This is the second of two articles by Tim Bourgeois on digital strategy. His first piece can be found here: Why You Should Pay Attention to Digital Strategy & Corporate Innovation
Weaving a digital strategy into an existing company is tricky business. It’s much easier for a start-up to redefine the rules of an industry and innovate – see Zappos, Amazon, Priceline, etc. – than it is for decades-old companies with stubborn organizational behaviors to deal with, and a long list of amortizing capital investments that cannot be ignored.
But, it’s not impossible. In fact, that’s just what Mac-Gray Corporation has accomplished over the past few years, by redefining the rules of the stodgy “laundry room management” industry – which is neither high profile nor a sector that seems ripe for innovation.
Owners of multi-unit housing facilities (think colleges/universities and urban apartment complexes) often choose to farm out management of their laundry rooms, and that’s where companies like Mac-Gray compete. The company has successfully employed a multifaceted digital strategy as the driving force to stay ahead of the competition over the past decade or so.
It’s a cutthroat business, with low barriers-to-entry and fiercely competitive pricing dynamics. Until recently, companies had little to offer in the form of differentiation except for post-installation services which could be measured in the form of machine uptime – that is, minimizing the frequency of broken washers and dryers, which results in tenant complaints. Mac-Gray changed industry dynamics by introducing a suite of web-based offerings which have literally changed the rules of the game.
The cornerstone of the company’s digital strategy has been LaundryView®, first launched in 2004, which allows students/residents to monitor activity in their specific laundry rooms (via a unique system that collects signals generated by washing machines and dryers) and decide whether or not to wash their laundry. After all – if you can harken back to your days in a dorm or apartment building – there’s nothing more annoying than lugging a basket down several flights of stairs, only to find all machines in use. Then, once a customer does run a load of laundry, s/he can set an email or text message notification to alert them on completion. If you’ve gone on any college campus visits lately, it’s likely you’ve heard about LaundryView, as it’s something colleges are touting during campus tours.
On the surface, LaundryView may sound like a superfluous offering, perhaps, but the program has been wildly successful. It’s been embraced by users, installed in 3,000 laundry rooms, visited by 5 million people, and – most importantly – gives Mac-Gray salespeople a powerful differentiator to tout during sales calls, not to mention the additional revenue stream it offers.
Mac-Gray has introduced other web-based features to further differentiate, and digital has genuinely become the lynchpin of new product development. Offerings such as Change Point™, an internet-based laundry payment system, and LaundryLinx™, an online service dispatch system, round out the company’s integrated suite of web-based offerings. Digital strategies have become so prominent that one of its communications tenets is now “Digital Laundry Is Here™”.
Benefits associated with Mac-Gray’s investments in innovative digital technologies is compelling. “Today LaundryView® is the established market leader due to its superior technology and distinct end-user benefits,” says the company’s CEO, Stewart G. MacDonald. He continues, “The introduction of Change Point(R) represents another important innovation by Mac-Gray and the next generation of service in our industry…[and] brings an unprecedented level of transparency to the management of laundry facilities. This is good for the clients we serve, good for their residents, and good for our company. [As a result], Mac-Gray is able to provide a truly differentiated and revolutionary product.”
Considering that Mac-Gray competes in a slow- or no-growth industry, its financial performance has been admirable over the past-decade, no doubt in large part to its digital strategy. Top-line numbers – both in terms of revenues and operational profit margin – have remained consistent over the past five years, and its stock price has as well, which is no small feat.
Mac-Gray is a compelling case study for digital-driven strategies in unusual places. While it’s unlikely that Fortune Magazine or the Wall Street Journal will showcase the company for its use of web strategy to protect mostly flat revenues and average profit margins, the company serves as a fine example for “the rest of us”, who understand that Apple, Facebook, and NetFlix are anomalies.
Learn how CEOs of other traditionally low and high tech businesses are applying mobile, social media, cloud and analytic technologies to improve business results by attending the CEO Tech Summit at Stanford Business School in October. Click here for more information.
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