Case Studies

Newspaper Publishers

Completed over fifty consulting engagements for multiple newspaper clients in the area of home delivery subscription pricing and revenue enhancement. Engagements have included the following:

• New-customer price elasticity - Data on current, former, and non-customers is applied in an economic model to estimate the influence of offer price, offer lengths, premiums and several other factors on the tendency for customers to subscribe to the paper and at what service frequency. These results are used to develop target offers for new customer starts.
• Existing-customer price sensitivity - Utilizing monthly transaction data, completed analyses of customer retention to understand the influence of several variables, including renewal prices, competitor pricing, and market penetration on retention rates. The conclusions are applied in the development of renewal offers for existing customers.
• Pricing strategy development - Data on incremental costs, including production, delivery, and acquisition costs, are combined with circulation and advertising revenues to measure gross profit by customer. This analysis supports the creation of a home delivery discounting strategy designed to maximize the return from each paper’s incentive budget.

Cell Phone Service Provider

Developed a Customer Lifetime Value model for the client that measured the value of current customers and estimated return on marketing spend for loyalty programs based on their retention effectiveness. The lifetime value model also supplied churn risk scores for current customers that enabled the client to proactively contact those customers most at risk for deactivating their service. Our econometric model used operating and billing data from millions of current and former customers in addition to appended demographic information.

Instant Lottery Game Manufacturer

Developed an econometric model of lottery ticket demand that identified the influence of prize structure, payout amount, game themes, play styles, economic conditions, and other variables on ticket sales. This model is applied to assist the firm optimize game sequencing and inventory management. The results of this analysis have also been used to estimate the optimal payout level and prize structure for lottery games to maximize operating margins.

Leading Fast Food Chain

Completed a study of national marketing campaign effectiveness using predictive modeling approach. Our team successfully measured the incremental sales lift from each type of marketing deployed by the client using sales data from each operating location by day. Our econometric models enabled the measurement of ROI for each marketing type of marketing spend. The models also provided valuable insights into other factors affecting sales per unit.

International Hotel Company

Measured the relationship between rooms sold through alternate channels and revenue per available room. The models were able to identify the most profitable allocation of marketing spend given the net revenue increase provided from each additional room sold by channel. The analysis included the effect of customer satisfaction, the competitive set in each market, and the brand by hotel.

Large Cable Provider

Completed an economic analysis of market size and operating model viability for a new service offering. During this engagement, the economic drivers of costs and revenue were identified and captured in a financial model that enabled the client to structure the pricing and provisioning of the service so as to maximize operating margins. The market sizing exercise validated a prior consulting firm’s conclusions, but the operating model analysis yielded insights into how best to leverage existing resources to minimize incremental costs while providing superior customer service and higher incremental revenue.

Application Developer

Assisted the client in developing the pricing strategy for a start up application developer. The client needed a pricing strategy that reflected the unique value proposition of their software. Primary and secondary research into software pricing models was conducted, as was an extensive strategy articulation effort. The objective of the engagement was to understand the nature of the application's value proposition and to develop a pricing strategy that promoted client's use of the product. A robust financial model was developed that enabled the client to perform strategic scenario analysis that demonstrated the effect of pricing changes to their operating margins.

Spend Management Solutions Provider

Completed an evaluation of pricing practices, including an in-depth assessment of the cost basis used for pricing of their software and consulting services, and provided recommendations for how to improve margins and customer retention using alternative pricing models. The engagement included analyses of direct operating costs, customer segments, employee compensation incentives, and competitive positioning.

Wastewater Residuals Disposal Service Provider

Assisted the company in developing a pricing strategy including acquisition and ongoing support pricing arrangements. We developed appropriate cost metrics, customer segments, and competitor strategies for consideration during pricing decisions and identified further quantitative analyses to support pricing strategy.

Global Competitive Energy Company based in the Midwest

Supported the valuation of power generating assets during a financial restructuring effort. Cash flows resulting from continued operation of the assets were estimated in addition to the valuation of the assets under an immediate sale scenario based on different potential debt structures. Structural simulations of the power market were used to forecast energy and fuel prices and capacity compensation received by generation asset operators.

Global Competitive Energy Company based in the Southeast

Created a management-reporting tool that demonstrated the influence of changing market conditions on forecasted financial measures. The report combines forecasts of revenue and costs from multiple statistical models to provide estimates of gross margin by quarter for two years. The model provides confidence intervals around the expected gross margin that reflect the level of hedging adopted by the client. A continuous improvement plan was developed that identified how the reporting tool can be enhanced through analytical, technology, and procedural changes.

Electric Utility

Developed performance measures for an electric utility's energy marketing and trading division. The effectiveness of the utility's price forecasting for fuel and energy was assessed as were the services provided during due diligence analysis for generation asset acquisitions. Performance measures were developed that aligned the organization's strategic objectives with value creation and risk assumption. The project deliverables provided effective communication of marketing and trading performance to the senior management of the utility.

