Positioning for Success: How Julie Copeland Transformed Arbill's Strategy
Discover how Arbill’s CEO Julie Copeland successfully transformed the company’s positioning strategy, shifting focus from low margins to high with SafetyCare bundles.
It was 2015. A decade had passed since Julie Copeland had taken the reins of CEO from her father, as he had a generation earlier from his own father. This third-generation, Philadelphia-born business, Arbill, had patiently built a reputation as a leading supplier of high-quality safety equipment. Their helmets, gloves, goggles, and hazmat suits had kept workers safe as they labored in warehouses and industrial sites not just along the Schuylkill River’s bends, but now across the nation. And Julia was determined to protect and build on this legacy, armed with a bachelor’s degree in communications from Syracuse and an MBA from Temple University.
While Julie had made immense strides in improving the business processes, organization, and purpose, margins remained persistently thin, a fact Michael Porter’s Five Forces would explain to be an inevitable reality of industry dynamics. Industrial distribution companies typically make only 30% gross margins leaving 5% net, while, in comparison, software application businesses generate 60% gross margins and medical supply generates 50%.
The buyers Arbill worked with, mainly purchasing managers stocking safety gear, were motivated by one thing: price. And they were ready to substitute any number of willing providers to save a few dollars. Rivalry was high, entrants abundant, switching costs low, and buyer bargaining power strong.
This could represent a pivotal moment in Julie’s career, a chance to either be relegated to fight for diminutive advantages in an unattractive market or chart a rosier course for her family’s and company’s legacy. The latter would not only help employees who depended on the business for their livelihoods but would represent a chance to fulfill the company’s mission of ensuring every worker goes home safe.
Reimagining Arbill’s Strategy: Applying the Outthinker Process
If you have attended one of my talks, you may have heard me describe Julie’s story: She assembled her leadership team to meet with me for a series of planning sessions. Together, we looked at a set of strategies my research shows transformed more than 30 companies from low-margin to high-margin businesses. The team ideated, decorating the grey conference room walls with colorful bursts of neon Post-it Notes. They sorted the ideas, separating low impact from high potential, the difficult from the easy.
A deceptively simple idea emerged out of this process. If they decided to pursue it, it might differentiate their offerings, even remove them from comparison with current competitors, and redefine Arbill as a company.
From Products to Value: The Birth of SafetyCare
Arbill sold products. High-quality, well-made products that helped people perform dangerous jobs safely. The ideation exercise facilitated the team to think differently. If the company’s mission was to achieve a day on which every worker goes home to their family safely, Julie asked, “Why are we only selling safety equipment? Why aren’t we selling safety?” It was not clear, to the leadership team or even Julie herself, exactly what this meant, but it opened up a new mindset.
The team played around with the concept. Creating a truly safe workplace for clients was about more than just dropping off masks and helmets at a warehouse. It also meant empowering workplaces with the skills, knowledge, and training to use those products safely and effectively.
“We realized we need to be much more than just a products company to accomplish that goal,” Julie shared in an interview with the Growth Institute.
Arbill already offered some safety programs as a service. They sold a Rapid Response, a First Aid service, and an Automated External Defibrillator (AED) service to train staff to use the devices. They were also testing environmental health and safety consulting. But the products and services weren’t integrated, and the buyers of those services were often different than those who bought their core products, so it was difficult for customers to understand the totality of what Arbill could do for them. The team settled on an idea of bundling their safety equipment with OSHA compliance consulting and safety training.
“SafetyCare” was born.
Positioning: A Shift in Customer Focus
Arbill had never bundled offerings together before. The team designed new marketing materials, and Julie assigned a salesperson to test the idea with customers.
When that salesperson started meeting with customers, he ran into a few issues. Arbill’s primary buyer— the purchasing manager for equipment — didn’t have the authority to buy safety consulting and training. The purchasing manager also didn’t know much about safety holistically. Sure, they cared, but their job was to reduce costs of everything the company purchased including machine parts and office supplies.
Another issue, as is the case with most innovators attempting to create a new category, was that no standard line item existed for Arbill’s bundle. And nobody seemed to have authority over all the components of Arbill’s would-be offering.
But then Julie and her team realized there was another, more senior, person in their client’s organizations who had the motivation and authority to greenlight SafetyCare: chief financial officers (CFOs).
Arbill’s New Positioning Strategy Delivers Results
Once the team figured out what they were selling, and to whom, interest started to build. Within six months, 10% of Arbill’s pipeline was coming from their new SafetyCare offer. Today, it represents a far more significant share of revenue, and even more of profit because it brings the company higher margins. It shapes how clients perceive them. It is the primary offering featured on the front page of its website. Instead of negotiating price with purchasing managers, they are cocreating safe workplaces with CFOs who, because they value the benefits, and long-term cost and risk avoidances, of increasing safety, are less price sensitive.
For years I’ve been using the Arbill case to underscore the power of bundling and disaggregating to remove you from direct competition. But now, I think it illustrates a deeper, more powerful, strategic logic – a formula that could dramatically improve the probability of success for our business, products, and innovation ideas … and slash our failure rates.
Strategic Insights: Lessons from Arbill’s Journey
Whether luck, intuition, or strategic insight (though we suspect the latter in Julie’s case), her choice to reposition the company by providing safety to CFOs, instead of safety equipment to purchasing managers, highlights a powerful strategic logic that a research study we undertook six months ago shows underpins the foundation of nearly every business that achieved significant, rapid scale, from Amazon and Netflix to NVIDIA and PayPal.
