabela’s freely thumbing through different Coleman catalogs while casually signaling to a Coleman representative, “Okay, we’d like to sell this product.”
“The process change that we made was to get finance involved from the very beginning and have us run the line reviews so that we would create one catalog of feature products,” recalls Kellenberger, who notes that the new catalog proved particularly invaluable for what it displayed internally.
Comments Kellenberger: “Because we could see what a product’s margin was from the previous year and compare it to the current one, we could flag low-margin products, consider replacement products with higher margins, and sometimes even sunset certain SKUs.”
Kellenberger believes that the resulting price volume analysis exposed the previous risks of making business decisions based on analysis that had historically seldom penetrated beyond the customer or product category level.
“What we learned at Coleman was that a single SKU at a single customer could be responsible for dragging an entire product category down,” remarks Kellenberger, who reports that the analysis also exposed the alarming fact that Coleman had at times unintentionally been replacing high-margin products with lower-margin newer ones.
Looking back, Kellenberger observes that Coleman’s margin decline turnaround might have had a different outcome had the manufacturer not rejected certain popular theories.
At the time, Kellenberger remembers, one management team member attributed the decline to “rising prices in China,” while another suggested that the downturn was due to “manufacturing snags in the U.S.”
Says Kellenberger: “This all began with a debate that was rooted not in fact but in emotion.” –Jack Sweeney
“Take time to understand the financial drivers of the organization that create value. Focus your efforts there and educate the people in your organization on their roles in delivering these results, even if they are located outside the typical finance and accounting responsibility areas.” –Dayton Kellenberger, CFO, Vendavo
Made Possible By
CFOTL: Tell us about Vendavo … what does this company do, and what are its offerings today?
Kellenberger: In a nutshell, we work with some of the largest companies in the world, mostly in the manufacturing and distribution spaces, to help them to optimize revenue and digitize their sales processes. This is a very broad statement, so let me give an example that may kind of help to bring home exactly what we do.
If you’re the type of large firm that becomes our customer, you have your customer relationship management system—your CRM—where you’re housing your leads, your opportunities, your customers. You also have your ERP platform, which is where you are actually billing your customers, collecting your cash, producing financial statements. But there still remains this whole segment in the middle where you need to configure a product. You need to understand the right price for selling it to your customer. You need to deliver a quote, you need to deliver a proposal. And all of this needs to happen in a digital framework.Read More
What we are talking about here is the market for CPQ—configure price quote—which is very fragmented today. From our perspective, this is really just the table stakes for digitizing your go-to-market. You need to be able to produce a quote that has a price that can turn into an executable document for your customer.
Where we really differentiate from our competition is that we focus on price optimization. For example, let’s say that you’re a company with 1,000 different SKUs that you might sell—so, 1,000 different individual products—and you sell in 30 countries globally, and you also sell in 10 verticals. Multiply these numbers together, and you have hundreds of thousands of different permeations of what price you might sell a given product at, depending on who your end user was and what country you were selling it in.
What our software does is to help customers with complexity to segment their customer base and optimize their prices. We then deliver analytics to help them to understand whether the pricing strategy that they are using is providing value to the customer. If you’re the company, you might segment your product to say, “If it’s in this country, in this vertical, I’m going to charge this price.” You need the ability to do this on a global scale with a centralized solution, and this is the product that Vendavo provides.
The great thing about our product—and the thing that really got me excited about joining the company and really has kind of kept me here—is the ROI that it delivers to our customers. Our customers get an average of about $50 million in annual value from using our solution. The way to think about how we create value is to understand that we’re all about putting the right price in front of the right customer at the right time.
Vendavo | www.vendavo.com | Denver, CO