Understanding the dynamics of your business

Client need:
Manufacturing goods in the UK and then selling them profitably is a difficult task these days.  On the one hand the relatively high cost base of having factories in the UK means that tight control of costs is imperative, whilst on the other hand competing in a saturated market place requires exceptionally sensitive pricing strategies. 

Our client for this project had all these elements (and more) to balance in his business.  Their products were sold through a complicated combination of direct sales, a network of agents and distributors and a few strategically placed wholesale groups.  To make things more complicated, the products themselves were often specified by a separate network of designers and fitters.

Our client had noticed that, although the overall revenue from sales of their products was increasing, the same was not true of the volume of customers who were buying them. 

Market research objectives:
Our client asked us to perform detailed analysis of their customer dynamics to discover what was behind the observed trends, specifically showing the balance between customer attrition, customer growth/decline, and new customer build.  All this analysis was performed across all the sales channels used by our client, as well as over three years of business data.

Our approach to this detailed research was to start the analysis at individual transaction level, building up time series of transactions by product group and sales channel so that we could clearly see what was changing.  This involved considerable manipulation of the 3.2 million transactional records in the client’s database.  A key element of this was the computation of a series of indexes that allowed rolling year growth or decline to be easily established, and its effect on segment sales to be clearly seen.

Key outcomes:
Though the overall sales were increasing, there were, perhaps unsurprisingly, some combinations of channel and product area where the sales performance was in decline.  Further drilling down into these areas allowed us to highlight which specific accounts the decline was from.  It was clear from comparison of the analysis and our client’s strategic targets where the shortfalls were.  Using this information, the client was able to direct sales and marketing effort into those areas that were key to the business, significantly strengthening its overall robustness.

The market research results presented to our client identified those aspects of the business which needed additional support and development.  More importantly, through rational, targeted redirection of effort, revenues were recovered without any increase to costs, preserving the profitability of that revenue for our client.