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Allen KloseChief Marketing OfficerACE Cash Express |
On Monday, May 17, the Chief Marketing Officer Institute will reveal the winners of its "CMO of the Year" award for leadership excellence. The following interview, conducted by the CMO Journal and CMO.com, is one of 10 with each of the finalists. Click here for our conversations with the other nine finalists.
>> Category
Large Organization
>> Company Description
Founded in 1968, ACE Cash Express, Inc. provides financial services, including short-term consumer loans, check cashing, bill payment and prepaid debit card services. At the end of 2009, ACE had a network of 1,758 stores in 38 states including the District of Columbia, consisting of 1,688 company-owned stores and 70 franchised stores. During 2009, ACE served more than 41 million customer visits with volume in excess of $14 billion.
>> Highlights
In 2009, unemployment rates reached double-digit levels and consumer confidence fell to record lows. These economic pressures also weighed heavily on ACE Cash Express, which is a business highly dependent on people having jobs with paychecks to cash. Employment status also affects their ability to get a loan, wire money to their family and friends, and pay bills. Despite these challenges, ACE grew its EBITDA by nearly $10 million dollars, or 14%, and experienced only a 3% reduction in overall revenue. Central to this performance, Chief Marketing Officer Allen Klose played a critical role in the company’s strategic planning process, which focused on offering more products through the existing retail stores and to expanding the company’s Internet offering.
>> The Conversation
Q: One would assume your budget and strategic plan for 2009 was in place when the financial crisis dramatically deepened in Q4 2008. How did you change your original plan to adapt to the new environment?
A: Our board of directors, CEO, and management team had a strong read on the U.S. economy and were not afraid to take appropriate action. In addition–and this is critical–the changing financial situation of our customer base was a leading indicator of the negative trends in the economy. When new home construction began to slow, our customers–the men and women building homes–were the first to be impacted. When families slowed their use of casual family dining establishments, our customers–the cooks, bus boys, waiters and waitresses–were the first to have their hours reduced or to be laid off. When purchases of new cars and furniture slowed, our customers–the men and women working in manufacturing–saw their hours reduced and, in some cases, their plants closed. ACE’s customers work in virtually all segments of the economy and were impacted early and hard during this current economic recession. With these insights into the marketplace and economy, ACE took aggressive steps in August 2008 to right-size our business and implement a new set of strategic initiatives.
Q: Can you elaborate on those steps?
A: ACE implemented three broad, strategic initiatives to address the economic crisis and the projected impact on our business. First was a plan to conserve capital; we stopped acquiring and building new stores and adopted a process to review all capital expenditures. Second, we focused all of our marketing and new-product development energy on opportunities we could offer in our existing ACE locations and on the Internet. We spoke to our customers and developed an expanded product offering to ensure we could continue to serve their financial needs. Central to this strategy was our aggressive push with prepaid debit cards and direct deposit, as well as allowing customers to transact with ACE on the Internet. Third, we right-sized our business and cost structure based on the forecasted needs of the business. Our operations team was able to save millions of dollars through labor and store operating efficiencies.
Q: You worked closely with your CFO on 2009 strategic planning efforts, which were key to the company weathering the extremes of the financial crisis. Describe that partnership–what makes it work?
A: Our CFO, Douglas Lindsay, and I have had a great working relationship for the past five years. The success of our relationship is based on three main factors. First, we both work hard to understand and appreciate each other’s function. This understanding is critical as we move forward with ideas that make both marketing and financial sense. Second, we test and measure everything we do at ACE. We only roll out marketing programs and new products after they have been thoroughly evaluated with consumer research and then tested in stores and markets. After we’ve implemented our marketing plans, we continue to provide analysis to ensure we are generating a positive ROI for the organization. Last, both Douglas and I are incented by our CEO on the same set of metrics–metrics we have both agreed to and bought into. We are both centrally focused on creating value for our customers and ultimately for our investors.
