Finding the value in every customer segment

A retail utility had spent many years focused on cost cutting, based on the view that valuable growth was no longer possible. It was steadily losing market share while holding customer numbers broadly flat. Several previous attempts to restart growth had stalled, despite strategy work from multiple global consulting firms over the preceding years.

The business had plenty of ideas but poor prioritisation, low buy-in from middle management, and execution issues. It lacked a clear, customer-level view of where profit actually came from, and how purchasing behaviour and willingness to pay varied across its customer base.

We started with a rigorous assessment of growth opportunities and competitive positioning, reviewing product range, customer type, pricing and channel performance, then identified and sized the key initiatives to grow share and value.

At the core was value-based micro-segmentation. We sized customer segments by their economic drivers, annual value, customer life and cost of acquisition, and tied each to targetable attributes and clear metrics like LTV to CAC and CAC payback. This revealed segments with materially different purchasing behaviour, from high-value loyal customers to price-led low-tenure and green customers, that simply could not be served well by a single brand.

Those insights drove concrete change across pricing, retention, acquisition and product: repricing unprofitable customers at renewal, micro-segmenting renewal pricing based on predicted behaviour and value, getting hyper-targeted in acquisition by channel and geography, and introducing new products and brands built around specific needs. A central growth fund, with monthly governance and initiative steering committees, made sure the best opportunities were funded and execution problems were solved as they arose.