Case Studies

Profit Insight Partners – Case Studies

Electronics

Situation: A leading European consumer electronics retailer experienced considerable events relating to the impact of pricing on customer demand. This fuelled a desire to understand and embed a scientific approach to pricing, to prevent future occurrences and to positively leverage for ongoing increased profitability.

Winning Initiatives: End of Lifecycle Product Clearance – financial audit of the aged stock impact on working capital, and identification of primary issue areas during the clearance cycle. Creation of a desktop markdown tool to direct merchandisers’ decision making, by identifying and recommending prices of clearance items. Process redesign and responsibilities, to enable synchronised execution from head office through to store shelf. Tactical Pricing Execution development of a pricing framework, aligned to the business growth strategy (clicks and mortar) and shaped by research into customer price perception of the brands. Extension of the desktop tool to facilitate in-lifecycle pricing recommendations, driven by item price elasticity and bounded by business rules.

Results: The new approach to pricing, based on a quantifiable understanding of price and demand, and supported by desktop tools enabled tangible benefits realisation in under ten weeks.

Noticeable clearance sales uplifts due to price reductions and an improved level of forecast accuracy, delivered a significant reduction of aged stock and a net profit gain of 1% to 1.5%. The regular pricing activities were incorporated into the annual business financial forecast, to generate a 2%pts to 4%pts incremental gain in net profit.

Less tangible, but vital in enabling sustainable success, is the internal mindset and reward structure which has moved from solely a weekly focus on percentage margin, to incorporate extended periods of actual Pound value margin realised.

Telecoms

Situation: In 2008 this mobile operator faced increased customer churn relative to competitors. The Operator reduced its tariffs on key products as a response, but this did not help customer retention.

Winning initiatives: Customer research and segmentation for developing new products, price plans and attractive bundles; Development of innovative pricing strategies helped with create value-for-money for customers, while offering improved margins for operator; Branding, channel and marketing programme raised mobile operator’s perception in the market and improved sales and retention.

Results: Customer churn decreased by 10%; Customer acquisition increased by a 1.3x; Brand perception of the company increased, both for consumers and for B2B channels.

Retail

Situation: As part of its revival strategy in 2005, a dominant UK books retailer had identified proactive product availability as a key lever in reversing a declining sales trend. An increasing focus on top selling books from the multiples had polarised the market forcing this client to evaluate their strategic offer against different competitors.

Winning Initiatives: Active Full Lifecycle Focus – seamlessly redesigning multiple business processes into a homogenous feedback routine, to administer all stages of each item’s lifecycle continuously through the business. The provision of analytical sales pattern forecasting for new launches, based on previous titles exhibiting similar attributes; Market Driven Ranging – bespoke analytical routines developed to enhance the existing data infrastructure, providing intricate information conveyed through simple reports. Proactive recommendations for item-store level ranging decisions to maximise sales for the top selling 5000 books, based on internal and market sales trends, balanced with exit recommendations for the remaining catalogue.

Results: The error rate for new item-setup check-points reduced to a negligible level with all completions occurring pre-deadline, preventing lost sales at launch due to availability issues. Given that 80% of a new title’s sales can occur by the fourth week, prevention is the only cure; A successful pilot migrated into business as usual, with the client Finance team reporting an exceeded first year result against a business case of £9.2M incremental sales; A targeted reduction of £20M in working capital was released, through identification and exit enablement of the previously 140% excess stock holding.

Banking

Situation: In 2007, this bank began offering discount brokerage services. Its goal was to drive top-line revenue growth by cross-selling its discount brokerage products to its existing customer base. However, conversion rates associated with current marketing efforts strategies would not deliver their aggressive FY07 targets for new brokerage accounts.

Winning Initiatives: Customer Segmentation and Predictive Modelling – building behavioural segmentation and predictive models for designing campaigns, developing campaign offers and determining optimal channels; Data Management – identified and extracted key customer data for building cross-sell models and data cleansing, including an enhancement of data with external demographic data sources; Marketing Program Development, Execution, and Measurement.

Results: Over 2,000 new brokerage accounts were opened in one year in response to the initiative. For its outbound calling campaign, the bank experienced a 60x improvement in conversion rates over the historical baseline in small-scale campaigns. The bank‘s e-mail campaigns to online banking customers had 1.5x improvement in conversion rate over historical baseline while its e-mail campaigns to offline banking customers – for which no historical baselines were available – demonstrated continual improvements in conversion rate over time; the final campaign had 2x improvement in conversion rate over the first campaign.