The Case of the White Whale
A sign CEO pushes his client base to the brink in pursuit of a new, huge customer.
CALL ME IZZY. That’s what they called me at Ambergris Signs. Some years ago, with nothing in particular left to interest me in sailing about the watery part of the world, I left the US Navy to come to work for Declan O’Hab, or rather, the “Captain” as I called him. He was a signmaker’s signmaker, having worked his way up from the lowest ranks — even injuring his leg in a fall during a small installation job I was on with him, and thereafter carrying an unmistakable limp.
For decades before the Captain’s ascendancy, Ambergris Signs remained a stable, medium-sized sign company with many accounts, most of them the smaller fish of our Nantucket base and its surrounding communities. Mr. Souter, the ancestral CEO, had often said of his clients, “While they be small, they be many and so we would not miss just one should it loosen from our net. Nay, we would land another or two more upon our very next cast!” And thus, did Ambergris Signs do its business for many years.
But, the passing of Mr. Souter brought the promotion of Captain O’Hab to CEO, and immediately, he let it be known that Ambergris Signs would now be pursuing much larger fish. “We shall jettison our low-sales and low-profit customers, Mr. Starbuck,” he said to the CFO, and resources previously servicing so many small clients were steered to the wider horizon of businesses with multiple locations throughout our region. For the first several years, the new mission expanded both the sales and profits of Ambergris, so Captain O’Hab began to target even larger prey.
ABOUT REAL DEAL
Real Deal scenarios are inspired by true stories, but are changed to sharpen the dilemmas involved and should not be confused with real people or places. Responses are peer-sourced opinions and are NOT a substitute for professional legal advice. Please contact your attorney if you any questions about an employee or customer situation in your own business.
ABOUT THE AUTHOR
Created by ROLF L’MAO, Signs of the Times’ mascot. Email him at firstname.lastname@example.org.
Then, three years ago, gigantic retailer White & Whaley — W&W for short — announced a major expansion into the New England region, with plans to open 1,000 stores over the next five years. Captain O’Hab wanted that account. I mean he really wanted that account. Of course, W&W already had established national sign company partners from their operations in other parts of the country. The Captain intended to keep them at bay. “Not one channel letter shall they bend, nay, nor install in our waters,” he once proclaimed. So after White & Whaley he went.
He traveled near and far — to all corners of our country — to meet, court and try to win favor with W&W’s many brand managers, vice presidents and the like. Endless mockups, prototypes and more were shipped here and everywhere on spec. When this began to diminish Ambergris salespeoples’, designers’ and fabricators’ time and attention to our regional clients, some of our oldest passengers began to threaten to jump ship. However, now so driven, O’Hab announced to the entire office and shop over the intercom: “Those minnows be damned! I’ll chase White & Whaley ’round the world and back again,” he shouted. “From Portland, Maine to Key West, Florida. From Boston Harbor to the Golden Gate!”
No one dared try to stop him, save for Mr. Starbuck. “You’re loosing our net ’twas so carefully woven by Mr. Souter; soon all our ‘minnows’ will swim through’t,” Starbuck said to O’Hab. “You hope to catch a whale in their place. Well, God help us that it be not an angry whale!” Unbeknownst to CFO Starbuck, the CEO Captain then agreed to one more and final price reduction demanded by W&W and lo — O’Hab had caught his White & Whaley.
Nine months later (three months past schedule) W&W opened a pilot store in Cape Cod. The permitting alone had meant weathering an unexpected storm, costing a boatload of staff time — as had the endless, last-minute changes and orders for items that had been forgotten. A cloud of birds, the like of which not seen by anyone present, had marred the store’s opening. All hands at Ambergris Signs took it all as an omen. And yet…Advertisement
The Big Questions
- What would you do if you were or could influence Captain O’Hab?
- Would you stay the course or correct it? If so, how?
Where to start? So many references to so many good books! Cap’t Ahab — sorry — O’Hab needs to come to his senses or be lashed to the mast. You can go whale hunting but you can’t use your fresh catch as chum and expect to be a successful fisherman.
If W&W is a good prospect, assign a new salesperson to the account and let them work it, while still serving your existing customer base. Cutting your client base free to focus on a longshot is the quick way to end up in Davy Jones’ Locker.
There is nothing wrong with culling your low-profit customers if they are taking up more resources than they are bringing in, but it has to be approached in an intelligent fashion. Have the new revenue stream in place before you cut them loose. You need to keep the business on an even keel, even in rough waters.
And if you do land the whale… “You’re going to need a bigger boat.”
I’d tell the boss that putting all our eggs in one basket and making that basket ever smaller puts us in a bad position. If we should lose the W&W account we’d be in a bad spot. If they realize this they could demand even lower prices; we would have to comply or die.
Dana Point, CA
Captain O’Hab steered his small craft directly into the deepest waters where storms are frequent, and did not shore up crew, mast, nor boat. This course is more likely to capsize the company than to ensure its growth. I might dig up three horror stories on the web of signshops that grew too fast and took on too much water. Support these real-life case studies with the cold hard truth of the bottom line, and what cash flow looks like without those valuable, loyal bread-and-butter sales. Unhappy customers will post negative reviews, hurting future (big fish) sales. To cap it all off, point out that employee attrition (which is likely) is the greatest (often hidden) expense a business can suffer. All of this might convince O’Hab to chart a more conservative path to growth. He has a bad case of “Zeal before Real.” Better to land some new big fish first, keep everyone happy, and build up team size and skill, rather than go after a whale and leave loyal clients stranded.Advertisement
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