Caso di Studio
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?
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
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 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.