How John Gleason Led Profitable and Sustainable Growth by Balancing Capital and Operational Constraints
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John Gleason is the recently retired Executive Vice President and Chief Sales Officer at Ryder System, Inc. (NYSE: R) a leading logistics and transportation company that provides supply chain, dedicated transportation, and fleet management solutions to some of the world’s most-recognized brands.
After 12 years as head of sales, Gleason shared how he was able to strategically balance accelerating growth in Ryder’s “asset-light” supply chain and dedicated transportation businesses with growing the asset-heavy lease portfolio within capital and cash-flow constraints.
“We intentionally moderated the growth of the fleet management business (the leasing side), which is capital intensive,” says Gleason. “And the primary purpose was to accelerate not only growth but profits while increasing cash flow, which has become more important to our investors.”
“On the other hand, we worked hard to accelerate the growth of our asset-light businesses, which are dedicated transportation and supply chain,” says Gleason. “While more scalable, growing these business units offers additional challenges because they are constrained by operational and logistical complexities. Both the dedicated and supply chain business units have large addressable markets and are growing in low double-digits with good margins,” he continued. “However, if we were to grow these businesses too fast, we could probably outsell our operational capabilities to perform at world-class levels for our customers, which obviously we wouldn’t want to do. We wanted to avoid running into operational issues in terms of how many drivers we could onboard efficiently and our ability to support the complex logistics of the automotive space, where Ryder is the largest provider for some of the best known original equipment manufacturers in the industry.”
John Gleason was uniquely suited to the task of realizing more profitable growth for Ryder. He is a student of his craft with a reputation for mastering the fundamentals of selling. This allowed him to get more growth out of his sales teams at a variety of high performing companies, including ADP. He also brought a unique blend of perspectives to the CSO role. He has a CFO’s focus on accountability, capital resource allocation, and analytics. And takes a CEO’s perspective when it comes to maximizing market potential and building shareholder value.
“My background is unique in sales leadership because I’m a CPA,” shares Gleason. “Not many CSO’s come from a financial background. I think it’s important to have someone on the leadership team focused on the science of selling as opposed to the art of selling. I think there’s a lot of skilled sales leaders in terms of culture. But in my experience, if you’re not taking advantage of some of the other elements of the growth formula—commercial architecture, data analytics, compensation design, and the return on selling assets—I think the selling effort is going to be sub-optimized.”
Gleason intelligently evolved the commercial model at Ryder in a variety of impactful ways.
One approach that proved tremendously effective was focusing the sales team on value selling, accountability, and Total Cost of Ownership (TCO), which stemmed from his background in accounting. To make this happen, Gleason hired an accounting firm to build value-selling tools based on a data-driven TCO model and trained 600 salespeople to use them.
“Prior to my joining the company, if you asked a sales rep why you should buy Ryder versus anybody else, they would basically say we’re better and give some emotional answer why we’re better,” Gleason recalls. “I completely flipped that on its head. Now, they sell analytically. They do a TCO analysis for the client, take a look at their maintenance information and asset strategy, and compare it to like-kind companies in an analytical process. And, if at the end of that, Ryder can save you money, I would show you how and be very specific.”
Getting the entire sales team to embrace the new value-selling approach was a cultural shift. “The data spoke for itself. In fact, today Ryder has a better benchmark and spending database than most trade associations,” he continued. “The bigger issue was cultural change. For the first year or two, we changed compensation to motivate reps to use the TCO approach. We did this by changing the multiplier. So, instead of a dollar of commission, we gave reps who used the TCO approach $1.10 commission. Over time, the success of the approach and the examples became so overwhelmingly clear that I no longer had to incentivize sellers.”
Another challenge Gleason had to overcome was in new business development. “We had a new business acquisition problem,” says Gleason. “Our people were growing existing customers, but they were not adding new ones. Obviously that’s hard in every company. One aspect of the problem was reps held onto all the accounts that they had sold in the past, so they didn’t have any time to hunt for new ones.”
“After trying a number of things, we changed the compensation on any account a sales rep kept for over 12 months,” says Gleason. “We said keep as many accounts as you like. You can earn a dollar on a new account and 25 cents on an existing one. Reps quickly did the math and asked for fewer acquisition accounts. All of a sudden, the hunters were now freed up to hunt. It took a while because not every person was a proven hunter, but it was a dramatic change through the organization.”
