Unlocking >£20M in Increased Gross Margin at a Major Health Insurer
The issue
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Shrinking customer base
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13 legacy books and numerous policy variants causing customer and staff confusion
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Operationally complex to manage – high cost to serve
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Existing proposition and pricing created trigger points for customer exit
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Customers not segmented by value
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No differentiated renewal or save strategies
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Not pricing for risk or maximised value retention
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Poor customer journey: passed from function to function, advisors not empowered
Solution
- Designed and executed a pricing, product and service migration of all policyholders to one new modular product
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- Developed new proposition which drove retention of high value customers and higher return from lower value customers
- Built in upgrade/downgrade ‘right-size’ choices to mitigate competitor switching
- Created pricing engine enabling all business to move to NCD-based policies and set renewal premiums to optimise gross margin
- Cut expected IT lead time to launch from 12 to 3 months
- Changed customer communications and management processes to de-risk customer disruption and loss
- Engaged Legal and regulator on ‘automatic renewal’ plans throughout
- Piloted the transition on 2 highest lapse-risk books to ensure error-free process and no adverse increase in lapse rates
The results
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Exceeded the £20Mpa gross margin improvement target
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Reduced customer loss by 25%
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Improved operating cost ratio from 30% to 16% with greatly improved IT flexibility
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Excellent customer and FSA feedback
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Successfully rolled out from personal to SME & Group schemes
Find out how we can solve the key challenges facing your organisation
Leveraging effective negotiation to deliver up to 50% more value for a major international airport
The issue
- Frontline ‘negotiators’ not trained – Teams lacked clarity on effective, strategic negotiations
- Power balance leaning to suppliers – Although the airport had leverage, suppliers secured favourable contract terms
- Costs above benchmark – Costs were identifed as 20% to 40% above benchmark for critical success
Solution
- Benchmarking & Research
- Gained clarity on the as-is situation. Conducted supplier forum
- Build Strategy
- Tenders, direct negotiations, demand management
- Deliver Negotitations
- Reduced costs, and aligned supplier contracts with strategic goals
- Train Stakeholders
- Equipped them with best practices to ensure long-term value in contracts
- Operating Model Change
- Ensured cost savings are locked in the organisation for the long term
- Build Future Roadmap
- So the organisation can use the training and model to deliver further savings
The results
- Training and Development of Client Team
- Empowered the client team with strategic procurement and negotiation skills, resulting in more balanced contracts and enhanced decision-making capabilities
- Client – Supplier Power Dynamic Changed
- Rebalanced power dynamics, shifting leverage back to the client and achieving more favourable contract terms
- Cost Reductions Delivered
- Achieved over $7 million (AUD) in savings and improved negotiation outcomes by up to 50%
Find out how we can solve the key challenges facing your organisation
5-year strategic plan to uplift recurring revenue by 80% through organic growth within four years
The issue
- Our clients was experiencing significant changes in the largest customer segment
- Leading to a material decline in client revenues
- EBITDA fell below business case targets
Solution
- Sized the UK medical consumables market for 10 segment, including private acute, NHS, care homes
- Created a vision for the organisation in collaboration with the client senior leadership team
- Shortlisted target segments to drive organic growth
- Developed win strategies and business model options for each segment
- Identified approaches to extend treatment and care pathways into a patient’s home
- Developed a 5-year financial plan including revenue projections and investments required
The results
- Identified multiple growth pathways to reach 80% revenue growth within four years
- Developed a balanced framework of win strategies to drive incremental revenue and EBITDA growth
- Generated a 5-year strategic plan, go-to-market launch and implementation roadmap to capture the identified incremental income
Find out how we can solve the key challenges facing your organisation
Driving market focused resource allocation decisions
The issue
- A business unit of a global speciality chemicals producer supplying catalysts for industrial applications to multiple markets across all geographies
- Capacity constrained and being challenged to improve overall business profitability
- Shared manufacturing assets serving multiple market-facing business units
- Upcoming regulatory changes required product recipe changes with implications on the existing production process
- Limited attempts to address supply constraints in an effective manner, with over-stated demand and poor sales & operations planning disciplines
Solution
- Establish & exploit true production capacity of existing assets:
- Identification and elimination of bottlenecks in supply chain & productions
- Drive for OEE in existing plant (batch size & sequencing, down time & maintenance etc.)
- Identify options to reallocate capacity use to more profitable customers
- Identification of customers & volumes yielding below average contribution allowing for either renegotiation or re-allocation
- Establish cross-market segment view of long-term demand
- Markets & functions created fact base & presented in facilitated cross functional sessions to build cross markets view & build priorities for overall business
- Revamped S&OP including product profitability of prospect pipeline to ensure capacity is utilised for highest financial returns
The results
- CAPEX spend avoidance of £18m with extrapolated implications to the whole division of c. £100m
- Improved joint-management understanding on the levers of capacity & profitability, supported by a cross-market decision making governance process to make data based trade-offs
- Increased production capacity through de-bottlenecking (e.g. batch sequence & maintenance optimisation) with potential resulting contribution uplift of ~ £ 10m p.a.
- 235 tonnes of unlocked capacity through selective elimination of low margin product variants and Sales re-alignment
An award-winning team
