Business type: Online start-up
Industry: IT Services
Product: Documents to serve the construction industry
Platform: B2B E-commerce
Result: 35-40% projected increase in revenue over current annual run rate
Over their 100+ year history, this client has developed hundreds of forms and documents to assist architects, contractors, and owners in the execution of construction and design projects. Over time, these documents have been refined and proven to reduce risk and costs in the construction process resulting in our client developing an unprecedented level of trust & brand equity. Without these forms, contractors can find themselves in legal battles over millions of dollars due to delays in productivity and overall expected timelines while partnering with endless vendors and contractors.
As a non-profit organization, the client found themselves in a situation of significant demand. They decided to spin off as a for-profit organization while unsure how best to serve their fast-growing retail customer base and keep them invested for the long term. New competition was also entering their market, and the business was structured for two sales options: sell the documents either one-by-one, or through an all-access subscription purchased through the website. They needed a more sustainable model to better serve their customers, bring in more revenue, and implement it as quickly as possible.
Market Basket Analysis for B2B Retail
In a market basket analysis, analysts mine data about customer behavior. They can then use that information to restructure a business’ offerings into bundles. While Market Basket Analysis is commonly used by retailers (e.g., consumers buy beer and peanuts at the same time), we found it’s a technique to inform bundles in a B2B environment.
First, we dissected the existing customer data. Then we reached out to customers to learn more about their user journey. We spoke to internal staff in different departments to uncover insights about the product and customer experience that the decision makers might be unaware of. We needed to know, from the customers, what they were buying and why.
What the data revealed:
The single download model was not enough, and the full subscription model was too much, especially for niche businesses who only needed specific documents and bundles for their projects.
Redesigning the Bundling Strategy
The data made it apparent we needed to map out a new pricing strategy based on offering different kinds of subscriptions. We kept the one-off offer but built upon it with subscriptions better suited for certain buyers—the architects, contractors, and lawyers—and for the size of their businesses. By creating a continuum of subscriptions dedicated to the very specific needs of their different customer types, the business is now able to secure long-term subscribers who get the products they want. Customer segments with the most basic needs now had entry level bundles reflective of their needs. Our client now had the ability to grow with their customers as they mature and require more complex, higher value documents.
Educating their customers on how to use their forms was important for building connections and trust. By breaking down complex legal issues and educating customers on the ins and outs of certain forms and bundles, the client gave their customers an important value-add they didn’t have before.
If you are a business in which most interactions occur online, make sure you have a data collection plan in place. Also, find ways of talking to your customers to gain important feedback about their needs and behaviors. From there, you might decide to bundle or do something else. Data insights and customer feedback each provide invaluable information—but together, they provide a complete picture for the value you provide. Only then can you bundle appropriately to get the price you deserve.
When all these plans are set in motion, we estimate that our client will see a 35-40% increase in revenue over their current annual run rate.