Services business changes business model to meet needs of new market segment
The Situation
This services business was looking for growth, and had chosen to enter a new market segment using their existing business model. It had been very successful in serving large national customers for years, with a high-touch, “customer intimacy” strategy.
Now they focused on smaller accounts with the same strategy. Pricing was somewhat higher for this segment, but it was unclear if that was enough to make it profitable.
Account growth was significant, but the sales were not showing up on the bottom-line profit.
The Solution
Team assessed the strategic profitability and developed business model solutions:
- Determined full- and marginal profitability for all products, customers and segments
- Identified that the company’s “growth” segment had -48% operating profit
- Facilitated executive team on strategic options for this segment
- Designed new go-to-market model and developed detailed business case
The Impact
For this new segment, the upside was substantial. The company projected a +$ 7M annual incremental profit with new business model. In addition, the new model was designed so that as this segment grew, it could grow profitably.
The work enabled leadership to envision a new, end-to-end business model that they had not considered, with all the processes, needed resources and technology laid out. Moreover, the new business fit within the overall strategy of the business and enabled them to achieve it.
Clear Performance Advisors, LLC 