Case #7

Inspired by McKinsey
North Sun
2021

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Week 2. Revenue growth Case #7. Inspired by McKinsey. 2021. North Sun

Case #7. Inspired by McKinsey. 2021. North Sun

Prompt Additional information Case type

• North Sun, a Japanese Please provide this information • Revenue growth

leading manufacturer of only upon request • Medium level
electric passenger • North Sun accounts for 65% of all
vehicles, has been • Interviewer-driven
Japanese battery-electric vehicles case
struggling with a low sold
market share in the B2B • Expected time is
segment. North Sun • Japanese cars capture 5% of pure 15-20 minutes
enjoys strong positions in electric vehicles sold worldwide
the B2C space, both • The e-vehicle global market size is
domestically and in the projected to grow from 4M units in
international market. 2021 to 35M units by 2030 (27%
However, North Sun’s CAGR)
sales to small and
• Rental car firms, corporations and
medium size businesses government agencies (e.g. police)
continue staying far below
are among major B2B client groups
expectations. The CEO
for electric cars
has invited you to help
them out. • North Sun’s model range of electric
vehicles includes only passenger
cars (not buses or trucks)
• There is no specific revenue goal

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Week 2. Revenue growth Case #7. Inspired by McKinsey. 2021. North Sun

Opening. Make sure the candidate follows these steps

Step 1. Typically the candidates are expected to restate the prompt to make sure they are
Restate the on the same page with the interviewer
prompt
Candidates can react to the prompt by providing some quick thoughts which will
demonstrate candidates’ business acumen, e.g.:
• “Electric car market is a fairly new space that is likely enjoying an explosive growth,
so car producers should invest a lot in marketing to keep up with the growth”
Step 2. Add
• “Corporate sales typically require long sales cycles and might be challenging in case
colors of limited networks of chargers and service stations. However, given North Sun’s
(optionally) current success in B2C, I’d think they have built wide networks already”
• “I’d imagine electric vehicle business is capex-heavy and thus volume-driven; so no
wonder the client is so concerned about their sales and low market share”

It is common that candidates ask 2-3 clarifying questions before designing their
framework. Typical questions include:
Step 3. Ask • Geography of client’s operations/sales
2-3 • Financial goal
questions
• Business model of the client

• Typically candidates ask for a couple of minutes to structure their approach

Step 4. Ask • Sometimes during interviewer-driven cases, the interviewers ask the first question
for a moment and then the candidate takes time to build their framework
to structure

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Week 2. Revenue growth Case #7. Inspired by McKinsey. 2021. North Sun

Case questions (this is an interviewer-driven case)

What do you need to think about to build recommendations for the

01
client?

What are your thoughts on the reasons behind the client’s low market
02
share in the B2B segment?

Based on the initial analysis the conversion rate from prospects to test-
03 drives (from stage 2 to stage 3 - see Appendix) is far below industry
average. What ideas can you suggest to increase it?

The company plans to launch a 1-day marketing event for 1k of its qualified
04 prospects to convert some of them to stage 3 – test drive (see Appendix 1).
How many prospects do they need to convert for this event to break-even?

Appendix 1.

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Week 2. Revenue growth Case #7. Inspired by McKinsey. 2021. North Sun

Q1. What do you need to think about to build

recommendations for the client?

Global B2B e-car Revenue Market share

North Sun
market analysis growth strategies

• Growth rate • Target corporate • Current level, • Marketing

client groups growth rate and strategy
• Top e-car brands market share
with their market • Key differentiation • Distribution
• Break-down by
shares in B2B points of e-car channels
region and model
models
• Recent market • Pricing strategy • Pricing strategy
trends (e.g. • Sales force and
government other distribution • Client journey
polices to channels and value
electricity car proposition
fleets)

Note: This is just one of many potential ways to structure your approach. Please treat this example only as a reference point and develop your own style.