“The other big thing we did to boost new business was on the management skill side,” he continues. “We had a lot of managers who were not good at hunting new business. I’m a big believer in skills and development, so if you’re going to be a director of sales, you have to demonstrate that you can successfully sell new business. We used analytics to track this and training to support it. But ultimately, I transitioned about half the sales directors to new roles over a period of three years, because they didn’t have the new business development skills to help our teams be successful.”
Advanced analytics is a big way Ryder is managing growth intelligently to increase value for shareholders. One way Gleason leveraged analytics was to focus sales reps on the highest-opportunity accounts. “There’s an enormous number of prospects out there—probably 20 million companies that rent trucks, seven million class three through eight leased vehicles, and a hundred thousand or so businesses that need warehousing,” he reports. “That’s a lot for 50 salespeople to call on. Analytics have become increasingly important, because when you have a smaller sales organization generating around $3 Billion, you can’t waste a lot of time knocking on doors, so to speak. We became increasingly data driven. We put in much better processes to understand the characteristics of buyers, their current contract status with other providers, who are the decision makers, and when those decision-makers change.”
Under Gleason’s watch, Ryder hired data scientists to aggregate first-party, product telemetry and third-party data that can help improve sales performance. His team applied advanced analytics to calculate propensity to buy, TCO, and price elasticity to prioritize the highest potential customers for sales to focus on. For example, Ryder continues to use safety and maintenance data to proactively call on clients to recommend ways they can reduce their TCO by reducing insurance premiums and avoiding expensive downtime.
“On the maintenance side, the trucks we maintain have fault codes and all of a sudden the red light goes on because a problem happens,” says Gleason. “We can get that information from a sensor by working with the OEM and we will call the client and say hey, I know you’re on a route from here to there but bring your vehicle in because you’re going to have a problem that you’re not even aware of. We can schedule that appointment for you online.”
“A good example of how we have used third-party data is the Compliance Safety Accountability Score (CSA Score) collected and disclosed by the federal government to measure the safety of trucks on the highway,” says Gleason. “So, if you ever see a truck pulled over by a state trooper because the truck’s brake light was out, the trooper will probably notice there were three or four other problems and report it. Armed with this information, we will call on prospects and say your CSA score is amongst the worst in the industry and it’s probably impacting your business. I didn’t have to wonder if a client had a problem. I called them because they had a problem. From a performance standpoint, if that data allowed us to put sales reps on customers with bad CSA scores and we could demonstrate ways we could fix it and reduce the TCO, it would improve the likelihood to buy.”
The next big play, as Gleason sees it, is to use analytics to optimize sales roles, coverage, cooperation, and territories. “I’m a big believer in trying to grow sales without growing the sales organization or cost to sell,” says Gleason. “The more I can use analytics to make sure our reps aren’t wasting time with prospects they’re not likely going to be successful with, the better. We’ve spent a lot of time in that particular area.” Gleason also sees analytics as an invaluable tool to redefine territories and refine the roles and responsibilities within the sales organization to provide better product expertise, cross selling opportunities, and customer experience.
“I think all CSOs should be looking at how to most effectively serve the customer’s needs in the most efficient manner possible,” says Gleason. “So I’ve always looked at how customer organizations, behavior, and digital channels are evolving, and then how can we serve our customers differently and more effectively through that evolution. What worked five to ten years ago may not be the best solution today. For example, I’ve explored adding more product specialists and having the fleet management person who sells the vehicle also sell dedicated solutions with the driver in it.”
One area where Gleason successfully adapted his commercial model is shifting sales coverage of smaller transactions and clients to a call center. “When I joined Ryder, we had zero inside salespeople,” says Gleason. “Now Ryder has 170 inside salespeople and they tackle one of the biggest issues – used vehicle sales. Ryder is the largest seller of used trucks in North America and most customers are small accounts with under three trucks. Today, 35% of all those vehicles are sold by our inside sales team with higher productivity, better customer satisfaction, and lower costs. When I gave small accounts (under three trucks) to inside sales, our customer retention rose from 50% to 72%, our CSI (Customer Satisfaction Index) went up 400 basis points, and our cost dropped in half.”
John Gleason recently retired as Executive Vice President and Chief Sales Officer at Ryder System, Inc.
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