CRM

Promotions-r-us

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Prepared by Dawn Rovers Adapted from OCMC 2011 Case Study

Revised Sept. 22, 2017

NOTE: All organizations and relationships are fiction for teaching purposes

Gerry Atwood, the CEO for Promotions-r-us was sitting at his desk one snowy day in January

2015. He was reviewing the latest report from his Sales Manager. He was at a loss as to how

to improve profitability when their product offering was so mature and competition so intense.

He could not explain why their sales and marketing efforts didn’t seem to be adding much more

value to the firm. He wondered if they needed to expand to new markets, consider moving into

the Business to Consumer market, or find a way to improve overall profitability within their

existing B2B market. He had to report to the Board of Directors the following week on how he

would improve profits for the promotions company that he founded 40 years ago.

Promotions-r-us:

Promotions-r-us was a family run Canadian company serving in the promotional product market

since 1975. They sold a range of products that could be customized with company logos or

slogans (e.g. bags, automotive products, lanyards, magnets, watches, drinkware, sports

products, awards, etc.). Promotions-r-us (PRU) was one of the top 25 promotional product

companies in Canada for the past twelve years. However, by 2015 Promotions-r-us faced a time

of intense competition in the industry, which had grown from a few hundred companies in 1975,

to well over 3000 companies. During that time, Promotions-r-us had evolved and grown with the

market, but by 2012 they had reached a plateau in sales. By 2014, margins had begun to slip

and overall profitability had been down for the past 2 years. At last year’s executive meeting,

the firm’s objective of putting North American made quality products into the hands of valued

partners was reaffirmed. However, a strong emphasis was put on maintaining profitability

through efficiencies in the light of competitive pricing and slipping product margins.

Products and Customers:

Promotions-r-us offered its comprehensive collection of promotional items to a vast portfolio of

clients, including multinational corporations and small to medium sized corporations. Some of

their best customers were multi-national firms with tremendous purchasing power. Further,

Promotions-r-us took pride in the strong relationships they developed over the past 40 years.

Some of their biggest clients had been with them since the company’s inception. However, in

each case, Promotions-r-us only provided for the needs of the North American operations, in

Promotions-r-us

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some cases, only to the Canadian affiliates. With a relatively small sales force, it would be

difficult to tackle a more international client base in their Business to Business operations.

Further, Promotions-r-us differentiated itself in this market by recognizing and promoting the

importance of using North American products. Unlike many of their competitors, who purchased

cheaper goods from Asia, Promotions-r-us only purchased high quality products from North

American suppliers, which was reflected in their premium pricing. This approach was very well

received by their top 25 clients, who historically represented 50% of their annual revenue. (See

Appendix 1)

Current Situation:

At the front end, PRU employed twenty (20) highly skilled promotional product sales

professionals, who pledged to care for and satisfy their clients. These employees had an

impressive depth and knowledge of the industry which allowing them to tailor offerings to

specific client needs. Since the purchase of Salesforce.com in early 2013, the sales

professionals used this CRM software to manage their client base and help them in their day-to-

day dealings with clients as well as prospects. The sales professionals secured all orders and

worked with the client to finalize the order details. Once the order is signed and faxed to the

PRU head office, the 4 Customer Service Representatives were responsible to ensure the

orders were filled and shipped to the client’s satisfaction. This department was affectionately

called the “Bull Pit”, but everyone in the firm recognized the tireless hours these folks put in to

try to ensure customers’ expectations were met. The big problem with this group was the high

turnover of employees. The Customer Service Department Manager was convinced that the

high turnover was because the order fulfillment process was completely outdated and change is

well overdue. She had requested that Salesforce.com CRM software be purchased for her

people too, but the CFO denied the request due to a crack-down on expenses in the past year.

PRU also had a very basic presence online. The corporate web site highlighted the quality of

their products and pointed prospective customers to call their local sales professional for a

personalized meeting. However, the Marketing Director thought there were opportunities to

expand this footprint. For example, people planning events such as weddings or other parties

might benefit from what PRU had to offer. With e-commerce on the rise, many customers, both

B2B and B2C were using the Internet as their first point of contact and/or purchasing directly

online. The Marketing Director ran a few promotional campaigns in 2012 and 2013 using

Promotions-r-us

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Google Adwords with some success. However, the results indicated lower than average sales

per order and predominantly small businesses taking advantage of the offers.

All of this concerned Gerry. As CEO and founder of PRU, he needed some answers. He had a

report on his desk that confirmed his deepest fears (see Appendix 1). His company was in

decline. He was also not convinced that the risk of either entering global markets or entering

the Business to Consumer market would be worth it. How could he improve revenue, but more

importantly, how could he improve profitability?

Promotions-r-us

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Appendix 1:

Year Annual Sales Total # of

customers

Average

annual sales

per client

Average Annual

Sales Per Client

EXCLUDING TOP 25

CLIENTS

TOP 25

CLIENTS:

Average Annual

sales per client

TOP 25

CLIENTS:

As

percentage

of total

sales

2011 $124,750,000

2,500 $49,900

$ 25,202 $ 2,495,000

50%

2012 $125,000,000

2,568 $48,676

$ 24,086 $ 2,550,000

51%

2013 $124,800,000

2,790 $44,624

$ 19,362 $ 2,838,600

57%

2014 $124,300,000

3,000 $41,333

$ 16,672 $ 2,976,000

60%