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Case Study - "Managing a Corporate
Turnaround"
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Company Description
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$250M
National Horticultural Distributor
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Company Situation
and Problem |
The
Company had cut expenses in the recession. After two years sales and margins
were down over 30%. The economy was blamed, as well as weather. The owners
did not know if they had lost share. Competitive activity was increasing.
Selling in this business is seasonal; the spring season is March though June;
the fall season is Sept. and Oct.
Paladin interviewed senior
management, GMs of the branches, employees in field locations, and customers;
marketing materials were reviewed, and data was gathered from Company
systems. Analysis showed that they had cut too far in vital green-goods
inventory, too far into the sales ranks, and in customer service personnel.
"Housekeeping" had slipped in several locations; many sales and service
positions were open; employee morale and turnover was poor. Finance was
dominating other functions as the Company focused on cost controls. They had
stopped customer satisfaction surveys, and tracking unfilled customer
requests, thus missing that they were losing market share. Headquarters
became insulated to customers and field personnel thinking. Direct mail and
advertising were cut in an industry with substantial customer "churn"- as
many as 25% of landscapers enter and exit the business annually. Paladin
found pricing breakdowns allowing unauthorized local discounting.
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| Paladin Actions & Recommendations |
Paladin felt the owners had no choice but to reinvest to recover share,
or face further distress managing a deteriorating asset, and recommended an
aggressive campaign to build sales in the spring season, and to position for
the fall season. This entailed increasing inventory stock levels, including
higher-margin "exotic" plants. An expanded sales staffing plan was
undertaken. Sales comp plans were written providing upside incentive and more
accountability. Customer service personnel were hired. Unfilled customer
requests were again identified, and customer satisfaction surveys
reinstituted. Housekeeping was improved. Direct mail and advertising budgets
were increased, with a single, simple message: "We’re listening to our
customers, and this spring we’ll have more stock than ever and better
service".
Later, a former Paladin Partner was installed as the full time CEO.
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| Client Results |
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Despite a very short lead-time, expanded marketing
& sales efforts stopped the revenue decline during the spring season |
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Customer satisfaction and employee morale recovered, and
the Company saw improved operating results during the spring season, and a
more successful fall season. |
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The new CEO continued to implement Paladin
recommendations, and the growth trend continued |
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Through balanced programs, the Company returned to
profitability within a year. |
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Revenue and Margin Slide
Reversed in 6 Months |
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