Most of the CEOs from the industrial sector have heard a statement from their customers quite often. “Why can’t you deliver a service that is as convenient as Amazon’s, as transparent as Uber’s, or as well-designed and innovative as Apple’s?” Well, these CEOs may have brushed off the first few statements, but now they seem to realize an important detail – the expectations of customers are on the rise.
In the case of oil, gas, and chemical companies, their business models rely purely on a traditional sequence. They need to draw hydrocarbons from the ground, process them, and then sell them. While this is the case, the expectations of their retail and commercial consumers have now evolved quite a lot. Now, they tend to match these services to the pristine customer service they experience online.
As we have seen in the past 10 – 15 years, the oil, gas, and chemical organizations have been focusing their efforts toward achieving complete excellence in their operations. They have been doing this by improving the performance and productivity in operations alongside the safety of their personnel and assets. There is no doubt about the fact that their money and time has been spent well. This is because they have been able to produce millions of extra barrels of gas and oil alongside bringing about higher utilization of their assets, not to mention higher standards of safety in their operations.
While these gains have been captured, executives in the oil and gas industries can be seen focusing their attention on an entirely new prize. They are planning to deliver commercial excellence with the help of the best practices in design and delivery toward maximized and profitable revenues. Oil and gas corporations are planning on doing this with the help of commercial excellence programs. These programs aim to improve their product mix and increase their sales force effectiveness, pricing, customer selection, and distributor management processes.
Until quite recently, executives in this industry could not be seen prioritizing the improvement of their commercial efforts. This was partly because of the fact that the potential prizes that customer satisfaction will bring forward were quite uncertain. This very uncertainty has now been changed, and oil and gas executives have realized that tremendous value can be captured with the help of commercial excellence programs.
What Is Commercial Excellence?
Commercial excellence is the aspiration to bring forward the same kind of scientific approach toward the customer’s side of the business as was seen in the excellence brought in operations. This can be done by encouraging the executives toward learning who their most valued customers are, what it will cost to serve them, how satisfied they really are, and how their customer loyalty can be captured to retain new values.
Commercial and retail businesses commonly see their earnings rise by about 20 to 25 percent whenever they focus their efforts on sales to the right customers. They are even able to further enhance their margins by optimizing their costs to serve customers with the help of improved price realizations.
That being said, a comprehensive commercial excellence program can benefit the oil & gas sector in a number of ways. The program assists these industries in:
- Identifying the most promising customers and focusing sales coverage, pricing strategies, and technical service support toward them
- Shifting production volumes toward more profitable regions and applications
- Optimizing pricing structures for products and customers
- Restructuring the sales forces and improving various management processes
- Implementing strict rules for the selection and management of distributors
- Enhancing the cost-to-serve ratios through collaborative shipment plans
- Building new capabilities among sales and marketing staff
Better pricing tends to be a method that brings forward the quickest results. Pricing, however, tends to be transparent in these commodity industries. This is because the competitive position of producers can vary according to their product properties, location, size, or even fungibility.
How to Capture Commercial Excellence?
For decades now, the oil and gas industry has been operating in its downstream segments, which include selling gasoline, chemicals, and lubricants to their retailers, wholesalers and distributors. This means that consumers and customers have only been focused on with regards to oil and gas products and their respective costs.
Oil and gas companies have also filled their portfolios with advancements in technologies in order to improve their oil drain intervals, enhance their vehicle performances, and lower emissions in their operations. All of this is relevant to optimizing supplies and efficiency.
The strategies have unfortunately had nothing to do with the relationship of these companies to their potential customers. This is where increased access to data, disruptive technologies, and new methods of engaging with suppliers is bringing forward new methods of engaging corporations with their customers. These relationships are being built and nurtured because of the following influences.
1. High Expectations of Digital Customers
Customers who belong to the digital age typically tend to prefer online or in-app business transactions for their convenience. This means that they expect to interact with organizations that are digitally mature.
2. The Desire for Omni-Channel Consistencies
Customers also tend to expect the same kind of experiences across all devices and channels. Because of this, oil and gas companies have an increased need for distributors and partners to collaborate with customers with content that complements every channel and platform.
3. Preferences for Self-Service Journeys
Many buyers tend to manage their purchase and exploration journeys with their own preferences of platforms and channels that are convenient.
4. New Players in the Ecosystem
There are many startups out there that are providing their customers with brilliantly value-added services. Such services allow customers to use, buy, and manage their consumable products much more efficiently.
How to Improve Customer Engagement?
Making interactions consistent, convenient, and simple, providing choices for channels, and meeting the customer’s digital needs is becoming more and more critical in the oil and gas industry. The problem, however, is that this requires way more than just implementing one-off projects. Digital transformation requires these companies to launch business models that are completely digitally-driven and focused on all the activities and touchpoints that are completely customer-driven.
