The subtle art of the pivot
Randall-Reilly is pivoting — again — by using data to weed out less desirable customers and focus its sales force on more profitable prospects
Back in 2014, Brent Reilly—the second-generation Reilly to serve as president of Randall-Reilly—stood on stage at a media industry event and delivered a keynote address about his company’s transformation.
The 87-year-old, family-owned Randall-Reilly, which started as an old-school publisher, had evolved over several decades to a company that delivers data, media and marketing services to customers in the heavy equipment manufacturing sector.
Reilly, who recently retired as CEO but is still chairman of the board, takes the responsibility of steering and redirecting the family business seriously, but he also has a sense of humor about the opportunity given to him. During that keynote, he played a parody video from The Onion that pokes fun at legacy family businesses. The video features a CEO who, like Reilly, “worked his way up from his humble beginnings as the son of the previous CEO.”
“He credits his continued success in business to a number of crucial moments in his career,” the video’s narrator says, “including getting hired by his father, his father’s retirement and a few lucky breaks in between.”
Self-deprecating humor aside, the real point of that speech seven years ago was to tell the story of how Tuscaloosa, Ala.-based Randall-Reilly had, in the wake of the 2008 recession, adapted and pivoted and chased so many opportunities that it became almost too entrepreneurial.
“Disaster had struck,” Reilly says. “That was a scary time, particularly for media companies. Your whole reason for being — your whole business model — was being called into question. We had niches on niches on niches, all of them run essentially like they were their own company. That led to unhealthy levels of internal competition.”
Ultimately, Randall-Reilly leaned on its strong client relationships to dig in and learn how the company could best align its media, data and marketing products to the pain points of its customers. By using that insight to streamline and focus, Randall-Reilly revived and thrived.
Fast-forward to 2021: In the tangle of disruption caused by the COVID-19 pandemic, Randall-Reilly is in the midst of another reinvention. This time, though, figuring out the best pivot is not so much a matter of Randall-Reilly adapting its products to meet customer needs — this time, it’s about making sure the customers themselves are really valuable to Randall-Reilly over the long haul.
Value of a Lifetime
In 2019, as a collective whole, it looked as if Randall-Reilly’s mix of different businesses — its truck driver recruiter business, its performance marketing data services offerings, and its flagship media assets — was still thriving.
“We started to look at the differences in sales KPIs between our businesses,” says Prescott Shibles, executive vice president and general manager of Randall-Reilly’s equipment division. “We found out that the recruiting business was masking some issues with the performance marketing and media businesses.”
The numbers coming from the company’s business development team — the boots-on-the-ground salespeople who actively push Randall-Reilly’s products to customers — looked good on paper. But the company wasn’t retaining a big chunk of the sales the sales team was generating by outbound calling.
“We figured out that we were spending a lot of time chasing business we just couldn’t keep,” Shibles says. “So we began using the data we had about our customers to start chasing clients that had a much higher lifetime value.”
In doing so, Randall-Reilly was applying the concept of growth accounting — the idea that the better the return per customer, the less labor-intensive the sales effort is over the long term. In short, the company decided to redirect its sales team’s focus on the most valuable customers — or at least the company’s best guess as to who its most valuable customers were.
And it worked: Randall-Reilly launched a new data product — one based on recurring revenue from repeat customers — and saw a quick boost in its data business. The productivity of its business development team also zoomed up. And the sales team’s revenue per month rose without any more people added to the team.
“We did this all ourselves,” Shibles says. “It took several months to figure it out, but it was super powerful.”
A Software Assist
Once Randall-Reilly had a handle on who its most profitable customers were, the company turned its attention turned to to how — specifically, how to make the process of profit prognostication automatic and repeatable without a team of data scientists at its disposal.
Enter Retina, a software-as-a-service platform designed to help B2B companies project customers’ journeys and predict profitability at an individual customer level.
“Retina tells you all the things about your business you might think you know, but don’t know,” Shibles says. “It tells you a lot about the lifetime value of your clients and the costs to acquire them.”
“Most companies aren’t going to make any money from nearly half their customers — ever — but they get away with that because of averages,” says Emad Hasan, CEO and co-founder of Retina. “We predict the journey of those customers in advance to allow companies to reallocate teams and sales strategies.”
