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Colmant Cap Classique: Jean-Philippe Colmant

An entrepreneur proves that it’s possible to change direction half-way through life and achieve business success in an unknown industry.

Juliet Pitman

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Jean Philippe of Colmant Cape Classique

In a former life, Jean-Philippe Colmant cut tombstones from granite slabs in what was a thriving business in Belgium. It was a business that made him a good living. And while it’s not uncommon to hear of people leaving their jobs to embark on a new entrepreneurial venture, it’s not so often that one hears of someone leaving such a successful enterprise and moving their wife and five children halfway across the world to pursue a career in an industry of which they know nothing and in which they have absolutely no experience. Yet that’s precisely what Jean-Philippe did. The Belgian says: “I had never visited South Africa and did not even know Table Mountain existed. And while I was a good consumer of wine and bubbly, I knew nothing about how it was made. I was a businessman – not a farmer or a winemaker.”

Having the vision

Today, however, JP runs a successful business importing champagne and this month will release his first bottle of Colmant Cap Classique on the South African market, made in his own custom-built Franschhoek cellar. The story of how he got there is testament to the fact that business success is the result of a combination of vision, passion, capital and having the wisdom to surround yourself with people who know what they’re doing. “With these things in place, entrepreneurs don’t necessarily need to have all the technical skills. Technical know-how can be learned. It’s the other ingredients of business that you need to have to begin with that are important,” he says.

Settling in

But when he moved to South Africa in 2002, he had no idea what business he wanted to pursue. “It was a lifestyle change that we wanted and when we visited Cape Town, we fell in love with it,” he says. Having sold his business in Belgium, he knew he’d quickly have to find some way of earning a living, and as he explains, “Once the decision to live in Franschhoek was made, it was a natural progression to think about making wine, although at that time we hadn’t yet decided to focus on bubbly.”  He purchased a 5-hectare plot, financed from the sale of his Belgian tombstone-making business, and on the advice of a nursery, planted Chardonnay grapes. “Nothing existed on the plot except for the main building – there was no vineyard or cellar or anything,” he says, “We had some books on winemaking and it was our intention to look around at the market and see what would be appropriate.”

Seeing the Gap

It didn’t take long for the champagne-lover to realise that South Africa did not have a single commercial winery dedicated exclusively to the production of Cap Classique sparkling wine. “It was also clear that, while the ‘still wine’ market was stagnating somewhat, there was a growing market for bubbly,” he says, adding, “I believed we could fill a gap for a high quality Cap Classique bubbly that was priced slightly above the other local quality Cap Classique brands, and that we could target a market that was looking for quality and was slightly less price sensitive.”

Drawing on expert knowledge

Decision made, there was still an enormous amount to learn and in this regard JP points to the importance of surrounding himself with the experts. “I received a great deal of help and advice from other winemakers in Franschhoek. Nigel McNaught from Stony Brook Winery showed me the ropes and allowed me to work with him. And although he doesn’t specialise in Cap Classique, he and I made a first experimental production batch at his winery so that at least I would have done it once before, prior to making the first bottle of Colmant Cap Classique,” he says. He also received advice from local bubbly expert, Pieter Ferreira, from Graham Beck Winery. “He has been enormously influential in our story and gave me advice on how to build the ideal bubbly production cellar,” says JP.
He invested a great deal of time in research before building the cellar or starting production. “I visited Champagne on a number of occasions to look at cellars and see what worked best, and it was there that I met Nicolas Follet,” says JP. The 23-year-old student was a few months away from completing his oenology degree and jumped at the opportunity to help JP in the first season’s production. His input was critical, as JP explains, “Not only was he born and brought up on a wine farm in Champagne but he also has all the technical and practical knowledge that you just can’t get by reading books.” The relationship worked so well that Nicolas is now a regular consultant to Colmant Cap Classique & Champagne.

Reaching critical mass

On his research visits overseas and during the information gathering process, JP learned another important aspect of sparkling wine production: critical mass. “For production and technical reasons, there is a minimum threshold of 40 000 bottles a year at which you can make bubbly and still have a sustainable business,” he explains. The Colmant cellar is built for precisely this output quantity.

