Case Study
Professional Services
A boutique brand agency utilises effective profit management processes to identify high value clients, and create tailored experiences to grow its market share of the most lucrative portion of the market.
Customer Strategy
Customer Experience Design
Marketing Program
A successful boutique brand agency had grown from a relatively small startup over the course of several years into one of the larger, well-respected companies in its business. Over time, however, the company’s financial performance had eroded. The firm’s return on sales was steadily dropping, and more recently, sales had noticeably slowed as well. Marketing costs had gone up in recent years, but it seemed that the firm had not seen much returns from their campaigns. The managing partner engaged Genova Digital to develop a marketing and sales strategy for its multi-service firm, and maximise its profitable growth.
The team began with a profit contour analysis to identify underlying patterns of profitability, which have historically been hidden by aggregate, average metrics. We discovered that most projects with clients were marginally profitable, while only a handful (about 5%) of clients were generating almost 10 times more profit than the rest. It was clear that the firm was too focused on growth at all costs that it neglected to build a sound account selection and management process. Marketing expenditure was applied homogeneously to pursue both high value and low value clients. As a result, the client base is now flooded with numerous, low potential, high maintenance customers that were taking increasing amounts of team’s resources. More importantly, the firm’s increasingly scattered portfolio was endangering the team’s ability to produce high quality work for its high value clients, and it was diluting its strategic differentiation.
Managers are often mistaken about achieving high growth by sacrificing profits. There is no trade-off between high growth and high profits. The real goal is to maximise market share within the most lucrative portion of the market.
Together with the management, we worked out an account qualification criteria that would help the sales personnel qualify incoming engagement queries. With a clearer understanding of the high value client’s profile, we then develop a marketing strategy to sell the firm’s services to prospective clients. We also worked out a plan to grow the business with the high value clients, by building their customer value footprint.
What we are trying to do with [client] here is to keep the set of allowed client relationships limited, so that we can create a tailored experience for each relationship, built with distinct management processes.
With a revised qualification criteria, the firm reduced its client count by about 55%, sales rose by about 65%, profits more than tripled and the company’s return on sales rose from 7% to 21%. Workload on the team was also alleviated, allowing its team to focus on building the high value client relationships.
Working with Genova Digital has brought clarity on our firm’s objective, and where we should be focusing our resources on. I look forward to working with them again on building processes to further our high value customer footprint.
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