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Guiding
Resource Allocations with Customer Equity™ Metrics
Take one Internet retail company formed from numerous acquisitions.
Add three core offerings and two divisions (business-to-business
and business-to-consumer). The tally? Frankly, not quite what
the company had hoped for. Could Integral help this client get
more value from its customer relationships, so that - on a recount
- the whole exceeds the sum of its parts?
Action: Where its business-to-consumer
segment was concerned, the client was faced with transforming
itself - culture, strategy, pricing structure, and more - to
better compete in an increasingly crowded market. In its business-to-business
division, the Internet retailer was falling short of its revenue
and profit growth expectations. Integral partnered with the
client to help them calculate the value of their customers and
to identify major drivers of their Customer Equity™.
Our consultants also defined a number of specific initiatives
that would eliminate bottlenecks, improve information flow,
and boost customer communications.
On the business-to-consumer side, Integral recommended that
the client focus on retention rather than acquisition or relationship
expansion. We also focused on customer service issues and identified
to the root causes of their high customer turnover. On the business-to-business
side, Integral recommended that the client stress customer relationship
expansion over customer retention or acquisition. The client
was doing a fine job of acquiring new customers and keeping
current ones, and was actually over-investing in these areas.
But, they were not nearly as effective as they could have been
at looking across product and geographic lines to find ways
to increase the business with customers. In this case, shifting
resources away from new-customer acquisition and toward add-on
selling was the key to profitable growth.
Results: The Internet retailer is now implementing
Integral's recommendations. With Integral's assistance, the
client's new Customer Equity™ equation should exceed
the sum of its parts. The anticipated tallies? Over $100 million
in profit improvement opportunities have been identified for
the business to consumer segment; approximately half that sum
is expected for the business-to-business segment. |
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