JP is at pains to emphasise that sustainability is critically important. “Some people look at me as a foreigner who bought a wine farm and now does it as his hobby, but this is simply not the case. Yes, I had capital that allowed me to set up the farm and the production facility, but I worked very hard for that money in my previous business and have invested everything I have into this venture. The production cellar is function-built but has no extravagant frills – we didn’t have the money for such things.
It’s run as a business and from the beginning I knew it absolutely had to work and be sustainable.”

Seeking a solution

Wine production takes years before it yields a profit and wine makers talk of their money ‘sleeping in the cellar.’ But a fellow wine producer from Franschhoek had advised JP that newcomers to the market should start marketing their name at least two years before they released their first production. This is even more important if the producer is small. Colmant’s first bottle would only be released in 2008 and it was partly the need to market himself that lead JP to hit on an innovative marketing solution that also generated a new income stream. “A number of these things that I had been pondering came together one night when I couldn’t sleep and provided me with the solution I had been looking for,” explains JP. He and his wife, both avid champagne-lovers, were surprised by the shortage of good quality French champagne at a reasonable price in South Africa.“Here, you only really get the big expensive brands, so we got some friends from Franschhoek together and imported a couple of palettes from a producer called Tribaut in Champagne. At about the same time I looked at our new tasting room and thought it was such a waste to leave it empty till we had our own bottles. And then it came to me – we would call ourselves Colmant Cap Classique & Champagne and I would import and sell affordable, good quality bubbly from Champagne to fill the gap that we knew existed in South Africa,” he explains.

Marketing magic

It was a stroke of genius. JP’s plan was to import two or three thousand bottles a year but he sold 1 500 bottles of Tribaut in the first few weeks and was soon importing a full container of 8 000. The champagne is sold in top restaurants around the country and fills the gap perfectly between the expensive big brand champagne names and the locally produced Cap Classique varieties. This market presence, together with the tastings JP conducts both at the farm and for corporate clients, has enabled him to market the Colmant brand and build up a large database of loyal customers. The farm delivers bottles to customers’ homes all over the country. “We send out a newsletter to all our customers and it is through this platform that we have been able to build excitement and inform people about the launch of our own locally-produced bubbly, which has been our goal from day one,” he says.

Personal relationships

Importing and selling Tribaut has also enabled Colmant to build personal relationships with these customers, and as JP points out, “It’s so important to develop personal relationships with customers in this business. Many of my customers have become friends and they are not only loyal, but they become ambassadors for your brand. When they open a bottle of your wine, they tell their guests about meeting the owner of the wine farm, and this kind of story-telling is so powerful. It gives you something that simply cannot be duplicated when people buy your bottle off the shelf of a supermarket.”

For these reasons, he says Colmant will always remain small. “In ten year’s time, the only difference you might see is an improvement in quality, which we always strive for, but never in quantity. I never want to go into mass production and have to tell my loyal customers that I’ve sold out of their bubbly because I had to ship it all to a large wholesaler,” says JP. And although he’s already been approached, he’s not interested in exporting either. “There are enough good brands that leave South Africa. We need to keep some good things here to spoil the locals,” he smiles.

A unique launch

The relationships Colmant has built with its customer base have paid off in bottom-line terms, most recently in the form of a unique sponsorship from Investec Capital Markets. “I have been so lucky to run into them, as they offered to sponsor the launch of Colmant Cap Classique. This has enabled us to have a prestigious event at Summer Place in Johannesburg, in addition to the less formal launch at our own premises in Franschhoek. I personally am not aware of another winery that has launched a wine for the first time and been offered a sponsorship to do so,” says JP. There is strong synergy between Investec Capital Markets’ clients, and Colmant’s niched target market. In addition, the Colmant story is unique because the winery is the only commercial one of its kind in South Africa to focus exclusively on the production of Cap Classique. “This, together with the Investec Capital Markets sponsorship is going to make a big difference to our ability to penetrate the market and get our name out there,” he adds.

