Plural helped our client, a leading provider of agricultural commodities, identify a $2bn gross profit uplift by moving away from a ‘one-size-fits-all’ offering to serving its customers in a more targeted way, leading to improved customer satisfaction and retention, and driving growth and share gain.
Our client was operating in challenging market conditions, facing disruptive new entrants as well as operational challenges and employee churn which had put pressure on profits and growth momentum. Our solution combined ‘quick wins’ that could be executed immediately, with long-term strategic initiatives by adapting the go-to-market strategy to a ‘customer-first’ approach.
Even in commoditised markets, customers have different needs
Despite operating in a highly commoditised market, we found that our client’s customers had different purchasing behaviours despite having outwardly similar characteristics. We identified three distinct behavioural segments with clearly different needs. For example:
- One customer segment had a more conservative mindset and wanted to ensure the continuity of their business without taking risks. This group prioritised value-added solutions and face-to-face advice over price.
- In contrast, another customer group had strong ambitions to grow by improving efficiency. This group didn’t value face-to-face relationships but needed digital self-serve solutions and flexible delivery to support their business goals.
At the heart of the solution was needs-based customer segmentation, built on in-depth qualitative and quantitative research with a machine learning cluster analysis on a sample of over one thousand current and prospective customers.
Driving long-term value creation through a refreshed go-to-market (GTM)
Once the behavioural customer segments were identified, our client realised they were ‘overserving’ some customers and ‘underserving’ another large group of customers. The commercial team achieved significant upsell results in only two months by changing the service levels to meet customer needs. Moreover, it could reallocate resources away from segments that a digitally enhanced, low-touch model could serve without negative impact.
To capture long-term value, we worked with our client to develop targeted value propositions for customer segments with the most potential for future growth. The ‘winning value propositions’ focused on meeting individual segment needs and establishing a competitive edge that competitors could not easily replicate. To drive the development of these propositions, strategic initiatives were launched to build and improve capabilities in value-added services, account management and digital solutions.
How to become a customer-first organisation
Customer segmentation is a powerful tool for identifying pockets of value. However, becoming a truly customer-first organisation and driving margin uplift is challenging for most organisations for various reasons, such as added complexity and lack of buy-in from customer facing teams.
To ensure that a customer-first approach was adopted within our client’s organisation, our engagement focused on:
- Generating buy-in and establishing segmentation champions. We ran multiple workshops and ‘role-storming’ sessions with rich customer personas, which enabled commercial teams to ‘think like the customer’ and take full ownership of the segmentation.
- Demonstrating results early. To maintain momentum, our pilot showed how changing service levels to meet customer needs led to a positive margin uplift within months.
- Keeping it actionable. To reduce fears of added complexity, several tools (including CRM plug-ins, reporting and best-practice guides) were incorporated into the organisation to reduce the burden of additional reporting and identifying customer needs.
Ultimately, our client had clarity on which market segments it should focus on and the strategic roadmap to capture its $2bn growth ambition. Moreover, our work transformed how our client thinks about customers. The organisation moved from a culture focused on ‘what can we sell to our customers?’ to ‘what do customers need?’. This was the catalyst for the team to rethink their go-to-market, and it re-energised the organisation to find new, innovative ways to bring value to their customers.