A New Market Opportunity

Rubicon’s strategy delivered a total market opportunity to the client in excess of $2B

A leading global software solutions company engaged Rubicon to recommend a strategy regarding the creation of a new consumer services business unit. Rubicon’s deliverables included general strategic advice, assessment of the total available market, identification of customer needs, and quantitative and qualitative research to characterize the opportunity.

The success of the original engagement resulted in two follow-on projects. The first was detailed strategic planning to define the specific service offerings that would lead to the quickest customer uptake. For this engagement Rubicon played a prominent role in the analysis of competitive threats, identification of unique competitive advantages and financial modeling. The second project was the development of tools to communicate the opportunity to the C-suite.

About the client

A Fortune 500 global software solutions company with a worldwide customer base, this client’s products are used by government and business entities, as well as consumers.

The challenge

The company knew there was an opportunity to sell services, but had few hard facts regarding the market.

Rubicon’s engagements were performed by principals experienced in strategic analysis, product planning, and detailed, high-value qualitative and quantitative research. The engagement required Rubicon to reach across multiple lines of business and develop an initial strategy that would produce buy-in for the services business unit strategy throughout the corporation.

Two subsequent projects challenged Rubicon to present a specific product plan, TAM and communication tools that would persuade the C-suite to greenlight the opportunity.

The work

The core of Rubicon’s work in all of these engagements was working with the executive leadership of the business unit to visualize how they could create a major new franchise in services. This comprehensive process included formulating strategy, analyzing competitive threats, identifying unique competitive advantages, and modeling the financials.

For the initial engagement, Rubicon interviewed a group of randomly-selected adults whose profiles matched potential customers. Key learnings included customer fear of poor response and language problems, the importance of offer specificity, and the desire for in-home services.

With this information in hand, Rubicon set up the methodology for a quantitative study of 2,700 US adults using the client’s segmentation. The insights gained resulted in a complete shift in thinking. The true opportunity turned out to be an integrated offering that included software and services and delivered a benefit users cared about. The opportunity was actually a business model, not a product. Rubicon outlined the commitment involved and discovered that bigger, flexible services that evoked a sense of commitment to the user performed well. Users had little interest in generic or single-issue services.

It was calculated that the strategy would produce significant sales based on questions Rubicon asked about users’ needs, wants and what they would pay for.

Rubicon also recommended a profitability analysis, a segmentation study, development of channel strategies and test marketing. Findings were provided for channels, segments, and customers, relating each area to four different offers.

In the first follow-on engagement, Rubicon performed the segmentation study it recommended. A full bottom-up TAM was developed using three quantitative research studies that revealed 38% of consumer PC owners would be interested in at least one offering. The market was found to be significantly larger than expected, and an opportunity was uncovered for a trusted brand name to provide services with specific, highly valued benefits. Rubicon tested bundles against standalone services and developed an effective strategy to take advantage of the opportunity.

The third engagement in the sequence involved the development of presentation tools for the C-suite. Details included the business unit’s quarter over quarter growth, its contribution to increased customer satisfaction, the industry attitude toward services and a three-phase strategy for moving from the current set of offers to services that reached into “the cloud.”

Keys to success

Rubicon brought more than 30 years of experience in strategy formulation, analysis of competitive threats, the identification of unique competitive advantages and financial modeling. Its knowledge of tech industry customers, channels, pricing, and markets are equally deep.

Rubicon’s extensive experience in pricing and segmentation enabled it to “pre-configure” offers that were most likely to appeal to the various customers targeted, saving time and additional research. The firm ferreted out the single best solution for profitable further expansion into services.

Qualitative interviews set the foundation for quantitative research that revealed what customers wanted, what they were willing to pay and the cumulative market opportunity.

Rubicon’s ability to work successfully with large, diverse internal teams with competing agendas was considered a critical component that led to the three successive engagements.

The results

Rubicon’s strategy delivered a total market opportunity to the client in excess of $2B.

The client identified three channels for use, and expects to exceed current margins in each based on Rubicon’s research and recommendations.

The client views Rubicon’s strategy as a vehicle that can add exceptional value for company shareholders. A significant PR plan to support the strategy has been proposed to further heighten the firm’s reputation among its core investors and potential customers.