Case study

PLAY OR STAY

Crop-2-Cup is a client of DC&H - the agency that you helped start in 2003 - and operates 270-boutique coffee stores in major urban areas across seven (7) states. In the industry and with its customers Crop-2-Cup’s is known for its ethical and fair-trade practices in procuring coffee beans, a classic roasting process that takes place in each location and offers the purchase both bulk bean, specialty food and drink, and coffee “peripherals” in each of the company’s retail locations. Crop-2-Cup is having tremendous success in all of their retail locations; however, the success comes with a price: during peak hours of operation (mornings from opening until around 10:30am), the speed of service (i.e., the customer “wait” time) is becoming an issue.

Not only are you one of the founders of DC&H, you are the account lead on C-2-C. You have just returned to the agency from a meeting with the C-2-C marketing team, wherein they announce they will begin developing and eventually test a mobile “app” that will allow C-2-C customers to “pre-order” and “pre-pay” their orders up to 15 minutes in advance of their arrival at any of the 270 C-2-C stores. This will address the peak hours “speed of service” issues the company is currently facing, and will provide customers with a better brand experience. The C-2-C marketing team indicated they were going to begin testing the “app” in 54 stores (20% of their retail system) in about three-to-six months depending on development timeline and the outcome of beta testing in approximately 27 of their retail locations. In this meeting C-2-C briefed the agency on developing an integrated marketing communications campaign for the 54 store “test”. The estimated agency revenue for developing both the “test” and “launch” campaigns for the new C-2-C app is $215,000.

During the meeting the C-2-Ct marketing team also indicated that while they would be opening up an agency review for the development of the new Crop-2-Cup mobile ordering “app” to three firms that specialize in mobile marketing program development and back-end/e-commerce operations, they want to include DH&C in the review given the strength, value and tenure of the C-2-C/DC&H relationship. The anticipated incremental revenue for DC&H if the agency is awarded the mobile “app” project is $385,000. Add this to the $215,000 for developing the “test” and “launch” IMC campaigns for the new app, the total app project is valued at $600K in revenue for the agency. And while the $385K is great from a topline revenue standpoint, there is a downside: DC&H is not prepared to take on the development an e-commerce app of the scope/scale of the new C-2-C “solo” – DC&H would need to find a” joint-venture” partner for the project. And taking on a partner will cut into both DC&H revenue and margin.

Given the agency’s current client base, DC&H has had plenty of on-line and social campaign development projects for clients, but very few in the mobile e-commerce space. And what experience the agency has had in mobile e-commerce has been limited to several “one-off” scope of work projects for clients where DC&H has partnered (on a “third party” basis) with one of two agencies (Mobile Dynamics and EC Solutions) to meet the requirements of the various client projects.

As a partner, the agency’s experience with Mobile Dynamics has been good, but not great. While from a tech standpoint Mobile Dynamics is solid, however, are hard to work with, they are always “last minute”, and at times have not great with the DC&H clients. However, despite all this, Mobile Dynamics is very cost effective, with about 41% of project revenues being retained by DC&H, and the projects have been profitable. It is the “getting there” that has been the issue with Mobile Dynamics.

With EC Solutions, the experience has been great – they are forward thinking, have a great “tech stack” and are very buttoned up. However, EC Solutions is much more expensive than Mobile Dynamics – close to 83% of project revenues have historically gone to EC Solutions. Every time DC&H partners with EC Solutions, the project ends up being a “loss” for the agency. And given that C-2-C was one of the founding clients of DC&H, a good experience is not “good” on this project … it needs to be great. But you know that “great” will come with a hefty price tag

So now you need to make a decision: play or stay. You know that DH&C does not have currently any staff that has direct, hands-on mobile/e-commerce experience, and that you would once again need to rely on either Mobile Dynamics or EC Solutions as the agency’s partner on the Crop-2-Cup mobile app development project. Or, do you decline the opportunity and simply develop the IMC support campaigns for the “test” and “launch” of the new C-2-C app. Also, from a big picture standpoint, this project has the potential to be a game changer for DC&H in that it potentially opens the door for another agency to begin developing a relationship with Crop-2-Cup should DC&H/ Mobile Dynamics or EC Solutions not prevail in the upcoming review.

Decisions, decisions, decisions …..

Do you go ahead and partner with Mobile Dynamics or EC Solutions and participate in the Crop-2-Cup upcoming agency review for their mobile application project? Do you explore other third-party “partnerships”? Do you decline the opportunity to participate? What are the client relationship and financial implications for DC&H? And, more importantly, what decision do you believe to be in the best interest of your long-term and highly valued client and DC&H? It is time to make “the call”.