How Top Consumer Goods Companies Master Commercial Excellence to Drive Profitable Growth

Mastering Commercial Excellence: A Path to Thriving in the Consumer Goods Industry

The consumer goods industry faces unprecedented challenges, from evolving consumer preferences to inflationary pressures and supply chain disruptions. However, some companies continue to thrive by mastering commercial excellence. A recent McKinsey study reveals that companies excelling at commercial execution deliver nine times higher total shareholder returns compared to peers.

The research, based on McKinsey's 2021 North America Commercial Excellence Benchmarking Survey of 28 companies, identifies ten critical practices across five key capability areas that differentiate the winners:

Portfolio and Innovation Management

Leading companies take a systematic approach to innovation and renovation of existing products. They are 2.5 times more likely to have distinct but integrated operating models for different types of innovation. While focusing on breakthrough innovation, they also maintain strong renovation programs - 60% of winners have formal programs driving both growth and cost savings, compared to just 27% of others.

Marketing Excellence

Winners leverage data and analytics to deliver personalized marketing at scale. They are 80% more skilled at integrating multiple data sources and 1.6 times more likely to have robust first-party data strategies. Their marketing generates 30% more sales per dollar spent compared to others.

Revenue Growth Management

Top performers take a multi-lens view combining consumer insights, category economics, and channel dynamics. They are 3.5 times more likely to deeply understand customer economics and 3 times more likely to build multi-year revenue management plans. This enables more precise pricing actions and strategic trade investments.

Sales Force Effectiveness

Leading companies break down silos between online and offline sales, with 40% more likely to have integrated omnichannel teams. They use advanced analytics to optimize sales force deployment, focusing 83% of time on high-value activities versus 56% for others. However, opportunity remains to incorporate next-generation performance metrics.

E-commerce and Direct-to-Consumer

Winners have clear channel strategies with distinct roles and targets. All winners monetize their direct-to-consumer operations versus only 40% of others. They also excel at Amazon execution - 60% participate in programs like Vendor Flex compared to 18% of others.

Key Success Factors

• Data-Driven Decision Making: Winners consistently leverage broader, more granular datasets and advanced analytics across functions.
• Cross-Functional Integration: They break down silos between channels and functions to enable seamless execution.
• Strategic Balance: Leaders maintain focus on both short-term performance and long-term capability building.
• Rapid Learning: Winners are significantly more likely to use test-and-learn approaches and in-market pilots.
• Systematic Execution: They deploy clear processes and governance to drive initiatives at scale.

Assessing and Building Capabilities

To begin the journey toward commercial excellence, companies should assess their current capabilities across these dimensions:

• Is the innovation program balanced between core improvements and breakthrough opportunities?
• Does marketing have the granularity and agility to compete with digital natives?
• Is revenue management leveraging multiple lenses to drive profitable growth?
• Are sales capabilities evolving to meet omnichannel needs?
• Is there a clear channel strategy with distinct roles for each platform?

The research makes clear that commercial excellence is more critical than ever for consumer goods companies. Those that build these capabilities systematically across functions position themselves to drive sustained profitable growth despite industry turbulence.

As one executive noted, "Commercial excellence is no longer optional - it's the price of admission for competing in consumer goods today." The winners demonstrate that superior execution, enabled by the right capabilities, delivers measurable advantages in growth and profitability.

Success requires a holistic approach - simultaneously strengthening core commercial capabilities while building new ones for the digital age. Companies that make these investments position themselves to win through superior execution, even as the industry continues to evolve rapidly.