The companies that benefit the most from that, Hasan says, are those that depend on repeat purchase behavior — companies like Randall-Reilly and its data and marketing services for vertical industries like trucking and heavy equipment manufacturing. By being able to crunch the longitudinal data (data a company will have if it uses a CRM system, Hasan says) businesses can evaluate, redirect, and retrench — just as Randall-Reilly is doing.
“All of a sudden, we’re looking at how much manpower it takes to service and maintain these accounts, and how many clients are actually profitable,” Shibles says. “From there, we have started developing profiles of customers at risk and profiles of what good, long-term customers looks like.”
Although Randall-Reilly started the number-crunching on its own, the process wouldn’t be sustainable without the software-driven power that Retina’s platform provided. One of the core ingredients of a successful technology implementation, Shibles says, is to make it work, then automate. “When you buy technology in the hopes it’s going to be a silver bullet,” he says, “that’s where you go wrong.”
For Randall-Reilly and other similarly sized companies, in fact, the only other way to conduct this kind of customer data analysis — the same type of analysis most private equity companies use to put a valuation on a business, Shibles says — is by retaining a team of data scientists, which most companies can’t afford to do.
“It’s not lost on me that we’re a data company, and we weren’t as data-driven as we should have been in our go-to-market strategy,” Shibles says.
Armed with the analysis gleaned from the work it started on its own and continued with the help of Retina’s platform, Randall-Reilly is now focused on pursuing not just the business its sales team can close, but the business that keeps coming back.
“You spend so much time trying to figure out why people leave — you want the reason why someone is breaking up with you,” Shibles says. “So much of it is about finding the customers that are well-suited to your business.”
According to Retina CEO Hasan, outcomes for companies that use its platform for growth accounting include new product introductions, content and creative that is more targeted to specific customer sets, and a better system of prioritization for customer service. For its part, Randall-Reilly is using its newly gained insight to make decisions about acquisitions and new product launches, and has also overhauled how it pays and motivates its sales team.
“This process helped us define a new compensation plan that aligns incentives with getting sales focused in the right places,” Shibles says. “Salespeople feel more motivated and more profitable, and have an easier path to upsell their customers.”
For Randall-Reilly, using software to hone its customer focus is just the latest in an ongoing series of evolutions that keep the company relevant after nearly 90 years.
“The number one thing we’ve learned is that we’re never going to stop transforming,” Reilly says. “The pace of change and innovation in the industries where we operate dictates that we remain in this constant state of learning and transformation.”
Growth Accounting by the Numbers
30% to 50%
Amount of an average company’s customers that prove unprofitable over their lifetime1
Productivity increase of Randall-Reilly’s biz dev team after refocusing on high-value customers3
In a survey of 22 consumer packaged goods companies, 73% of sales came from the top 20% of customers3
Sources: 1Retina; 2Randall-Reilly; 3“The Pareto Rule in Marketing Revisited,” Emory University and New York University
The Randall-Reilly Story: A Timeline
Henry Pettus Randall Jr. refuses to pay $5 to join the honor society at the University of Alabama and instead publishes Who’s Who Among Students in American Universities & Colleges, a recognition program that continues today.
The Randall family founds the Award Company of America and expands into printing and distributing state trade and used-equipment publications. The following year, H. Pettus Randall III succeeds his father as president.
Under the joint leadership of H. Pettus Randall III and Michael Reilly, the company moves into B2B media in 1986 with the purchase of Overdrive and continues to expand as a trade publisher over the next 20 years with the acquisition of titles like Equipment World, Commercial Carrier Journal, Total Landscape Care, and Truck Parts & Service.
F. Michael Reilly assumes the role of president and CEO and continues the company’s evolution into a data- and technology-driven company. In 2004, Randall-Reilly launches its recruiting division with the launch of Owner Operator/ Company Driver.
Randall-Reilly adds The Great American Trucking Show and acquires eVision Marketing Group, expanding the company into more digital advertising channels.
Brent Reilly succeeds his father as president.
Randall-Reilly implements Retina software for growth accounting through analysis of customer lifetime value.
Jason Meyers is a freelance writer and frequent contributor to Family Business.