Electric Power Cooperative

Analyzed and proposed recommendations to improve cost sharing across member utilities for a large electric power cooperative. Deregulation in the electric power industry and open market purchases and sales of electric power required adjustments to the cooperative billing methodology and algorithms used to assign costs to the cooperative members.

Wholesale Automobile Digital Exchange

Developed a pricing strategy for a wholesale auto exchange. Completed analyses of marginal costs, competitors and customers to formulate a strategy that maximizes profits for the exchange over the long run. Customer segmentation was performed including an analysis of the value provided to each segment by the exchange’s services. An overall pricing strategy was developed in conjunction with product bundling and two-part pricing alternatives to allow customers to self-select themselves into customer segments based on their own valuation of the exchange’s products.

Publishing Industry Digital Exchange

Managed the development of a pricing strategy and revenue model for a digital exchange in the publishing industry. The client needed a pricing strategy that generated sufficient revenue to cover the costs of the digital exchange while reflecting the substantial differences in value received by different marketplace participants. A sophisticated pricing strategy was developed that enabled market participants to self sort themselves into customer segments by offering multiple pricing alternatives that the participants could choose from. Depending on their anticipated use of the exchange, different pricing models provided more value to the customer and enabled the exchange to predict behavior of the customer on the site.

Internet-based OTC Commodity Exchange

Developed a financial projection model to estimate the future revenue and cost flows by commodity/geography based market. Financial projections incorporated competitive pricing pressures, Internet and bandwidth costs, technology adoption curves, and all other sources of cost and revenue for this global company. Detailed market analysis was completed in cooperation with leading research firms. Representing the model and projections to investment banking firms and documenting risks and assumptions was a critical component of the engagement’s success.

Food Ingredients Digital Exchange

Developed revenue model for food ingredients digital exchange. Documented the client's competitive strategy, bundled their proposed services for initial market offering, identified customer segments and value proposition for each service. Applied revenue models for each service to capture value created by the exchange. Set initial price points based on analysis of the firm's cost structure, the value provided to the exchange participants, and the competitive prices. A quantitative model of revenues and costs was developed for the client.

Management Services Provider

Managed a project to develop a business plan, market research report, and venture capital presentation for a technology start up. A strategy articulation session was held with the client's management team to extend their current strategy to new business opportunities. Market research and an industry analysis were conducted to support the client's strategic decisions and the venture capital funding presentations given by the firm. Direct research with the firm's current and potential customers enabled the client to offer their services to the market with revenue models that were consistent with market needs and their own strategic direction. The client received venture funding utilizing the deliverables from this project.

International Meat & Poultry Digital Exchange

Developed financial model in support of the business plan and venture capital presentation for an international meat and poultry digital exchange. Facilitated pricing strategy discussion with client to bundle proposed service offerings, identify target customer segments and define the value proposition to each segment. Revenue models were selected for each service bundle and preliminary price points were selected. A quantitative analysis of the revenue and costs was completed.

Multinational Financial Services Firm

Characterized the eCommerce strategic opportunity for a multinational financial services firm as it related to B2B digital exchanges. Identified potential services within the core competency of the financial services firm that would be of value to digital exchanges and their participants. Provided the client with an opportunity description that described the relevant industry forces and outlined a framework for further analysis.

Temporary Staffing Agency

Analyzed operating costs for a large temporary staffing agency in support of an integration of corporate support processes. The cost analysis identified the current cost structure and productivity levels in multiple corporate locations. The analysis was used as the basis for a business plan that provided recommendations on how to integrate support operations into one location following a large acquisition.

Large Hospital

Managed a project to develop an analysis methodology and reporting framework focused on procurement expense for a large hospital. The analysis methodology enabled the client to understand the drivers of procurement expense and decompose cost changes into the source components. A database tool was developed that automated the analysis methodology for the client, including data capture and formatting, so that the analysis could be completed and the results reported on a monthly basis. The tool also reconciled the supplies expense to the client's general ledger.

Telecommunications Company

Managed a project to correct the tax status of wireless telephone customers in the billing system of a large telecommunications company. A pending audit with substantial fines required that the work be completed in a very aggressive time frame. A strategy for dealing with customers affected by the tax status change, and who would perceive higher prices for the wireless service as a result, was developed and incorporated into the project's implementation efforts.

Satellite Broadcasting Company

Developed recommendations for sharing common capital equipment costs across four partners in a satellite broadcasting company. The cost sharing arrangement developed for the initial partnership was no longer relevant given new product offerings and market changes. The existing cost sharing arrangement led to non optimal strategic and pricing decisions, which would be alleviated given a new cost sharing arrangement.

International Shipping Lane

Completed an analysis of operating costs in support of a market based pricing system for an international shipping lane. The cost measures were coupled with market sensitivity estimates to derive market based price levels for canal transits. The market based pricing system was to be implemented following the transition of the canal to new ownership.