In each case, leaps of growth tended to occur after the business decided to target the right number of underserved, valuable customers. Let’s break this down with three effective yet often overlooked tools to get the target right:
The right number = they started with a total addressable market large enough to support a sustainable business but narrow enough to limit competition. Tool: Total Addressable Market (TAM)
… of underserved = they identified a job the customer was trying to get done but could not adequately get done by existing offerings. Tool: Jobs to Be Done (JTBD)
… valuable customers = they targeted the most valuable customers that met the other two criteria. Tool: Customer Lifetime Value (CLV)
We’ve studied the journeys of 30+ breakthrough companies, and the formula is remarkably consistent. Nearly every one of them triggered their growth journey when they found the discipline to turn their backs on seemingly more accessible customers in order to focus on the right number of underserved, valuable customers. Take a look at these examples:
Amazon did not become the “everything store” by selling “everything” (had they tried that, they likely would have become the “nothing store”). They focused on book buyers (a TAM small enough to dominate) who struggled to find books they wanted online (an emerging JTBD) and that represented value (CLV) far beyond their book purchases.
PayPal targeted early internet shoppers and small online businesses (TAM) overlooked by traditional banks (JTBD) then grew their value (CLV) through trust and reliability, eventually expanding to serve a larger market as online shopping became mainstream.
Shopify zoomed in on small merchants and entrepreneurs (TAM) struggling to build online stores without technical expertise (JTBD) with the potential to represent significant future value (CLV) through the seamless integration of commerce tools.
Salesforce left large enterprises to Oracle and instead targeted small to medium-sized businesses (TAM) in need of customer relationship management (CRM) solutions (a JTBD not effectively addressed by existing enterprise solutions, which were too complex and expensive to install) and that promised significant value (CLV) through subscription-based services that would be natural add-ons once the client had adopted the Salesforce CRM.
Netflix initially served a niche market of movie enthusiasts (TAM) looking for a more convenient way to rent DVDs without late fees (JTBD) and then expanded the value of its audience (CLV) by using superior convenience and selection to ramp up loyalty, expand into streaming, and growing purchasing power.
NVIDIA targeted small gamers and graphic professionals (TAM) looking for better graphics performance (JTBD), who were willing to pay a premium (CLV) for smooth graphics. Over time, NVIDIA expanded its TAM by diversifying into AI, data center, and automotive markets, leveraging its technology in new, high-value applications.
Turning back to Arbill, we see that same shift in strategy position to target the right number of underserved, more valuable customers:
*Data from BLS.gov
How to Apply this Formula
The challenge in applying this formula doesn’t stem from not understanding the concepts, not being convinced by the logic, or not knowing how to do the analysis. It is having the discipline to do the work and make the strategic choices the analysis directs. It is tempting to follow our guts or go along with consensus. But the time spent gathering the data to make a fact-based strategic choice could determine if you step along the path of Amazon or instead the less successful paths of its early ecommerce peers like eToys.com, Books.com, or Webvan.
1. Develop your TAM hypothesis
Come up with 1 to 3 hypotheses of the broad customer segments you might target. For example, Bezos might have started with “ecommerce buyers.” Arbill was already committed to industrial sites.
Estimate the size of this broad market today and in the future in whatever units make the most sense to you (number of customers, number of units, dollars of spend, etc.). For example, at Amazon’s founding, the ecommerce market was small (only about 10 to 15 million Americans, 4% to 6% of the population) but poised for explosive growth. Arbill’s was mature and stable.
2. Look for underserved jobs to be done (JTBD)
Develop an interview guide composed of JTBD questions (for more detail on this process, I recommend reading The Jobs to Be Done Playbook). Here are some examples:
Using the interview guide you developed, interview 15 to 30 customers that fit within the TAM you identified in Step 1.
After each interview, note what the interviewee said regarding (a) the JTBD, (b) the higher-order emotional and social JTBD, the context in which they are seeking to get the job done, (d) what outcome they are after, and (e) what solutions they use to try to get the job done (note, they may not have any solutions so may not be getting the job done).
Develop a set of JTBD hypotheses, each made up of one sentence composed of a verb (e.g., acquire), a subject (e.g., a book), and a contextual modifier (e.g., when I don’t think my bookstore will have it).
Assess which JTBDs are both (a) underserved and (b) valuable to the customer (meaning the value of getting it done or cost of not getting it done is high).
3. Assess the CLV of each customer-JTBD combination
Each JTBD will have a natural customer (e.g., for Arbill the purchasing manager’s JTBD is to buy cheaper safety supplies and the CFO’s JTBD is to reduce safety risk). List out the most promising combinations of customers and JTBDs.
Estimate the CLV for each customer and JTBD combination by making an informed guess as to (a) how much profit you will earn each time this customer transacts with you, (b) how many transactions they will represent in a year, (c) how many years they are likely to remain a customer, (d) what additional revenue they could represent to you over their lifetime (e.g., referrals, purchases of other goods/services), and (e) their customer acquisition costs (how much you will have to spend on marketing and sales to convert one customer). Then simply plug these into the formula a X b X c + d – e. You will revisit and refine these CLV calculations later as you think through other elements of your strategy like pricing.
4. Prioritize and choose your positioning
Prepare a prioritized list of positionings. For example, a book collector looking for a specific book they cannot find, a book collector that wants acquire a book without leaving home. Or the head of procurement who wants lower costs, a CFO who wants to reduce the risk and cost of accidents.
Think through the TAM (is it big enough to support a business given the market share you could achieve and it is niche enough to reduce existing or future competition?), JTBD (is this an urgent and high-value job that there are not adequate solutions for?), and CLV (is this customer a valuable customer who will represent significant profit each year, stay with us many years, and be inexpensive to acquire?).
Choose your positioning.
You will know your positioning has potential if it targets the right number (TAM) of underserved (JTBD), valuable (CLV) customers.