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Week 2. Revenue growth Case #7. Inspired by McKinsey. 2021. North Sun

Q1. Make sure the candidate follows these steps

Step 1. Do The best practice is to start with a 15-second big-picture overview, e.g. “I’d like to
horizontal assess this problem through the lens of four areas – first, …; secondly, …; thirdly, …;
presentation and finally …”

Check if the candidate covers all key points typical for a revenue growth case
structure:
Revenue analysis Business model External factors
Step 2. Hit
• Revenue analysis • Client segments • Growth rate
key points
• Product portfolio • Competition

To avoid cookie-cutter/generic approach, the candidates can incorporate 2-3 stories

into their structure presentation, e.g.:
• “The space should be exponentially growing given strengthening demand for
zero-emission commuting, governments supporting electric vehicles through
Step 3. Add subsidies and tax rebates and rapidly increasing customer awareness”
stories • “Rapidly expanding market likely attracts lots of newcomers, and competitive
(optionally) pressure is on the rise which makes our client’s task even more challenging”
• “Key success factor in B2B sales is usually a high-quality salesforce that is well
trained and incentivized, so I’d like to double-click on it later”

At the end of the structure presentation, it is helpful for candidate to show that they
Step 4. Finish can drive team forward and prioritize, e.g. “If this approach makes sense, I’d like to
with a explore financials first. Do we have any revenue data?”
question

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Week 2. Revenue growth Case #7. Inspired by McKinsey. 2021. North Sun

Q2. Reasons of low market share

What are your thoughts on the reasons behind the client’s low market share in the B2B
02 segment?

Poor Low Sub-optimal

Inadequate
marketing efficiency value
pricing
strategy of distribution proposition
[Given a wide variety of e- [B2B clients usually demand [Corporate sales are usually [With high R&D investment
vehicles nowadays, the market volume discounts and do relationship-based and are and constantly upgrading
might become more and more proper benchmarking analysis driven by salesforce which technology of electric vehicles,
commoditized, and marketing to put a car producer under identifies and develops leads.] it’s easy to be left behind with
might be key to differentiate.] high price pressure.] § Low quality salesforce due an inferior product]
§ Low brand awareness § Too high base prices to weak selection process Product issues
§ Lack of features in the
among corporate clients § Uncompetitive discount and poor training system
(e.g. rental car companies, base model of e-car
policy § Rare sales team result § Limited range
corporations, government assessments
§ Inflexible payment terms § Long charging times
agencies)
§ Discouraging incentives Service issues
§ Limited marketing budgets § Too high total cost of § Low-quality of service
ownership (e.g. (e.g. low sales commission)
allocated to B2B events, ads § Limited network of service
maintenance, insurance) for salesforce and
and promotions dealerships centers and lack of spare
§ Lack of focus in marketing § Less-than-average useful parts
§ Limited network of car
messages on needs and life of a car § Lack of mechanics to hire
dealerships
pain points of the corporate for in-house e-car
clients § Undeveloped online maintenance
channel (vs strong at
§ PR issues in the past (e.g. Tesla)
high accident rate)

Note: This is just one of many potential ways to brainstorm. Please treat this example only as a reference point and develop your own style. [The candi-
date is usually expected to generate at least 4 ideas. The best practice is 7-8 ideas, structured approach, and on-the-fly delivery without taking notes]

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Week 2. Revenue growth Case #7. Inspired by McKinsey. 2021. North Sun

Q2. Make sure the candidate follows these steps

• 80% of interviewers feel comfortable when candidates take 30-40
Step 1. Take seconds to think and write down their ideas before walking the
time or do interviewer through them
on-the-go • The best practice is to ideate on-the-fly

• The best practice is to structure brainstorming and offer a 10-second

Step 2. Do top-down overview, e.g. “Sure, I plan to break down reasons into four
horizontal groups - poor marketing, inadequate pricing, inefficient distribution
presentation and sub-optimal value proposition. In terms of marketing…”
(optional)

