1) The Company

Client Name and Industry

‍Lexmark - Printing Industry

Background

Lexmark is a top-five global printer company, known for its innovative printing solutions and commitment to quality. The company has achieved significant milestones in the printing industry, solidifying its reputation as a leader.

2) The Challenge

Initial Situation:

Lexmark sought to determine the viability of retaining its internal commercial sales team amid concerns about profitability.

Specific Problems:

The company faced high turnover within the commercial sales team, leading to lost sales and substantial training and upscaling expenses. Additionally, onboarding small clients incurred high costs, and these clients significantly taxed customer service resources.

Goals:

Lexmark aimed to conduct a comprehensive analysis of all internal and external costs associated with commercial clients. This would enable the company to decide whether to transition to a third-party distribution channel or retain the internal sales team.

Previous Attempts:

Previously, Lexmark only considered the direct costs of the commercial sales team, overlooking indirect costs such as additional professional services, customer service, training and education, HR, finance, marketing, and IT.

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3) The Solution

Our Approach:

Ideahouse Collective began by identifying all relevant costs and business partners necessary for a thorough analysis. We then collaborated with Lexmark’s accounting department to understand how costs were being captured within their systems.

Systems Implemented:

• Opened new cost centers to accurately book channel business expenses.
• Developed instructions for business owners to allocate expenses to new cost centers within HR, IT, professional services, and accounting systems.
• Implemented allocation processes in specific areas like customer service to capture relevant costs.

Services Provided:

We offered consultancy services and system build-out to enable Lexmark to capture and analyze the required financial data.

Collaboration:

Our team worked closely with Lexmark’s sales and finance departments. We formed a project team that provided feedback on our progress and findings. Direct collaboration with functional group members ensured accurate analysis and implementation of the new expense capture processes.

4) The Results

Key Performance Indicators (KPIs):

Success was measured by comparing the overall profitability of the commercial sales team against the margin achievable through an indirect sales model.

Quantitative Results:

• Increase margin by 8% for Commercial Sales Channel
• Restructure resulted in a 90% headcount reduction.
• Increase profits $6M due to larger in-direct sales team
• Decreased overall sales attrition by 27%

Qualitative Results:

• Simplified training and sales education processes.
• Reduced the number of job openings HR needed to support.
• Decreased customer service volume for unprofitable clients.
• Reduced the time inside sales spent on commercial clients.
• Simplified the sales organization structure and compensation plan.

Client Feedback:

Lexmark was highly satisfied with the outcome. They immediately engaged Idea House Collective for additional analytic projects, leading to a five-year partnership.

Long-term Impact:

The analysis led Lexmark to switch to a more profitable distribution channel for their software solutions. Additionally, the company benefited from a simplified business organization and streamlined processes.

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This case study highlights Ideahouse Collective’s expertise in delivering strategic solutions that address complex business challenges. Through detailed analysis, effective system implementation, and strategic collaboration, we enabled Lexmark to make informed decisions that enhanced their profitability and operational efficiency.

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