Future plans

Looking to the future, Colmant has big plans to entrench Cap Classique as a quality standard in South Africa. JP is a member of the Method Cap Classique Association of South Africa, whose interests are in the promotion of quality South African bubbly. “In 200 years, we’d like to see Cap Classique have the same status as Champagne – and we hope Colmant Cap Classique will be there as well,” he concludes.

Colmant’s ingredients for success in the wine industry

  • This is a capital intensive business that takes time to yield returns. You need to be able to cover yourself for the period that your wine is in production
  • Get your name out there as soon as possible. You cannot wait until you are ready to release your first bottle to start marketing – this is especially true if you are small
  • You don’t need to go for large volumes – small businesses are able to fill the gaps that the larger companies can’t
  • Surround yourself with experts, do as much research as you can and aim to follow industry best-practices
  • Look after your customers and develop strong personal relationships with them
  • Don’t expect to make a fortune out of wine – it can provide you with a good living and a great lifestyle but it’s difficult and
  • demanding work that requires 100% attention and passion.

Success milestones

  • May 2001 Jean-Philippe Colmant starts investigating the possibility of relocating to South Africa from Belgium to start a business
  • 2001/2002 Concludes the sale of Belgian tombstone business
  • December 2002 Moves to South Africa and purchases 5-hectare farm which will become Colmant Cap Classique & Champagne
  • Summer 2003 Starts planting chardonnay grapes in the new vineyard
  • 2003 Conducts market research and identifies a gap in the local market for Cap Classique bubbly
  • End-2003 Decision is made to focus exclusively on Cap Classique sparkling wine
  • 2004 Conducts research on ideal cellar design
  • End-2004 Work begins on building the cellar
  • 2005 Building of the cellar continues; makes an experimental batch of Cap Classique with the help of Nigel McNaught from Stony Brook Winery
  • 2005 Hits on the idea to import French Champagne brand Tribaut and sell locally to build customer database and market the Colmant name
  • January 2006 Meets Nicolas Follet while travelling in France; contracts him to help out with production of the first season
  • April 2006 Starts importing and re-selling Tribaut. Gets listings in top restaurants around South Africa
  • 2006 Harvests and bottles first Colmant Cap Classique
  • 2008 Launch of first production with sponsorship from Investec Capital Market

Juliet Pitman is a features writer at Entrepreneur Magazine.

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Case Studies

Starbucks Coffee Is All About Culture… For A Reason

CEO Howard Schultz reveals how Starbucks does it.

GG van Rooyen

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Howard-Schultz

Vital Stats

  • Player: Howard Schultz
  • Company: Starbucks
  • Market cap: $85 bn
  • Established: 1971 (Schultz purchased the brand in 1987)
  • Website: starbucks.com

When Howard Schultz was raising money for his first coffee shop called Il Giornale (later to be renamed Starbucks) he was finding it hard to land investors. The reason was simple: Schultz was trying to create a coffee culture where none existed.

The idea that the man on the street would pay a premium price for a cup of Italian coffee with a name he couldn’t pronounce seemed nothing short of preposterous. But that wasn’t the only reason people weren’t willing to buy into his idea. Schultz, you see, refused to talk like a proper capitalist. He kept emphasising the fact that he wanted ‘to do good’.

Related: How tashas Built A Recession Proof Business

Schultz recounted the trouble he had finding investors during a recent visit to South Africa for the local launch of Starbucks. He spoke at a Q&A session hosted by the Wits Business School.

“My wife was eight months pregnant at the time,” says Schultz. “Her father actually sat me down and said: ‘My daughter is pregnant, and she’s working. You have a hobby. You need to get a job.”’

But, as is so typical of entrepreneurs, Schultz persevered and eventually got the funding he needed.

“The first time someone gave me $100 000, I couldn’t believe it,” he recalls.

Since those early days (the shop opened in the mid-1980s), Starbucks has grown rather prodigiously. Consider the following: By the late 1980s there were 11 Starbucks stores that employed about 100 people. A few years later, in 1992, the company went public with a market cap of $270 million. Today, it has around 24 000 stores in more than 70 countries. And its market cap? A cool $85 billion.

