Experience on Demand

The Challenge: Ensuring volume and quality of supply matches demand in a two-sided marketplace.

The Story: Two-sided marketplace models are increasingly common, but providers often focus disproportionately on generating marketplace demand while underestimating the complexities of ensuring supply is appropriate and consistent. We analyzed SKU-level consumption patterns, customer feedback data and other operating metrics to build a comprehensive toolkit for optimizing supply and unit pricing.

The Results: Our analysis conclusively demonstrated that while the marketplace demonstrated classic price elasticity of demand, demand for individual suppliers--subject to specific operating characteristics--is highly price inelastic. Unit prices were adjusted to achieve optimum utilization of inventory and the company (and many suppliers) benefitted from higher margins which further reinforced customer inelastic demand through price signaling.

The Challenge: Generating optimal value on asset disposition when faced with multiple approaches.

The Story: A large, multi-brand company sought to exit a line of business which had substantial embedded asset value. Moderate interest from PE buyers raised the possibility of generating greater value from selling off individual assets rather than the entire brand as a whole. We modelled alternative scenarios through a simulation process, including multiple assumption sets around individual asset value, time to sale and risk of continued decline in operating performance of the surviving assets. The analysis ultimately provided a range of likely outcomes under the asset sale scenario for executive leadership to compare to the PE offers already in hand for the entire brand.

The Results: We presented our analysis and recommendation to the company’s Executive Committee, and defended our conclusions (single PE sale in this case) against a different perspective from the internal Corporate Development team (piecemeal asset sale over time). The Committee decided to follow our recommendation and consummated the PE sale shortly thereafter. Post-transaction performance of the assets suggest our recommendation generated significant incremental value relative to the alternative approach.

The Challenge: Workforce Management in High-Touch Services

The Story: A high-end consumer brand handled all inbound inquiries--both service and sales--via a single in-house contact center, but new found marketing success strained the ability of internal staff and technology to handle spikes in volume. Because the company enjoyed a very high customer LTV and differentiated itself with great customer service, management was hesitant to consider outsourcing as an option. By breaking down call types and identifying different customer expectations for each type, we were able to identify a hybrid approach that solved the company’s problem and removed sales channel constraints that blocked revenue growth opportunities.

The Results: After the implementation of the hybrid model, calls were intelligently routed to a mix of internal and flexible external contact resources based on customer type, customer LTV and probability of a sale. Overall contact center costs declined relative to revenue, call abandonment declined precipitously and customer feedback on the contact center process remained very positive.

The Challenge: Targeting underserved markets without cannibalization

The Story: A direct-to-consumer company had found long term success as the high-end brand in its category, steadily increasing prices over time. While revenue and margins were strong, management recognized that a substantial part of the addressable market had been left behind as the brand had become more “high end.” We worked with a team of entrepreneurially-minded leaders within the company to reimagine the offering for a cost-conscious consumer by creating an extremely low price point constraint. This forced the team to fundamentally rethink the service offering and not just roll out a “lite” version of the flagship brand. Old ways of doing business would simply not work at the new price point.

The Results: By re-thinking the business from the ground up, the team was able to successfully launch the new brand at the very low price point. Specific strategies were developed to address challenges with customer acquisition (i.e. very low allowable CPA), technology, customer service and inventory management that ultimately proved successful. In addition, the team developed new skills in thinking creatively about problems that also benefited the flagship brand.