-Gulf Credit Card Operation-
Industry: Oil Credit Card Size: Fourth Largest U. S. Oil Company
Challenge: Need For Reducing Credit Card Operating Expenses
ELLER was assigned the task of producing recommendations on what should be done with the Gulf Credit Card Operation. The management was split into two schools of “what needed to be done”. One school wanted to close the operation with $ 1 billion in annual receivables and a net operating loss of $ 40 million per year. The other group wanted to retain the very outdated system with its out- of- control receivables collection system. Needless to say, the two groups could not find a common ground but agreed to welcome “fresh recommendations”.
Solution: Cost Unit Transformed to New Growth Center
ELLER performed a detailed strategic situation review of the operation and found that there were 9.5 million open accounts. The credit card system was very instrumental in the sale of petroleum products and services in 40,000 service stations in the United States and Canada. Also, important billing relationships existed between Disney and Holiday Inns. With ELLER’S strategic development process it was determined that the marketing brand and relationships were invaluable and not appreciated. It was determined that the operation was outdated and a source of uncontrolled bad debt exposure.
ELLER and his team concluded that the best corporate strategy was to build on the present capabilities and to greatly enlarge the product offerings. New data centers were constructed with real time processing technology. Negotiations were held with KLM Royal Dutch Airlines, Gerber Insurance, Douglas Dunhill, and others to secure marketing joint ventures to expand the card to include new product offerings.
The outdated “Gulf Credit Card” was transformed from an old fashioned oil card to a “Gulf Family Card” that could be used to buy travel tours, insurance, tool boxes, and countless other products and services.
Results: Significant Increases in cost savings and revenue growth.
Since ELLER’S launch of the New Gulf Credit Card Program they have achieved the following results:
- Customers, stockholders, employees, dealers, joint venture partners, and others raved about the new growth program.
- Decreased operating expenses.
- Decreased credit risk exposure by installing a state of the art real time credit control system
- Transformed the former credit card cost center into a stand alone strategic profit center. A new Gulf Consumer Services, Inc. was formed as a wholly owned subsidiary with a professional marketing team.
- Market relationships Holiday Inns, Disney, and other companies produced growth.
- The rate of return grew to 240% on the new data center facilities and systems.
- New numerical credit scoring systems were implemented for tighter credit card exposure.
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