While growth is good, it has a tendency to birth a ravenous monster that is impossible to satiate.

“We have to add $2,5 billion in revenue every year for the next five years just to maintain our current growth rate and satisfy Wall Street,” says Schultz. “And to do this, we will need to add 80 000 employees over the next 12 months. Essentially, we’re launching a new massive company every year.”

Yet, despite this, Starbucks manages to maintain its unique culture. Just as when Starbucks was a far smaller operation, it is known for stores manned by high-energy individuals who have a clear love for the brand. How has the brand managed this? Schultz attributes it to the following seven core principles.

Starbucks-franchise-south-africa

1. Partners not employees

Howard Schultz’s father worked as a truck driver, delivering and picking up cloth diapers in the days before Pampers. When he slipped and seriously injured himself, he was summarily retrenched. Schultz wanted to create a very different company.

One of the reasons he didn’t adopt a franchise model was that he wanted to be able to offer each employee at least some stake in Starbucks.

When the company went public, each employee became entitled to a portion of their annual salary in the form of stock options. That is still the case today, which is why Starbucks employees are called ‘partners’.

“Success is best when it’s shared,” says Schultz. “At Starbucks, we always ask: What’s in it for our people? Starbucks is accused of being great at marketing, but it spends very little on marketing. It’s all about the experience we offer in the stores.

Managers and leaders must do everything to exceed the expectations of our people so that they can exceed the expectations of our customers.

Related: Howard Blake Stays Hungry With His Innovation Strategy

2. Regular interaction

The management of Starbucks does everything in its power to engage with employees regularly.

“We travel extensively, and the amount of face-time management has with employees across the globe is really unusual for a company of Starbucks’s size,” says Schultz.

Schultz himself, for instance, sat down with each and every new Starbucks employee in South Africa during his recent visit.

Starbucks also has what it calls ‘Town Hall Meetings’ all over the world, during which management interacts with employees in an open and informal manner.

“We tell employees that they are free to speak up during these meetings without fear of retribution. We want honest opinions,” says Schultz.

Starbucks-franchise-layout

3. Respecting (and cherishing) employees

Howard Schultz is a humanist at heart, and this is reflected in the culture of the company that he created.

“The universal language of Starbucks is a deep sense of humanity,” says Schultz. “Building a company is a lot like raising children. You are imprinting a company with a culture and a set of values. Now, if a child falls, what do you do? You pick it up and comfort it. You don’t scold it. You need to take the same approach in business.”

4. Protecting the culture

Being tolerant of failure, however, does not mean the same thing as indulging bad behaviour. In fact, Starbucks is fiercely protective of its culture, and it doesn’t tolerate bad behaviour.

“We teach employees that they have a voice, and that they should speak up when they see someone doing something wrong. You can’t enable bad behaviour because it will erode a company’s culture.”

Related: Don’t Let Expansion Ruin A Great Company Culture

5. Spending money on employees

According to Schultz, the management teams of most large companies would be horrified to discover the amount of time and money spent on Starbucks employees.

“We have been very innovative with technology, and we have created a massive digital eco-system. Interestingly, though, we spent as much time and money focusing on the things that were employee-facing as the ones that were customer-facing.”

Starbucks-storefront-layout

6. Rewarding the right things

Schultz famously stepped away from the role of Starbucks CEO for around five years, and during that time the culture of the company quickly deteriorated.

“The company lost its way. The people who were managing the company — who were all good people — were measuring and rewarding the wrong things. Things such as profit and stock price became the focus. In any business, you need to continuously ask: What is our core purpose for being? Otherwise you lose your way.”

Schultz believes that his big mistake was not selecting a successor from within the culture. When he eventually retires, he intends to choose someone from within the operation who is in touch with the culture of the brand.

7. Being human

The film Fight Club famously depicted Starbucks as the epitome of the faceless corporation taking over the globe, but the company is actually quite unique in its willingness to speak out and engage with people on a social (and even political) level.

