Assignment task:
Woof Dog Food Company (home delivery, super premium organic/healthy dog food) has been in business for 10 years and has leveled out at 400 customers. Most spend $2,000 per year with Woof. Most dogs live to be 16 years. Woof's customers average 1.2 dogs. Small dogs eat 65% of average dogs, large dogs eat 120% of average dogs. Woof's customer mix (dogs) = 25% small dogs, 50% average dogs, 25% large dogs. 25% of customers have 2 dogs. 10% have 3 dogs. Woof loses approximately 20% of customers (dogs) per year for a variety of reasons and can get approximately 80 - 100 new dogs per year. Woof's dog's ages break down as follows: Puppies (0 - 1) = 5%, 1-3-year-olds (10%), 4-8-year-olds (50%), 9-12-year-olds (20%), 13-20-year-olds (15%). The average customer (dog) stays with Woof for 8 years.
In talking with the owner, you believe his 1:1 approach isn't scalable. In taking with his peers in other markets, those that have been successful have built additional sales channels beyond delivery. The owner has territory exclusivity for Kansas and Missouri and like a Budweiser distributor or Coke bottler, has enormous latitude to market and grow within his territory. He's had 5+ years of customer acquisition in 1's and 2's, but needs to change his entire sales and marketing strategy to gain 200+ per month.
Woof currently offers one free month of food ($166 retail) to new customers who sign up (home delivery) and offer current customers 2 months free for referrals ($333 retail). Woof's marketing includes social media posts, door hangers, and booths at local consumer shows (Lawn & Garden). Woof has 1 part time employee in addition to the owner who wears all hats including delivery, sales, marketing, operations. Woof marks-up each bag of dog food 35%. Woof's operating costs (including labor) is 65% of revenue. The owner is making a classic mistake of "working in the business" vs. "working on the business." Each day is spent reacting vs. any time spent planning and growing. Lots of daily "activity" in search of a strategy. You've been hired as a marketing consultant to First, analyze the business, and Second, provide a marketing strategy for growth to a new customer base of 4000 (10x).
Assignment Part One: Analysis:
Show math:
- What is the Customer Lifetime Value? By customer segment?
- How much should Woof spend to get a customer?
- What is Break-Even?
- What's a Customer Worth?
- Analyze the Category
- Analyze the Brand
- Analyze the Business
- Analyze the Marketing
- Identify the Key Issues that need to be addressed
Assignment Part Two: Marketing Strategy:
- What is the Current marketing strategy(s)
- What Does Winning Look Like?
- Who Will We Win With?
- How Will We Win? (What should the marketing strategy be)
- What are your recommendations