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Case Study

Revenue hunt delivers for air freight company

Bain's client, an international air freight services company, was suffering from poor financial performance. Bain's analysis uncovered the root causes of the company's loss of revenue and profit. We recommended a list of quick-hit initiatives that yielded a potential profit improvement of $250 million.

  • min read

At a Glance

  • $250M potential profit improvment

The Full Story

The Situation

DeliveryCo* is an international airfreight services company. Its financial performance was suffering from declining revenues and it had had an unprofitable past year. DeliveryCo had opportunities to grow its revenues profitably through tackling several areas:

  • Reducing customer churn
  • Improving customer targeting
  • Enhancing product portfolio
  • Improving salesforce effectiveness

DeliveryCo asked Bain to address three questions:

  • Who are the most profitable customers, and how can DeliveryCo most effectively target them?
  • What are the highest impact initiatives to improve DeliveryCo's profitability?
  • What are the "quick wins" to turn around profit performance as soon as possible?

Our Approach

Bain took a typical revenue hunt approach which begins with building a fact base. This included quantifying the sources of revenue, assessing profitability of customer and product mix, evaluating sales and channel dynamics and assessing marketing and pricing effectiveness. Building the fact base uncovered:

  • Significant revenue opportunity across all major levers (see chart below)
  • Large opportunity to increase margin from high-value customer segments
  • Wide variability in pricing for different customers
  • Opportunity to increase productivity of direct salesforce channel
  • Better targeting of vertical segments with marketing efforts

Our Recommendations

Synthesis of the fact base resulted in a list of profit improvement initiatives that ranged from short to long-term programs. These initiatives were prioritized and sequenced based on value vs. ease of implementation. Benefits and risks for each program were carefully weighed.

Initiatives were grouped into change programs worth ~$100M in profit.

The Results

The profit improvement initiative started in April and delivered EBIT improvement within the same year.

 

 

* We take our clients' confidentiality seriously. While we've changed their names, the results are real. 

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