Situation

Changes in the truck market left this U.S. manufacturer as one of the share-leaders in the medium-duty truck market where sales were declining. Growth was in extra-heavy trucks where sales had jumped from 15% to 60% of the total market.

The manufacturer implemented a strategy to produce dramatic breakthroughs in the face of this profit-reducing industry change, but shifting its sales efforts ran straight into a huge disincentive for its dealers. Because new heavy-duty truck sales were often to larger fleets, dealers were faced with having to take in fleet trades that might be valued at more than the dealers’ total net worth. A wrong move in handling the used trucks and the dealerships often were put in jeopardy. Stakes were growing so high that dealers, and therefore the manufacturer, were increasingly kept out of important parts of the extra-heavy market.

After personally surveying dealers around the country, the team of managers charged with redesigning the entire used truck buying and selling process called on Rath & Strong to work with them and help validate their qualitative findings that the industry’s trading process was filled with steps of no value to customers, and that there were untapped opportunities for innovations to delight customers.

Solution

Rath & Strong was known at the manufacturer for using customer research and benchmarking techniques that produced the remarkable combination of sophisticated statistical analyses and top-to-bottom buy-in. The used truck manager teams and Rath & Strong gathered the data to create a statistical model to determine the combination of product, price and services that used truck customers would buy.

First, Rath & Strong and the team members went on the road to truck stops around the United States to gather information from recent used truck buyers. Team members engaged buyers in Customer Value Conversations ^SM, a specialized qualitative research method that helps uncover what customers value and what they will pay for. These open-ended exchanges were followed by structured research to weight statistically the long list of factors customers use, often intuitively, to decide what to pay for a used truck.

The manufacturer expected to see real breakthroughs, be able to take fast action and get measurable results based on past experience with insightful analyses they and Rath & Strong had jointly developed. However, even those who had seen the power of these kinds of analyses got some welcome surprises from the model. Things that buyers were expected to find attractive like chrome bumpers and polished fuel tanks weren’t even on the value map.

Using the new model, the teams created a total package that offered outstanding value to customers at dramatically higher profit levels. By statistically proving what customers liked and how much they would spend for it, the team had also gained buy-in and needed support from stakeholders across their own company.

Redesigning the process around customer value gave the team the insights and confidence to assess the risks and to launch the new process.

Results

In just one week, the company sold $4 million of used trucks faster and more profitably than anyone expected. A waiting list for used trucks formed immediately.

As Rath & Strong and the manufacturer worked hand-in-hand to develop and implement the new sales process, the model and the skills to use it were transferred to the manufacturer. People in the company were energized by their meetings with customers and the dealers. At the end of the day, the manufacturer was equipped with new capabilities to move faster and more effectively than the competition to generate customer purchases and loyalty.

Lessons Learned

Diverse stakeholders in an organization – finance, senior management, market research, sales – all can understand and come to believe in a sophisticated statistical model whose precision is expressed in outcomes measured on the bottom line and seen on an income statement.

The best way to drive change is to let your customers do it. The Customer Value Conversations ^SM gave managers and experienced dealers the new understanding necessary to assess the risk and rewards of the new sales process at the gut level.

Key are measurable, actionable and understandable dimensions of customer value – value that takes into account satisfaction, loyalty, and most especially, what customers want and will pay good money for.