Gulf Oil Program

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Challenge:

Need For  Reducing Credit Card Operating Expenses   

Dave 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  The other group wanted to retain the very outdated system with its out- of- control receivables collection system.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”.

 

Solutions:

Transform Cost Unit to New International Travel-Tourism Business      

A detailed strategic situation review of the operation  was conducted by David Eller and  it was determined 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  It was determined that the operation was outdated and a source of uncontrolled bad debt exposure.

Dave 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, Martin Air, Mc Donnel Douglas Aircraft, Gerber Insurance, and others to secure marketing  joint ventures to expand the card to include new international product offerings.

The outdated “Gulf Credit Card” was transformed from an old fashioned oil card to a “Gulf  Travel Card” that could be used to buy travel tours, travel club arrangements, insurance, hotel accommodations, and countless other products and services.

 

Results:

 Significant Increases in cost savings and revenue growth.

Since the launch of the New Gulf Credit Card Program the following results have been achieved::

  •  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 with Holiday Inns, Disney, and other companies produced growth.
  • The rate of return on investment for the two new data center facilities and systems was over 240%.
  • New numerical credit scoring systems were implemented for tighter credit card exposure.

 

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