• Regular feedback from consulting firms is that candidates offer only

three ideas which is a bit on the lower end
Step 3.
Provide at • Push the candidate to provide at least 4 ideas
least 4 ideas • Top-5% of candidates can usually suggest 7-8 ideas

• To impress the interviewer, the candidates can contextualize some of

Step 4. Add their ideas
colors • Example are given in [] brackets on the previous slide
(optionally)

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Week 2. Revenue growth Case #7. Inspired by McKinsey. 2021. North Sun

Q3. Revenue growth ideas

Based on the initial analysis the conversion rate from prospects to test-drives (from stage
03 2 to stage 3 - see Appendix) is far below industry average. What ideas can you suggest to
increase it?
Strengthen Increase
Optimize Improve value
marketing efficiency
pricing proposition
strategy of distribution
[Typically, the more touch [The price-sensitivity of [To convert prospects into [The decision to do a test-drive
points (e.g. events, printed different stakeholders (e.g. test-drives, salesforce should should be as easy as possible
media, ads) the prospects have fleet manager, CFO, COO) keep prospects engaged and and hesitations about the
with the company, the higher might vary, so the client should address individual concerns.] product quality and value
chance of closing a contract.] educate prospects on created Salesforce should be addressed.]
§ Organize more marketing value to justify pricing and be Electric car
§ Select stricter, train better,
flexible to accommodate § Analyze the needs and pain
events for qualified incentivize more generous-
prospects (e.g. parties, different perspectives on points of specific qualified
ly, assess more often,
showroom events, invite- prices.] leads and adjust sales pitch
ensure healthy culture
Test-drive
only dinners) § Be more flexible in payment § Identify major prospects’
terms and pricing with § Ensure more flexible timing
§ Connect current clients with objections and design a (incl. weekends and late
qualified prospects to ask qualified prospects playbook to address those evenings)
about their experiences § Show the full cost of Work with prospects § Offer more flexible place
§ Attend an industry ownership and provide § Reactivate old qualified (e.g. bring test-drive to
benchmarking data vs their office)
conference that material prospects
portion of qualified major competitors
§ Ensure follow-ups and
prospects will participate in reminders with prospects
§ Use news and recent
developments to reach out

Note: This is just one of many potential ways to brainstorm. Please treat this example only as a reference point and develop your own style. [The candi-
date is usually expected to generate at least 4 ideas. The best practice is 7-8 ideas, structured approach, and on-the-fly delivery without taking notes]

© 2021 Peter K. More at [Link] See e-course: “Brainstorming”, Lecture 3. “Revenue growth ideas” (10 min) | 113
Week 2. Revenue growth Case #7. Inspired by McKinsey. 2021. North Sun

Q3. Make sure the candidate follows these steps

• 80% of interviewers feel comfortable when candidates take 30-40
Step 1. Take seconds to think and write down their ideas before walking the
time or do interviewer through them
on-the-go • The best practice is to ideate on-the-fly

• The best practice is to structure brainstorming and offer a 10-second

Step 2. Do top-down overview, e.g. “Great question! I'd like to think about some
horizontal ways to convert prospects into test-drives based on four categories
presentation - marketing, pricing, distribution and value proposition…”
(optional)

• Regular feedback from consulting firms is that candidates offer only

Step 3.
three ideas which is a bit on the lower end
Provide at • Push the candidate to provide at least 4 ideas
least 4 ideas • Top-5% of candidates can usually suggest 7-8 ideas

• To impress the interviewer, the candidates can contextualize some of

Step 4. Add their ideas
colors • Example are given in [] brackets on the previous slide
(optionally)

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Week 2. Revenue growth Case #7. Inspired by McKinsey. 2021. North Sun

Q4. Math exercise – prompt

The company plans to launch a 1-day marketing event for 1k of its qualified prospects to
04 convert some of them to stage 3 – test drive (see Appendix 1). How many prospects do
they need to convert for this event to break-even?