If oil and gas companies wish to become digitally driven, then they will have to first bring about a very customer-centric culture. Such a culture should be recognized and rewarded by customers because of the fact that they provide seamless, easy, and satisfying digital experiences.
In order to help organizations steer toward improved customer experiences and engagements, oil and gas marketers will have to implement the following strategies:
1. Think of the Customers Preferences and Needs
Most of the customers today have brought forward the notion that their buying journey is made of multi-channels. This means that if a customer receives a quote via email, then he/she will wish to click a button to place the order – instead of placing the order over the phone. These customers will then also want post-sale services in the form of multi-channels. An example of this can be confirmation over email, tracking over a mobile application, and 24/7 helpline services for any issue resolutions.
Oil and gas corporations will have to figure out what channels make the most sense for their customer personas. In order to do this, they will have to effectively let go of their ‘one-direction’ sales methods. They will now have to shift towards reimagining their business towards a more customer-centric perspective. This will, therefore, require these companies to carry out some educated guesses and customer surveys or even via ethnographic researches.
Ethnographic researches signify the study of customers in terms of their buying behaviors, their preferences of technologies, and what kind of challenges are faced by them in terms of purchasing activities.
2. Identifying Methods to Improve Processes and Touchpoints
Laying the customer-centric groundwork requires companies to understand what customers face during the whole buying process in terms of touchpoints. This also involves the companies understanding where new customer-centric touchpoints will have to be implemented in order to create new opportunities. Opportunities, like strengthening the relationship with valued customers, increasing revenues, and improving margins, are likely to arise.
All of the above can be kicked off by paying particular attention to all the downstream processes that create lag-times for customers. These processes can then be digitized or possibly reconsidered so as to reduce delays.
3. Investing In Technologies That Strengthen Customer Engagement
As the expectations of customers continually rise, these organizations’ ability to adapt and evolve becomes crucial. This is because of the fact that oil and gas corporations need to invest in technologies such as IoT sensors, blockchain, robotics, cognitive computing, and deep analytics.
IoT sensors tend to optimize performance data, while blockchain has the ability to provide corporations with control and oversight for their respective products. Robotics, on the other hand, has the ability to enable the back-office teams to reduce their manual efforts and focus on tasks that are more strategic. Cognitive computers, such as chatbots, have the ability to produce natural language and engage with customers to answer their common questions. Lastly, deep analytics has the ability to predict the behaviors of customers by identifying their usage patterns.
4. Measure, Learn, Adapt, and Repeat
Digital sale strategies can be judged in terms of success quite easily. This is so because percentages of revenue can be easily tracked to determine whether they came in from non-traditional sources or from digitized means. Some ‘soft measures’ can also be implemented such as regularly analyzing and measuring certain metrics. These measures include metrics related to satisfaction ratings, account profitability, customer churn, and real-time feedback.
The customers of the oil and gas corporations are now much empowered then they used to be because of an increasingly digitized world. For decades, this sector has seen a reign of product differentiation. Now, however, digital processes and solutions have the sole ability to bring about the most cutting edge basis for competitiveness.
Organizations that will fail to move forward with digital forms of customer engagement strategies for their upstream, midstream and downstream segments will only find themselves catching up too late – or even worse – ending up with massive losses.
How Leading Oil And Gas Companies Are Bringing Forward Commercial Excellence?
The leading chemical and energy companies can be seen following a common set of strategic patterns in order to unlock complete commercial potentials. They can be seen doing so by firstly tapping into their major customers in order to determine how more value can be captured from them. By identifying their key customers, oil & gas companies can easily determine where they need to focus their efforts. This can simultaneously identify which segments are unprofitable and which customers the companies should focus their efforts least on.
Secondly, companies can also be seen responding to the expectations of their profitable customers in the most cost-effective manner. If, for example, customers need an app to track their respective shipments, then businesses focus on what exactly they need from the app. They may even come up with a substitute for an app – like text-based updates. These updates will do exactly what the app was supposed to do but in a more cost-effective manner.
Finally, executives in the leading oil and gas companies tend to form a culture that is not only meant to meet their customers’ needs but also to build towards their long term loyalty. This is exactly why the journey toward commercial excellence is a multi-year one. In this time, the senior management of these organizations, their operations, their supply chain, and marketing and sales departments work in synergy towards a common effort.
When it comes to commercial excellence, only a sustainable and concerted companywide effort can be hoped to achieve the necessary results. Implementing the right customer-focused strategies can help various oil & gas companies make substantial profits, reduce their costs, and streamline their operations better.