In an effort to expand into new markets, FinancialCo* had lost sight of the customer segments that its business model could best serve. As a result, the company failed to innovate where it mattered most; losing business to market leaders with better service, or newcomers with better technology, or both. When the economy hit a downturn, this lack of focus translated into a decline of market cap of more than 75%.
FinancialCo's point of departure was a relatively strong one, thanks to its robust brand and solid capital structure, but aggressive competitors heightened urgency. Management needed to work on multiple fronts to right-size internal infrastructure while reaching out to the customers it needed to regain market share.
Working with Bain, FinancialCo's management team decided to make operational changes in parallel with longer-term strategic shifts involving the sale of one business unit and new directions for the remaining two.
- Step one: Make operational cost cuts that created quick wins and freed up cash flow.
- Step two: Roll out a new set of customer-facing initiatives designed to improve customer loyalty as measured through Net Promoter® scores.
- Step three: Realign the organization around the new strategy that had evolved in the ensuing time.
To refresh the strategy, our transformation consultants helped the company redefine its core business and, accordingly, prepare one business unit for sale. A new CEO helped focus the firm on cost management and also organized the effort by appointing a Chief Transformation Officer to lead the way.
To reduce costs, the company identified fast ways to streamline IT and shrink its real estate footprint that erased 15% of its initial costs. It also reduced its advertising sharply.
To renew the focus on customers, FinancialCo began closely tracking customer loyalty, an exercise which helped it identify new customer segments to target as well as new steps to take with existing customers.
It then realigned the organization to work within the new cost base and serve customers better.
Within five years, FinancialCo regained its footing as the full results of the transformation took hold:
- More than $500 million in reduced operational costs
- A 50-point increase in NPS (customer loyalty scores) among both existing and new customers
- Revenues grew 250%
- Stock price rose 100%
Net Promoter® and NPS® are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
* We take our clients' confidentiality seriously. While we've changed their names, the results are real.