Leveraging "Sweet Spot" Customers to Drive Profits for a National Printing Company
Client Situation
Our client was a national printing company in need of a turnaround. The division had experienced significant losses for the past two years due to declining sales and huge customer churn, driving the corporate parent to question whether they should keep the business. The division was poorly positioned as a high-cost producer fighting a price war in an industry struggling with excess capacity. The corporate parent believed that all customers were driven solely by price and that there were few meaningful differences between segments.
Demand Strategy Approach
The Cambridge Group developed a Demand Landscape to determine the profit drivers for the industry, including market economics and the industry value chain. We assessed the client’s competitive position and key options for improvement. We also modeled the characteristics of "sweetspot" customer segments and defined the best way to reach them through alliances.
Results
- The client was able to identify and focus on profitable customers
- Near-term "sweetspot" focus significantly improved economics for the division with conservative estimates of a 39% increase in gross profit and a 19% increase in profit margin
- Streamlined the company's print assets and aggregated demand across a network – resulting in million-dollar savings
- Given the near-term solution and the attractive long-term option, corporate determined not to exit the business after all