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Case Study: How We Grew One $2 Million Company 72% Year Over Year in 3.5 Months

A few years back I formed a company with a partner where we’d go into companies, roll up our sleeves and actually do the work of growing them fast in trade for a piece of the upside.

One of our first clients was a trucking company that wasn’t doing badly in fact they were doing well about $2 million/yr. in sales with just under 20% margins but they’d been stuck at that level for a while and were looking to go to the next level.  This is the story of what actions worked and which didn’t, resulting in a 72% year over year growth in 3.5 months…pretty good for any business.

 

Starting Point

Initially the company was primarily relying on owner operators, people who owned their own vehicles and would do the trucking work involved.  These drivers were each paid 80% of the gross earned for each job.  The company owned a few of their own vehicles and had both the cash and cashflow to purchase others if necessary.  Most of the owner operators were Class 1 drivers meaning they could drive larger trucks but a fairly large percentage of the jobs didn’t require larger trucks being direct point A to B trucking within a 6 or so hour radius though some were multi-day trips.

Scalability in terms of trucks and drivers was relatively easy and dispatch could handle considerably more capacity so the primary goal was to increase sales and grow margins.

The industry was full of a fair number of smaller and similar sized competitors with a difficulty etching out a competitive advantage due to the low barrier to entry nature of the work.  The primary defense was the requirement of various safety programs to work for various large and lucrative clients.

 

What Didn’t Work

The owner had previously been sold on a call service to businesses within the surrounding area to generate leads and had this supposed leads list untapped.  We had a sales person call the leads to little success noticing most of them weren’t very targeted and not particularly high value.

One of the administrative operations people wanted to streamline office procedures, buy new equipment, etc.  Although we did replace the office administrator and implement the documentation of various systems, which made life somewhat easier for the owner the cost savings were minimal because the administrator needed to be around regardless so streamlined procedures didn’t reduce working hours.

Part of the graphics team wanted to implement a rebranding effort (new name, logo, and website).  This had relatively little effect in large part because it wasn’t embraced by the owner who wanted to stick to the older brand, which was recognized by existing customers.  Although the branding could have been leveraged to greater effect it’s questionable whether it was or would have ultimately been the driving force in dramatically increasing sales even if it was embraced given the relationship nature of the business.

 

What Got the Results

The real breakthroughs occurred as a result of 4 inter-related changes:

  1. We sat down and identified the 4 most profitable types of customers and created a list of the specific companies that fit within each of those 4 categories to target with direct calls and visits

 

  1. We knew we had to differentiate the question was how? The service itself is pretty commoditized and guarantees only go so far.  Knowing the clients were typically men in remote work areas for weeks at a time we hired hot girls to drive the low end trucks and branded them

 

  1. We applied a visitation rhythm of regular visits and calls (PR trips) where the girls would for example bring donuts by the target customer locations and hand out information

 

  1. By hiring the girls to drive company owned trucks we were able to reduce the cost on those loads from 80% to 65% of gross resulting in a massive boost in margins

 

Even gaining one large customer within the target categories had the potential to significantly boost sales.  Hiring the girls created industry virality where companies we hadn’t even heard of were calling.  The regular rhythm helped encourage repeat business and keep the company top of mind for when services were needed.  Finally, the boost in margins as you can imagine was significant from a profit standpoint.

 

Lessons You Can Learn

Focusing on the right target market is EVERYTHING.  It is by far the largest marketing mistake I see people make and the biggest opportunity for improvement.

All customers have a buying window and go through buying cycles.  If you don’t hit the window at the right time you won’t get the sale because they simply aren’t in the market.  There are things you can do to improve your timing and consequently your efficiency but baring this applying a regular rhythm of follow up is the best thing you can do.

Differentiation is one of the most powerful ways to increase conversions but you need to be able to do it in a compelling way.  If your customers aren’t emotional about how you’re different then you need to look to a different strategy.  This is also where knowing your target customer is very helpful and in this case allowed us to set ourselves apart when others hadn’t previously.  Also note the fundamental service remained the same the differentiator was in the form of the packaging, which is something else you should consider if you can’t improve or differentiate the core offer.

Finally, when it comes to cutting costs not all efficiencies are necessarily better and some carry risks (for example owning too many trucks would have created risks that having owner operators didn’t create) so you need to be sure to measure the net effect of supposed improvements to make sure there will be cost savings and these aren’t counter balanced by increased risk.

If you’re looking for assistance growing your business, please contact us.