“We are very outspoken as a company. We feel that we live in a time where the rules of engagement have changed. What I mean by this is that we need to do more for the communities that we serve. The question we ask ourselves is: What is the role of a for-profit public company? Looking at this question has resulted in us taking on social issues such as same-sex marriage, gay rights, gun control and racism.”

For example, Starbucks recently unveiled its first store in Ferguson, Missouri (which has been plagued by racial unrest) as part of a plan to support efforts to rebuild and revitalise communities.

Read next: 5 Inexpensive Ways to Create a Company Culture Like Google’s

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Case Studies

How Merchant Capital And Retroviral Were Built To Sell

Entrepreneur chats to Dov Girnun of Merchant Capital and Mike Sharman of Retroviral. We explore why their companies attracted funders, and how the relationship can be used to grow their businesses.

Nadine Todd

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Dov-Girnun-of-Merchant-Capital
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The Tech Based Business

Know your business’s numbers inside out, and don’t try to bluff your way through any questions that relate to numbers.

Dov-Girnun

Vital Stats

  • Player: Dov Girnun
  • Company: Merchant Capital
  • What they do: Lending solutions for SMEs
  • Est: 2013
  • Investor: Rand Merchant Investment Holdings
  • Shareholding: 25%
  • Visit: merchantcapital.co.za

Less than two years into his business, Dov Girnun attracted the attention of Rand Merchant Investment Holdings (RMIH), a financial services investment company that includes the founders of FirstRand, Laurie Diepenaar, Paul Harris and GT Ferreira. These are no small industry players. On an investment level, they’re the funders who backed Adrian Gore when he launched Discovery and Willem Roos when he started OUTsurance.

How had Girnun found himself in the position to pitch to investors at this level? Months earlier, RMIH had launched a fintech incubator called Alpha Code. The idea was to find pre-revenue start-ups that would be the next game-changers. Their research brought them to Merchant Capital.

“We didn’t exactly fit their mandate because we were already operational and profitable,” says Girnun, “but they still really loved the business. They’d been researching the fintech space, and had recognised the potential in SME lending, which is our focus. They really wanted to invest, but at the time I was unsure if I wanted to dilute my shares further.”

Girnun already had an investor, the Capricorn Group, whose investments include Hollard, Nandos and Clientèle, and until this point he’d been careful to maintain his shareholding. His relationship with Capricorn was excellent, as the investment team added huge strategic value to the business over and above capital, and so he hadn’t been actively seeking additional funding.

And then a new opportunity presented itself. “We realised we have golden data on the SME space. How could we cross-sell to our base and monetise that data? We started chatting to RMIH, who were aligned to our thinking.

“Once I realised the value RMIH could add to our business, my whole perspective shifted. Here was an investor that could potentially help me to build a billion dollar business. I’d be diluting shares, but building a much bigger pie.”

Related: Funding Growth with Dov Girnun

The price of equity

Girnun is referring to the investment lesson that equity is cheap early on, and very expensive later, when a funder holds more shares of your business than you do. If you look for funding later, your valuation is higher, you’ve got a proven track record, and the same amount of money secures fewer shares. Sell too early, and the exact opposite happens.

This had always been Girnun’s view, but an understanding of how far the business could potentially go with RMIH’s backing was changing his mind.

There was just one challenge. While RMIH’s investment team loved Merchant Capital’s business model, investments need to be signed off by the board, which meant Girnun and his co-founder Daniel Moritz, needed to pitch to them in person, so that they could see their energy, passion and vision for Merchant Capital.

Serious, seasoned investors don’t make this easy. They need to see your passion, and how well you understand your business. They’re not there to make the experience easy.

“Even though I knew they were interested in my business, I still found the experience extremely daunting. There were very few introductions, handshakes or jokes. I was expected to launch into my pitch, and I knew that even though I had been given 20 minutes, the first two minutes would be the deciding factor. If I didn’t grab their attention in that time frame, they wouldn’t be investing in me and my business.”

Tapping into investor concerns

“I had just returned from the Endeavour international selection panel in San Francisco, and I think this played a major role in the success of my pitch,” says Girnun.

