Financial planning for a subscription business model
Oak Lawn Marketing partnered with TimeLife Australia and bareMinerals to introduce subscription products for CD/DVD sets and cosmetics to Japanese consumers. This venture marked a significant shift from the company’s traditional direct marketing approach of selling high-priced, one-time products that delivered immediate profits. The subscription model, by contrast, relied on recurring low-price sales over an extended period, resulting in initial unprofitability, which created widespread apprehension among stakeholders.
Sven developed financial models for the subscription business, addressing the concerns of stakeholders by illustrating its long-term profitability. He designed an information system that applied statistical models to calculate the lifetime value of subscribers and integrated this data with media performance metrics to project ROI from advertising efforts. This system enabled an apples-to-apples comparison between traditional one-time sales and the new subscription model, providing clarity and actionable insights.
The models and systems quickly proved their value as actual results aligned with projections, instilling confidence within the company. By year-end, the subscription business accounted for 30% of the company’s advertising budget and generated $60 million in annual revenue, showcasing the transformative power of Finance BI in applying statistical models and data analytics to the FP&A work.
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