Texacone’s new owner came to Maven looking for a way to not just grow the business , but to get greater transparency on the business’s everyday operations and profit opportunities. Anchor Investments (Anchor) purchased the second-generation family-run business in 2016. It knew it had a solid business, but did not have the visibility to see a path to accelerating growth.
By digging deeper into customer expectations and needs, and by asking tough questions about Texacone’s pricing structure and economics, Maven was able to help Texacone, the largest producer of aftermarket hydraulic seals for the elevator market in the United States, restructure its sales process and pricing strategy. This led to a significant improvement to the bottom line.
Anchor’s impetus to engage Maven for help came from an all-too-common frustration: as a new owner—and an outsider to the day-to-day operations—its suggestions for improvement were often met with an unwillingness to try something new. Anchor sensed that it needed a third-party to look at Texacone’s business practices objectively. The new owner wanted transparency and knew that with the right perspective, new opportunities could be cultivated to grow the business.
The Maven/Texacone project lasted 10 weeks and focused on this question: what are the things we can do to drive the top and bottom line of the organization?
As is always the case, Maven started by spending time in the business. It’s imperative to be onsite, to engage with people face-to-face and to observe what’s happening on a daily basis so that when questions are asked, the answers make sense. Then, with a clear understanding of the business’s culture and day-to-day operations, Maven dug deeper and collected data.
That data revealed important things, like that customers preferred to purchase directly from Texacone because of its expert knowledge of the product, but often opted to purchase from other sources because Texacone took too long to fulfill orders..
The team also realized that Texacone had two core issues with its pricing strategy. First, the way it had defined margin led to an incorrect view of each product’s economics. This led to bad pricing decisions. Second, there were variations in how pricing and discount structures were applied to different customers, and those variations were not aligned with Texacone’s overall pricing approach; rather, they were remnants of decisions made years before that were no longer applicable to those customers..
This isn’t uncommon; in fact, many companies don’t have clarity on their economics and how those economics affect the bottom line. All too often, a business will base a price discount on something that is true today (order volume or order size) but can change over a few years. That discount becomes set—and because the management team is busy working in the business, they don’t take the time to take a holistic view of their pricing every couple of years. As a result, some customers continue receive discounts they should not.
During the ten-week engagement, Maven was able to help Texacone see that standardizing its pricing and discount structure would drastically affect the company’s profitability at a relatively minimal cost.
This project was unique for Maven in that Texacone is a smaller company than Maven’s typical client. In fact, Maven tried to dissuade Anchor from engaging Maven’s standard service, which would be for Anchor to work with a consulting team. Instead, Maven suggested that a more cost effective way to improve a business of this size would be to “coach” the executive team on how to approach the problem. ”When Maven engages with a client, we want to be confident that the annual profit improvment we can create with the business is more than 10x our fees.” That is a tall order for businesses with less than $25M in revenue.
But Anchor was certain that Texacone needed Maven’s perspective and expertise—and knew that Maven’s agnostic approach to relying on data and substantiated outcomes rather than anecdotes was what the company needed to grow.
In the course of the project, Maven identified approximately 25-30 opportunities it thought might be worth pursuing, then prioritized to focus on the biggest and best opportunities.