1 - Use customer insight to improve buying experience
A national manufacturer of paints and coatings has a clearly established product superiority; the colors are clearer and crisper, and the paint can be applied with the lowest level of effort. But the manufacturer goes to market through franchise dealers, who are independent. They resist centralized pricing and promotional initiatives. For any given promotion, more than 30% fail to participate. Growth in the past few years has all come from increasing prices; actual volume has been declining.
Atenga analysis segmented the marketplace into three segments: “loyal,” “available,” and “not available.” We documented their perception of the competitive positions of the manufacturer and its competitors. We identified each segment’s value drivers and how they differed from one another.
Using our own data resources, Atenga was able to:
- Independently identify the population of contractors who were likely customers
- Identify their perception of competitive positions of the manufacturer and its competitors
- Identify customer value drivers and how they differed
- Divide customers into “loyal,” “available” and “not available” segments
Now that we knew the market’s value drivers, it was time to engage the retailers and take action. A mailing went out to each “loyal” and “available” customer with a voucher and a service profile telling them what to expect from their local retailer. We also needed to tell the stores what their customers would be expecting.
- Sent a booklet to each store describing best practices and service levels for store engagement with customers, based on customers’ value drivers
- Built an ongoing survey process to collect continuous stream of data from each store
- Rewarded loyal customers each time they made a purchase and filled out survey
- Client was able to rate each store and provide relevant, specific resources, training and guidance
- Declining sales turned around and overall sales volume rose 3.4% over the next six months
- Worst-performing stores’ sales uplift was over 5%
2 - Use customer insight to develop an effective growth strategy
Business services company (CRO) faced its third year of zero growth. Management planned to open remote offices to be closer to their customers. The CRO engaged Atenga to help determine whether that strategy would work, and which steps would be most attractive to its customers.
The marketplace did not care about company location at all, believed that most CRO’s were about the same, and cared deeply about company’s expertise in their specific therapeutic area (cancer, arthritis, diabetes, etc.).
With a better understanding of buyers’ value drivers, the CRO took the following decisive actions:
- Abandoned the costly geographic expansion plans
- Developed specific offerings (brochures) tied to specific therapies and trained salespeople to use them
- Developed messages to differentiate themselves based on therapeutic expertise and trained salespeople to use them
The CRO not only began growing again, it was able to win business at higher prices.
- 6 months after the training, sales run rate was up 16%
- Salespeople reported marketplace had become much more receptive
- 60% of new sales came from the new offerings, which commanded higher prices
3 - Medical services company
Customer insight helps company open a new geographic service area and compete with larger competitors
A small medical services company had expertise in serving rural areas where the economics were completely different. When medicare changed its reimbursement policies it created an opportunity to expand into nine adjacent counties. Client engaged atenga to determine pricing and messaging that would enable it to compete with larger established companies already in place but not yet providing the services needed.
These insights were gained following a series of likely customer interviews:
- Buyers were very concerned about new medicare penalties for hospital re-admits. They could wipe out an entire year’s profits;
- Buyers were skeptical that existing providers understood their needs or the special challenges of providing services to rural populations at home;
- Buyers were generally aware of client’s existence and recognized their special expertise in serving rural areas
- Client put together an informative seminar explaining the new medicare policies in detail. Client presented in nine times (once/county) in the next few months
- Client created sales resources and processes to make sure buyers understood the risks that ineffective rollout would pose
- Client created three tiers of product offering, each priced per-patient-per-month to align with medicare guidelines
- Client signed up more than half the hospitals in the target area within the first six months of the program
- Competitors who offered lower prices struggled to deliver services and were reported to be losing money.
4 - Customer insight shows how to compete with inexpensive Chinese imports.
A midsized fabricator specialized in milling aluminum components to extremely fine tolerances, but was unable to command premium prices and consistently lost business to inexpensive imports.
Atenga research identified two segments that needed client’s capabilities, among the myriad of segments that did not. These segments were also appreciative of quick-response services, which foreign competitors could not match. They were willing to pay 25% higher prices. Additionally, research identified a set of services that the two market segments needed and client could easily provide that would further improve client’s value perception in the target marketplace.
- Re-engineer production processes to enable faster turnaround and more-accurate production forecasts
- Focus sales efforts on the two indicated segments
- Develop introductory offer for new customers to acquaint them with client’s tolerances, responsiveness and turnaround times
- Develop program to reward existing customers for making “all” their purchases from client
- Fewer proposals were generated. Capture rate rose from 2% to 60%
- New sales grew 34% in six months after project
- About 20% of existing customers signed up for “all” program
5 - Customer insight to create a pricing framework for anticipated explosive growth
A midsized vendor of resource mapping information had just released a product with significantly greater capabilities. The company’s pricing strategy heretofore had been deal-driven, so it was inconsistent, with wide variances in what similar customers were paying for similar services. Management believed the company was leaving significant money “on the table” and it had no criteria for pricing the new capabilities. Further, the company was anticipating explosive growth and even an ipo, and its pricing policies needed to withstand public and regulatory scrutiny.
Different segments of the market – brokers, exploration companies, lease trading companies, producers and local, state and federal regulators – used the product in significantly different ways, and achieved vastly different returns on their investment. The single most important differentiator was the level of aggregation each segment required.
- With a clear understanding of its customers’ usage profile, create access packages named and tailored for each user type.
- Create a migration plan for each significant customer, allowing them to remain on their old plan until contract expiration, but to migrate to the appropriate new plan upon contract renewal. This alone generated about 12% higher revenues.
