Sales management in the energy market
In the future, sales will have to deliver higher contributions to earnings - especially at times of growing cost pressure in the grid. This involves covering sales costs (cost-to-serve), making a profit and making use of price elasticity. At the same time, competition is increasing and end customer sales staff are faced with the task of communicating further price increases or decreases. Moreover, near-market procurement calls for ongoing monitoring and, when necessary, strategy adaptations combined with professional tools for portfolio and risk management. How can prices and profitability be optimised and managed on a segment basis?
As wholesale market prices continued to rise, long-term rolling procurement was right for stadtwerke. By now, at the latest, with the continued sideways movement of the market, a change in thinking is required. Sales units that fail to deliver an adequate contribution to earnings lose their right to exist.
Even when competition is stiff, profitability must be improved on a lasting basis and given priority over market share maximisation. It is not only necessary to pass on price changes in the wholesale market, sales margins must be raised to a permanently profitable level.
But each price adjustment triggers the impulse among customers to switch suppliers. This is why it is important for suppliers to wait for the right moment in time and cycle to announce prices and to counteract the impulse to switch suppliers through suitable communication and offers. In this way, switching rates can be reduced and customer margins can be operatively managed through longer loyalty periods.
Instruments, such as a break-even analysis based on customer segments, must meet the demands of the market. Margins and risks must be generally steered close to the market.
