Services & Programs

Revenue Optimization

Companies today are experiencing significant challenges in growing their top-line. Increased competition and reduced consumer spending leads the list of hurdles a business must face. And while expense reduction is a viable solution for delivering profits, long term sustainability demands a balanced approach with an equally deep focus on revenue optimization.

Generally, a firm has two ways to approach the challenge of revenue optimization. The defensive approach focuses on improving relationships with the current customer base through appropriate segmentation, optimized customer experience definition (CED) and enhanced management. The offensive approach seeks increased sales through new relationship acquisition and improved penetration into existing relationships. These two strategies require distinctly different execution, however they are complimentary in the way they enhance the organization’s top line.

CUSTOMER RETENTION: Everyone talks about customer retention, but execution generally falls short. Do you have a cohesive strategy for retention? Studies across industries have shown that if you increase customer retention by just 5 percent, you can increase profits by 25 percent or more. Banks are particularly vulnerable to having their customer ranks siphoned off by "stealth" competitors such as brokerages, mutual funds and consumer finance companies. Why? Because unlike these competitors, banks have traditionally lacked a 360 degree view into their customers.

The problem exists and can be diagnosed. So how do you proceed? To begin with:

  • Visit the current segmentation strategy, ensure it is still relevant and that all stakeholders understand how it fits in with product/service strategy.
  • Perform a Customer Experience Definition (CED) process to articulate requirements of customer treatment both from the business and customer perspective.
  • Target the right customers. Core customers who are the most profitable at appropriate cost levels.
  • Cater to the end user of the product and service.
  • Mass customization is essential in the new fragmented marketplace.
  • One-to-one marketing is essential to "knowing your customer" and keeping them over time.
  • Institute service management and measurement to constantly monitor service performance.
  • Develop appropriate and meaningful measures to focus the management process on customer retention.
  • Learn from customer defections by performing source/cause analysis and fixing the root problem.

INCREASING REVENUE: If management is willing to make the commitment of focus and resources to be successful, there are several options for the firm seeking to increase revenues:

  • Market effectiveness that matches market opportunities to the firm's capabilities through segmentation and focused targeting of products and services, and then structures the sales effort to this end.
  • Sales rationalization that maximizes sales productivity and minimizes customer acquisition costs.
  • Differentiation strategy that presents opportunities for premium pricing as well as increased sales volume to particular unique micro markets.
  • Complementary products (bundling) and cross-subsidization that supports differentiation and enhances revenues.
  • Identification of adjacent revenue opportunities, which could include fee for services, partner products and re-pricing prospects.
  • Identification of product, service and channel enhancements.
  • Revenue management that customizes price according to customer value in small unique segments of the market place.

THE LOBUE APPROACH

LoBue works with clients to develop a more objective, focused and useful means of measuring and enhancing revenues. The effort includes:

  • Identification, and analysis of revenue sources and associated strengths in each business line or department.
  • Organizational Optimization to ensure appropriate focus against all available revenue opportunities.
  • Segment clarification and clear Customer Experience Definition (CED) for understanding and managing ongoing revenue opportunities.
  • Identification and implementation of tactical product, service and channel enhancements to maximize revenue opportunities from existing strengths.
  • Identification of critical success factors and key performance indicators, as well as benchmarks for each.
  • Enhancement or development of revenue measurement, tracking and reporting mechanisms.
  • Enhancement or development of strategies for both customer retention and sales management appropriate to each business line or department.
  • Implementation of the new revenue structure and mechanisms.

REAL RESULTS

Senior and department level management is provided with superior decision making tools and information in detailed and objective terms that enable them to address current revenue opportunities ensuring that:

  • Departmental efforts are aligned with corporate goals.
  • There is a clear organizational understanding of customer segments and contribution each one brings to the top line.
  • Revenue structures accurately and completely reflect the current operational environment.
  • All sources of revenue appropriate to the firm’s competitive strengths are targeted. Revenue increase ranges from 20%-40%.
  • Sales productivity is optimized (typical range is a sustainable 25%-50% increase in roll rate) and customer retention is maximized.
  • Revenue information is timely, accurate and focused for maximum relevance and usefulness. Cost of sales improvement ranges from 20% to 40%.

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