Please share with the candidate Please provide this additional

the following information information only upon request

• Appendix 1 • Total costs of the marketing event are $1M

• Typical contract
– Fleet size is 40 e-cars
– Price per car is $35,000
• Average margin per car is 5%
• Average conversion rate from stage 3 (test-
drive) to stage 4 (conclude contract) is 20%
• Based on team’s estimates 30 prospects will
convert to test-drive even without this
marketing event

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Week 2. Revenue growth Case #7. Inspired by McKinsey. 2021. North Sun

Q4. Math exercise – calculations

The company plans to launch a 1-day marketing event for 1k of its qualified prospects to
04 convert some of them to stage 3 – test drive (see Appendix 1). How many prospects do
they need to convert for this event to break-even?

Profit per
$35,000 $70,000
average 40 cars 5% margin
contract per car per contract

# prospects at
stage 4 to $1M $70,000 per contract 14 prospects
break-even

# prospects at
stage 3 to
20%
14 prospects 70 prospects
break-even [conversion rate]

Total break-
even #
prospects at 70 prospects 30 prospects 100 prospects
stage 3

The client will need to convert 100 prospects

into test-drives to break-even on the event

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Week 2. Revenue growth Case #7. Inspired by McKinsey. 2021. North Sun

Q4. Math exercise – contextualization of the answer

The company plans to launch a 1-day marketing event for 1k of its qualified prospects to
04 convert some of them to stage 3 – test drive (see Appendix 1). How many prospects do
they need to convert for this event to break-even?

Basic
comments • To make the event break-even, the client needs to convert 100
(expected from prospects into test-drives
everyone)

• 10% conversion rate (100 out of 1k participants) seems reasonable

• Currently salesforce converts only 3% of the qualified prospects (30
out of 1k) which might be a bit on the lower end and suggest that the
client should strengthen its salesforce through more rigorous selection,
Advanced advanced training and/or more generous incentives
comments (for • The event will promote the brand of the client and assuming high-
outstanding quality participant experience might improve the conversion rate from
candidates) stage 3 (test-drive) to stage 4 (contract conclusion)
• The client enjoys a fairly low margin of 5% which makes sense as this
is a rapidly growing market and they need to sacrifice profits to propel
sales

Note: The candidate is not expected to mention all the advanced comments, but adding some of them will demonstrate that the candidate can connect the
dots, see the depth, add colors and bring some insights even if the candidate is not that familiar with the industry/topic

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Week 2. Revenue growth Case #7. Inspired by McKinsey. 2021. North Sun

Q4. Make sure the candidate follows these steps

• Providing big-picture approach of how to calculate the answer might

Step 1.
help the candidate gain more points and help the interviewer follow
Structure
approach the candidate’s thought process

Step 2. Clarify • Often interviewers don’t provide all the information

missing data • The candidate needs to proactively ask for missing pieces
points

• Ideally the candidate shouldn’t make any mistakes

Step 3. • It is okay to ask for some time to run numbers and then walk the
Calculate interviewer through the calculations (some interviewers though might
accurately push back and ask you to do your Math on the fly)

• The interviewers highly appreciate it when the candidate not only

Step 4. Add calculates the answer correctly, but also contextualizes it
colors • See some advanced comments on the previous slide as example of
(optionally) the contextualization

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 ü
Recommendation

McKinsey
typically doesn’t
require
recommendation
for their cases

© 2021 Peter K. More at [Link] |

© 2021 Peter K. More at [Link]
Week 2. Revenue growth Case #7. Inspired by McKinsey. 2021. North Sun

Appendix 1. North Sun’s sales funnel for corporate clients

North Sun’s sales funnel for corporate clients

Stage 01 Stage 02 Stage 03 Stage 04

Convert
Conduct test sales
Nurture drives
Capture prospects
leads
Leads (or new A qualified Qualified Prospects conclude
customers) might be prospect has prospects conduct contracts for car
identified through confirmed their test drives of fleets
cold/warm outreach interest, planned different e-car
(outbound) and fleet size and models
inbound inquiries (e.g. allocated budget
site, phone, email)

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