Our team have delivered projects in Australia and the UK across a number of different clients. Our work changed the way they understand their customer base and deepened their understand of their network utilisation.
Parcel Express business changes SME strategy
A parcel express business was shown that SME customers were a valuable component of profitability, and changed their strategy to lock these customers in
A road freight business realised that their SME customers were extremely profitable, but they were unsure how to segment the customer base in order to deliver the correct value proposition to the customer.
With the SME customer base consisting of many thousands of customers, a simple segmentation approach would be required that yields better profitability for the freight business and the right level of customer service for the customer.
PCG used the customer profitability model that we built to segment the customers. Customers could be grouped using any of the metrics or attributes available within the model.
Using a matrix approach and segmenting the customer base across the two dimensions of Direct Margin percentage per customer and revenue per customer provides a simple way to segregate the customer base.
- Question marks: High Margin / Low Revenue
- Stars: High Margin / High Revenue
- Ballast: Low Margin / Low Revenue
- Cash Cows: Low Margin / High Revenue
Once each customer is allocated into a segment, the strategy for each segment can be applied to the appropriate customer.
For the Question marks – Increase share of wallet or encourage extra volume. For the Stars – Retain with loyalty programs, unique value proposition, find more customers of the same nature. For the Ballast – encourage more volume or re-price. For the Cash Cows – Review to ensure margins remain acceptable and aim to keep the business.
The business managed to grow the SME business after this segment had been shrinking, contribuing to improved EBITDA %