Company: $7.2M residential and commercial Fertilization company.
Value Problem: Lack of customer density in the local geographic area, which impacted productivity, profit margins and revenues.
What Wasn’t Working:
- The company organically grew by 40% in one year by increasing sales and customer service staff to handle the new volume but they needed to increase customer density in their local service areas in order to maximize efficiency.
What was done:
- The company had implemented a new digital marketing program that required an increased sales and customer service structure. It positioned itself to grow and handle the business but then immediately needed additional revenue to pay for the structure in order to continue to grow. They sought out local competitors to acquire that would increase density in areas already serviced by the company to increase efficiency, reduce costs and increase market share.
- They were able to identify and acquire three small competitors that increased density allowing the company to improve profitability by 30%.
- Technician stops increased from 15 to 20 stops a day without increasing payroll or capital vehicle cost.
- This also provided the company the ability to cross sell (using the existing sales structure) and those new accounts improved profitability by opening up new lines of business.
- The company positioned itself to provide higher quality customer service, cross sell existing accounts, secure customer referrals and have the structure in place to double its business within a two year period
- By increasing customer density through acquisitions, the company was able to improve productivity, improve margins, reduce local competition, increase market share, drive increased cash flow, and increase profitability and therefore, company value.