“One of my judges, a hugely successful venture capitalist from Sillicon Valley, really explained the significance of the elevator pitch to me. Imagine you’ve gotten into an elevator with the CEO of Goldman Sachs, he said. If you’re lucky, you’ve got seven floors to get them interested enough in your business to want your card, and maybe even a meeting. They can’t possibly learn everything about your business there and then — they just need enough for their interest to be piqued.

“Because you don’t know how much time you have, or who you’ll be talking to and what their area of expertise is, you can’t just learn a pitch off by heart, and you certainly shouldn’t have a power point deck that you rely on. Both are very bad ideas. Instead, you need to know your business so well, inside and out, that you can tailor your pitch to the person you’re talking to, based on what they care about.

“Because of this piece of advice, I was able to tailor the first two minutes of my pitch to the RMIH board and what they care about. If I grabbed their attention, I’d be able to hold it for the next 20 minutes, which actually ended up being close on two hours. If I hadn’t, we would have politely shaken hands after 20 minutes (if not earlier), and been on our way.”

It’s a simple, but incredibly important lesson: Know your business’s numbers inside out, and don’t try to bluff your way through any questions that relate to numbers.

“You have to know your unit economics — are you able to distill the essence of your business economics on the back of a napkin? You need to know the high level stuff and the minute details, and they all have to be at your fingertips. If they aren’t, you have no business trying to sell your company or attract investors.”

Related: Bootstrapping Is Much More Fun Than Investors

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Case Studies

How AutoTrader Anticipated Change

AutoTrader South Africa is an online behemoth, boasting more than three million visitors each month. Not that long ago, though, the brand faced the very real possibility of extinction.

GG van Rooyen

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Autotrader-George-Mienie

Vital Stats

  • Player: George Mienie
  • Company: AutoTrader South Africa
  • Established: 1992
  • Visit: www.autotrader.co.za

Key learnings

  • Trends are out there to be identified. Being caught unprepared is unacceptable.
  • Change needs to be tracked through the use of a measurable KPI.
  • Don’t be afraid to act pre-emptively.
  • Do research. Know your customer.
  • Create an unprecedented user experience.

By the mid-2000s, it was becoming clear that the world was changing. The internet was going mainstream, placing massive pressure on industries that only a few years earlier had seemed untouchable.

The print industry in particular was coming under threat, with readers moving to the internet for information. Things didn’t change overnight, though. The general decline in readership was steady but quite slow.

Like a frog sitting in a slowly-heated pot of water, it was all too easy to ignore the evidence. AutoTrader South Africa, however, was not willing to accept death by attrition.

Related: Fake It ‘Til You Make It: How These 10 Entrepreneurs Did Just That

Measuring change

Autotrader-technology

“When it comes to the digital realm, you can never complain that some development impacted you unexpectedly. The writing is always on the wall, provided you’re taking notice,” says AutoTrader CEO George Mienie.

Long before the global shift to digital mediums started to affect AutoTrader in a real way, the company began to prepare for the inevitable.

“We knew it was coming. The shift to digital was already starting in places such as the US and Europe,” says Mienie.

“We also knew that we needed to measure this shift in a reliable way. When it comes to managing difficult change, you need a KPI that you can reliably measure.”

Comparing unique users of a website to the circulation of the magazine wasn’t reliable enough, since it was impossible to truly know how many people had used any given copy as a reference when shopping for a vehicle. Some other KPI was needed.

“We settled on leads to dealers. We wanted to track how many people had actually contacted vehicle dealers thanks to the magazine, versus how many had contacted a dealer because of the website,” says Mienie.

Finding a KPI

Tracking website leads and comparing them to magazine leads sounds like a simple idea, until you actually start to think about it. If it’s hard to know how many people used a single copy of AutoTrader as a reference, how do you figure out how many leads the mag has generated? It was a conundrum.

Tracking leads on the website would be easier, provided you were willing to harm the user-friendliness of the site. AutoTrader wasn’t willing to do this.

“We could track website leads by forcing every user to fill in some kind of form before gaining access to a dealer’s details, but we weren’t willing to do this,” says Mienie.

