Our client was looking to restructure their distribution network to increase its effectiveness given the changing needs and attitudes of customers. This was in reaction both to an aggressive shift on the part of the clients’ competitors as well as a customer preference for an electronic distribution channel for financial services products.
Our goal was to develop a strategy for changing the client’s approach to the distribution of Financial Service products that would be more convenient for the customer and able to produce higher sales at lower costs. We also wanted to develop tangible market-level plans (based on the strategy) which could be implemented over the short-medium term.
We worked initially to understand competitors’ practices and the economics of these different practices. We also developed a model to help determine the economic stakes of restructuring the client’s network (both expected costs and potential gains), assuming the adoption of select best practices from competitors and other retailers.
Based on this model, we prioritized the elements to be restructured focusing on the ideas/options that yielded the most impact. We developed analytical frameworks and models to determine the optimal network configuration with regards to various factors such as:
- Market saturation
- Optimal mix of different outlet types
- Outlet locations
- Customer usage preference
We analyzed the revenue, cost, and investment trade-offs among reconfiguration options and also worked on-site with market managers to understand market-specific issues.
We developed detailed market-level plans for reconfigured networks, resulting in significant savings and improved sales generation capability. This improved customer convenience (locations and hours) and reduced cost to serve customers (including more self-servicing). It also led to improved sales performance. We worked jointly with the client implementing the new network plan, which had significant impact on the client’s bottom line.