The Challenge
‘I’ve been doing this for thirty-eight years. You know nothing about my industry. What could you possibly teach me?’
I’m standing with Malcolm McLeod in his automotive dealership. He’s Whyalla’s Toyota, Nissan and Mitsubishi dealer. His immaculate showroom displays gleaming, high-end models from each marque—sedans, SUV’s, dual-cab utes.
‘That depends,’ I reply. ‘Tell me about your top 20% of customers.’
Malcolm reels off all the details. He knows his top 20% inside-out. Fleet buyers, business owners, farmers. How much they spend with him, the cars they drive, their kids’ names—he recalls all the information off the top of his head.
‘Brilliant,’ I reply. ‘Now tell me about your middle 50%—from 80 down to 30. What’s going on with them?’
Malcolm turns to me and shakes his head. A knowing grin spreads slowly across his face. ‘Fair enough, you tricky bugger,’ he replies. ‘You got me there.’
The Solution
Using Strategy to Cash and the Value Chain, I focussed Malcolm and his team on an underutilised resource—his middle 50% of customers. They’re people they don’t see that often.
Maybe they buy a cheaper new car every seven years or so, or a quality used model. They bring it in for service every now and then. McLeod’s Whyalla Automotive sends them out the usual email reminders. Maybe they open them, maybe they go straight to the spam folder. Who knows?
But there’s one thing Malcolm had forgotten about these customers.
They’re loyal. Even if they’re not spending a lot of money, they keep coming back to McLeod’s.
Think about it. People buy Toyotas, Nissans and Mitsubishis because they’re reliable, honest vehicles. In Whyalla, if you want dealer-quality service for these brands, you go to McLeod’s. So customer loyalty is not a big ask.
I set Malcolm a target. What if his middle 50% came in 10% more often? Up the service tempo a little so they bring their cars in when the service is due, not six months or 10,000 kilometres later. Sell them on genuine parts if they want a towbar or a tonneau cover. Keep them informed of great deals coming up on new or used vehicles.
Malcolm thought about it for a moment. ‘So what you’re asking me to do,’ he said, ‘is treat my middle 50 like my top 20.’
‘Is that realistic?’ I asked.
The Result
When I first met Malcolm a little over a year ago, McLeod’s Whyalla Automotive was making a solid profit of $300,000 to $400,000 per year. After using Strategy to Cash and the Value Chain, McLeod Motors realised a profit of one million dollars last financial year. This year, it’s on target to crack $1.1 million profit.
Mind you, every client is different. McLeod’s was already a successful, well-managed business. Malcolm, his team and I developed a set of solutions specific to his industry, location, and customer base. The ideas which worked for McLeod’s might not work for you. That’s the power of Strategy to Cash and the Value Chain—they take your unique situation into account then transform your business, letting you realise its full potential.
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