Holland Hitch, a 75-year-old family-owned business head-quartered in Holland, Michigan, manufactures premium-quality truck and trailer components throughout the U.S., Europe, and the Far East. Holland sells to three primary customers: trailer OEMs, tractor OEMs, and large fleet owners. In the mid-nineties, Holland saw that almost half of its total available opportunity was in the large-fleet segment, a niche in which Holland had historically been least successful. Fleet buyers tend to focus intensely on purchase price and so were unwilling to buy Holland's premium-priced components. Holland knew that, if it wanted to continue growing, it would have to develop a strategy to penetrate the large fleets.
In 1996, Holland promoted Dan Millar, who had successfully sold Holland products to large fleets, to become its manager of national accounts. Holland asked that Millar develop a national account management program to serve the large-fleet segment. After the promotion, Millar considered how Holland might sell differently to large-fleet buyers. In his own selling, Millar regularly quantified value. As an example, Holland sells a fifth wheel—the large metal wheel that attaches the truck to the trailer. Holland's fifth wheel had a premium price, but it was made of aluminum, which meant it was lighter than the steel fifth wheels that competitors manufactured. Millar determined how much gasoline the lighter Holland fifth wheel saved a tractor trailer during a year and showed that its gas savings more than made up for the price differential. He then did the same for Holland's two other major components: suspensions (mechanical and air) and landing gears. He put the numbers on a spreadsheet and started to sell using that spreadsheet.
While calling on a fleet buyer's office, Millar would start by asking what sorts of components the Fleet would be looking to buy or replace that year. These always included items from Holland's product mix. Then Millar would explain the value that each Holland component offered one tractor-trailer, entering them on the spreadsheet. The spreadsheet instantly added the savings for one tractor-trailer. The sales closer for Millar often came when he asked how many tractor-trailers the account had in its fleet. When he entered that number, the spreadsheet would multiply savings times total tractor-trailers. Many times, the number was in the hundreds of thousands of dollars. The sale at that point was not assured, but quantifying Holland's total value versus what his competitors were offering guaranteed that Holland would be considered very carefully. And the sales numbers started growing dramatically.
The spreadsheet eventually became too cumbersome, and Holland funded the development of a relational database that Millar had envisioned, called Component Value Analysis (CVA). CVA continued to quantify component value, but also captured fleet operational data and cost drivers. After the Holland account managers had entered a baseline amount of performance data, the CVA became a performance indicator. It could tell fleet buyers exactly where they were spending too much money in certain areas—such as oil or maintenance, for example. Holland's normative performance database allowed it to offer a value that its competitors could not.
Holland's final success? After developing CVA, hiring new people, and training its field sales representatives how to become national account managers, Holland generated more than $50 million in incremental revenue from 1996–2000. Holland's president declared that the national account program was the single most effective marketing initiative in the company's history. Perhaps most important, Holland's use of CVA with its customers has been the starting point of a major restructuring of its overall marketing strategy. The software shows the importance of viewing product value from the customer's perspective and has resulted in an increased sense of customer responsiveness from all parts of Holland Hitch, from marketing to engineering to manufacturing. All this came about because a gifted national account manager started quantifying the value that Holland delivered to a targeted segment.
The Holland case is interesting because the CVA program, designed to quantify customer value, became the focal point of the organization becoming aligned to serve the customer. Our third case shows another creative national account manager, Rich Mistkowski, and how he was able to recover and expand orders from a customer that had booted out his company, National Office Supplies, for delivering no value.