- Assign each named package to a product manager responsible for providing support to the sales force, and for a specific growth target divided between existing and new products.
- Just the migration alone increased revenues from existing customers about 12% over the next 8 months.
- Sales in some segments skyrocketed as the tailored access methods appealed to buyers who had not previously used the vendor’s services. Sales in other segments languished and the company deployed customer insight to find the causes and remedy them.
- Overall, sales grew more than 35% in the 12 months following the project.
6 - Customer insight enables well-known technology-based services company to enter a new market
A well-known technology brand was planning to release a new line of services in the United states and Canada. The category was growing rapidly, and appeared to offer significant revenue opportunities. Company management believed that it could differentiate itself by offering seamless integration with its well-known existing products, and functionality that made it simple to update the product configuration as the surrounding infrastructure changed.
We found that the marketplace for the company’s services is largely driven by compliance obligations rather than technical needs. It managers in four sectors – finance, medical, education and aerospace -- worried that their implementation would comply with regulations that were becoming more and more stringent, and would pass regulatory audits. Of the four, finance had the highest willingness to pay, and faced the most frequent and stringent audits.
We researched the regulations that had recently been released, and also those being proposed. We generated a series of white papers, implementation guides and checklists that would enable managers to implement client’s technology with a high degree of confidence that it would pass regulatory scrutiny. Finance (dodd-frank and others) regulations were the first to be released, followed by aerospace and then education (ferpa). We trained the company’s salespeople to utilize a free compliance audit at the beginning of the sales process.
The company introduced the term ‘compliance support’ into its sales and marketing messages and began soliciting chief executives for meetings, rather than just the it managers.
By commanding the attention of chief executives, the company was able to increase the number and quality of its sales meetings. The compliance audit process proved popular and useful, improving enabling executives to monitor compliance issues as well as technical implementation. Once the company had the attention of the it managers, their update functionality won the day. The number of sales calls per month rose about 25% within 4 months after project completion, and the capture rate nearly doubled (44% from 25% previously). A byproduct was that existing customers were anxious to have the compliance audit as well, and were willing to pay for it.
7 - Insurance services
The world’s largest insurance service organization was experiencing its fifth year of declining sales. With offices in nearly every country in the world, the company was regularly beaten for deals by much smaller, competitors who served the local markets where the service was actually delivered.
Large international insurance companies and clients were looking to the company for guidance, breakthroughs, insights,and ways to improve their own businesses. They would pay a 20%-35% premium to a services vendor that could show them better ways to manage their claims processes, improve customer service and reduce the costs of processing claims in a strategic way. They perceived the service organization as a likely source for innovation, but were disappointed.
The client purchased an aggressive it services organization with innovative methods to reduce the costs of claims processing. Release of mobile applications to enable various claims management functions from the field placed the company as the #1 rated service provider for emergency services. It also purchased a consultancy specializing in reducing the incidence of accidents and injuries for its clients, and a third-party claims administrator, enabling it to offer new services to its clients.
The new suite of services enabled the company to conduct higher level conversations with its customers and establish strategic relationships. In that context the revenue value of a customer rose 18% in the 14 months following the study, and the company was able to win 35% more local engagements by virtue of its corporate relationships.
8 - SAAS company
An american supplier of saas (software-as-a-service) based project management solutions was having difficulty winning sales and faced customers unwilling to pay the prices it needed to charge. The company delivered a core functionality similar to that of its competitors, but added several extensions that vastly increased its value to the customers. The customers’ pricing pressures threatened the very survival of the company.
Price was a convenient basis for resisting sales pressures, but in fact it was not very important in customers’ decision landscape. Even so, it was more decisive among users who had never used a specialized project management solution than it was to those who had used one. For the newcomers, the actual point of resistance was buyers’ reluctance to learn something new. Experienced buyers welcomed the extensions and believed they were underpriced compared to their value.
The supplier initiated a round of webinars and physical seminars showing prospective users how to use the software and how easy it was to use. They became the company’s basic lead generation mechanism, providing an attractive initial experience with the software and the company. The sales force was trained to follow up with webinar and seminar attendees, and emphasize convenience and ease of use along with basic functionality.
Attendance at the seminars was substantial, and more than half the attendees became customers within 6 months. The company raised prices twice during those 6 months, with almost no loss of customers.
9 - Household products
An american supplier of household products built its business on a membership model. The business was adding customers at a substantial rate, but was experiencing 70% attrition each year, which made growth difficult.
Customers joined for a specific cleaning, health or environmental problems that they wanted to solve. As time went on, those problems either were solved or became less important. Even though there was a great variety in initial purchases, over time each customer’s purchase basket became more generic, more similar to everyone else’s. This homogenization preceded a customer’s termination .
As customers began to stop purchases of their distinctive products, the company began sending out coupons and motivational materials to remind them of the values that had them start. The vouchers were for their products and also for those found to be collegial.
- Identify the buying patterns most susceptible to attrition.
- Identify customers with those buying patterns.
- Identify collegial products – those which tended to be purchased together.
- Create offers based on the buying patterns, organized by level of spending. Target customers who purchased one but not another of the collegial products and offer them coupons for the other ones.
- Offer coupons effective for four successive months, to get them back into the program.
- Contact customers who have left the program and offer them coupons tailored to their products.
- The attrition rate has been cut 41% for customers receiving the mailings.
- Return rate on customers who left the program is 18%
- 24% of the rise in sales came from collegial products.