“Today, the average user spends a phenomenal amount of time on our site. A typical visit lasts 12 minutes, and we believe this is because our site is easy to use. While KPIs are important, they shouldn’t come at the expense of the user. Everything should be done to make the experience for the client or user as pleasant as possible.

“With this in mind, we give our software engineers a lot of freedom. They don’t need to seek permission to improve the site. If they’ve been working on something that they think will improve the website, they can run with it. You never want bureaucracy to stand in the way of improvement.”

Related: 11 SA Entrepreneurs on What They’ve Learnt About Managing Staff

An innovative solution

Autotrader-team

In order to effectively measure leads from both AutoTrader magazine and the website, the company came up with a very elegant solution called Call Tracker.

The solution was so elegant and transparent that even regular consumers of AutoTrader probably wouldn’t have noticed its existence.

How does it work? The number that you find for any given dealer in the AutoTrader magazine or on the website was not the same as the regular number of that dealer, although, the number was dedicated to a dealer.

Instead, it is a technology that redirected the call through the company to the dealer. Thus, giving AutoTrader the ability to measure leads via phone to the dealer, which was the most-used way in which consumers got in touch with dealers in those years.

Importantly, the company regularly placed a different number for specific dealers on the website and in the magazine, meaning AutoTrader could track exactly which platform a lead was generated from, and give the dealers useful insights into his/her dealership’s response.

AutoTrader had in essence created a reliable but simple KPI, using sophisticated technology at the time, that could be used to track consumers’ migration from print to digital.

The watershed

As mentioned, the migration of users was fairly slow. AutoTrader had started monitoring the trend in 2007, but it wasn’t until 2013 that the website took over from the magazine as the core focus of the business.

In the mid-2000s, the company had printed around 230 000 magazines each month, and managed to sell 55% of those on a regular basis.

Today, it sells about 30 000 magazines a month. However, as magazine sales have declined, the number of visitors to the website has skyrocketed, with more than three million visitors to the website every month, opening more than 40 million pages.

Related: 5 Wrongheaded Attitudes Stunting Your Growth As An Entrepreneur

New competition

The migration of AutoTrader magazine advertisers (sellers) and consumers (buyers) to the website wasn’t guaranteed. Getting buyers and sellers of the magazine to embrace the AutoTrader website required hard work.

“As a magazine, we had a big advantage: Potential competitors were faced with very high barriers to entry. We had the capability to compile a 600-page magazine, print it and distribute it weekly. Any new competitor would have found it hard to match us,” says Mienie. “The internet, however, obliterated those barriers. Suddenly it was much easier to compete with AutoTrader.”

AutoTrader wasn’t afraid to pre-empt the digital shift. “You need to be willing to eat yourself. One of the things we did was to place the website prominently in the magazine, knowing that it would eat into sales. We had to take a short-term hit, but we knew that we would benefit from it in the long term.” The company also placed a huge emphasis on the user experience.

“You need to be the best,” says Mienie. “You need to lead the charge and be first to market with every new development. You also need to know and respect your consumer and dealer. We believe in creating a site that is easy to use and offers more content than you’ll find anywhere else. We also make it a priority to know the consumer’s car-buying journey and car sellers’ needs.

“But, the game is changing again, fewer and fewer consumers are using the phone, and to an even lesser degree email, to get in touch with dealers. Our research over the last year shows that more than 52% of car-buying consumers don’t phone or email a car dealer, but simply take the address and visit the dealer directly.

“When it comes to managing great change within a company, research is incredibly important. But just doing research isn’t enough you need to use it effectively. The temptation exists to hog research because you don’t want competitors to get hold of it. That doesn’t work. We know exactly how much time the average consumer spends studying vehicles before buying a new car. We also know how much of that time is spent online (15 hours), and how much is spent in the physical world visiting dealers (14 hours), and this trend is shifting rapidly toward less time in the physical world and more time searching online, which means the consumer has pretty much made his choice before he leaves his screen. We give that info to our salespeople, who in turn give it to our clients (car sellers). Information needs to be disseminated.”

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