Tag Archive: customers

Value Based Pricing

October 21st, 2019

calm leadershipAn overarching theme from our pricing and profits presentation relates to value based pricing. It was unanimous – every CEO believed that value based pricing was the best direction to go.  Yet, it became muddier in figuring out how to move towards value based pricing in his/her particular situation.

Let’s start by defining value based pricing. Simply stated: prices are based on the value the customer receives.

Everyone wins. The customer gains more value and you gain a higher price. Of course, that higher price should carry a higher margin.  It isn’t set up so that you win at the expense of your customer. Instead, both parties win with extra value and margin. So, if everyone wins, why don’t more of us utilize value based pricing? According to the CEOs, it isn’t simple. Yet we all agreed it is worth it.

Perhaps we’ll be talking about this for months and years to come as it can do something far more important than increase margins. It enhances customer value which can lead to customer engagement and loyalty. There are lots of statistics.  Suffice it to say, we will be much happier and are willing to spend more to do business with companies that deliver excellent customer service. And, more engaged and happy customers are dramatically more profitable.

After all, it can be 2 to 25 times more expensive to acquire a new customer than to keep a current one.

Start by figuring out the value of your product or service. Don’t listen solely to your R&D department, sales resources or anyone else while trying to understand value. Don’t even listen to your customers. Instead, think about your target customers and probe the value to these customers. Ask. Listen. Observe. When you ask questions, listen to what else they say. What would improve your customers’ situation? The value will emerge.

 



The Value of Export

October 18th, 2019

My colleague, Kusum Kavia recommended me for CIEDEC which is the Califorina Inland Empire District Export Council.  So, I attended a meeting as a guest. Export is a vast opportunity. Just consider a few facts:

  • 95% of potential customers are outside of the U.S.
  • 97% of exporters are outside of the U.S.
  • California is the #1 state in exports
  • Less than 1% of American companies export – this is quite shocking. The good news is our clients are clearly outside of the norm.
  • Canada and Mexico are the top two export countries.

Given these facts, looking at USMCA, the U.S. – Mexico – Canada agreement should be of keen interest. The CIEDEC has written letters of support to pass this agreement citing that it will better serve the interests of American workers, farmers, ranchers and businesses; and, it supports mutually beneficial trade leading to freer markets, fairer trade and robust economic growth in N.A. There were $43.6 billion of exports from California to Canada and Mexico in 2017.  The top exports were computer and electronic products, transportation equipment agricultural products, machinery and chemicals.

There is also a heightened interest in export based on Brookings research and the consortium for Advanced Manufacturing Excellence in the Inland Empire. We are excited about the future Are you exporting?

What Should We Consider and/or What Impacts Could Arise?
There is vast opportunity for California manufacturers to export. There are tremendous resources available for exploring markets for your products and services, as well as help in getting started. We have several significant exporters in the Inland Empire.  They have grown their businesses faster and more significantly than the average.

This will be one of several topics we’ll address in our consortium for advanced manufacturing. If you are an executive interested in participating in an advisory capacity on the steering committee for this initiative, please contact me.

Additionally, our APICS Inland Empire Chapter will be addressing this topic as a part of our upcoming executive panel and networking symposium on “Collaborating for Advanced Manufacturing & Supply Chain Success“.

Think about taking one step forward in evaluating whether adding or expanding exports could increase your revenue, profitability and success. Of course, export also provides potential in distributing your dependence on domestic revenue and profitability.  So, it could be another leg in creating a resilient supply chain.



Customer Care 1.01 & The SLURPY Method by Guest Blogger, Steve Weimar

October 1st, 2019

When we think of who’s responsible for developing and retaining the customer relationship business owners and CEO’s too often feel this is solely the role and responsibility of the Business Development or Sales team. I’m here to tell you that mindset is narrow-minded and can lead to a parade of lost business, sometimes in a very short time. Everyone in the company plays a role in customer retention!

When we think of why a customer buys from us and how to retain them we need to look at every aspect of our business, who adds value and who are the Contact Points or CP’s. We also need to adopt a simple company operating philosophy I call SLURPY, not the drink at 7-11, but a set of 6 basic principles that are critical to both customer and inter-departmental relationships.

 

S     Smile into the phone or in a meeting – it’s hard to communicate negatively when you smile

L     Leave your personal issues at home – distractions at work or in a meeting can derail your ability to concentrate and perform in a professional manner towards customers

U    Understand that the customers purchases are funding your compensation and benefits – no customer purchases, no job, no money

R    Respect your customer – business is people working with people. That means all types of people!

P     Problem Solving can be some of the most important customer and inter-departmental building and retention experiences – if handled improperly they can derail the relationship. Remember, in every problem lies the solution.

Y     You treat customers and your colleagues as you would want to be treated – think about the times you’ve had poor service. Is that what you want for your customer or colleague?

Now that we understand SLURPY, let’s see how understanding your company’s many CP’s are an extension of SLURPY and can make or break a company and customer retention.

CP1

Receptionist or Automated Attendant is usually the most common touch point in an on-going relationship but can be the first contact point ever for that prospect. This is where I see successful companies shine while others fail miserably. If this is the first CP at the company this position needs to be taken seriously and not considered an entry-level hire.

  • Live Attendants must come across as happy and cheerful on the phone and if they are really at the top of their game will be able to recognize those callers who regularly call the company and acknowledge them with either a “Hi (first name of caller) who would you like to talk to?” If they call for the same person or persons each time you should add that to your response such as “Hi (first name of caller), Sue is on a call right now, would you like to leave a voice mail or would you like to speak with someone else?” Invest in this position versus feeling this is an entry-level position in your company.
  • Automated Attendants can be a valuable tool or the kiss of death. What you want to have is a quick and easy means for inbound calls to reach their destination. This is accomplished by first recording a short but cheerful message with department code options and a method to enter extension numbers and/or a Directory (EXAMPL:E: Dial 1 for Customer Service, 2 for Sales, 3 for Accounts Receivable or 4 for the Company Directory). They should also have an option to reach a live person at any time to prevent customer frustration. I don’t know about you, but I’m not a big fan of Automated Attendants as many take too long to reach a live person. My recommendations if you have an Automated Attendant are…don’t go into a long-winded sales pitch or history lesson about the company on your recorded message. Use the KISS (Keep It Simple Stupid) method and help your customers reach their desired party quickly, just like you would want to be treated when you’re the caller.

CP2   

Customer Service typically has more CP’s with the customer than the Biz Dev or Sales Mgr. Customer Service can, and in many cases is, the most important CP in the customer relationship. A single call from a customer to an unhappy or rude Customer Service Rep can dismantle months and even years of customer relationship building. Ways to improve your customer relationship through Customer Service:

    Make sure to communicate back and confirm tasks, questions and order details before ending the call.

    • Follow up the call with a quick email detailing the topics and/or order details
  • Go the extra mile. EXAMPLE: An order is placed 30 minutes after shipping cut off. Don’t promise it will ship but work with Operations to see if this is possible then communicate to the customer. I’ve even seen the Customer Service Rep take the package to FedEx or UPS to make sure the customer is taken care of. Little things make a difference.
  • Make every attempt to diffuse friction and issues within reason. Remember, these are sometimes the most important calls and gives the Customer Service Rep and the company a chance to solve the problem and make it go away for the customer.
    • Advise the appropriate Sales Rep/Biz Dev person of any issues brought up during the call and what you plan of action you are undertaking

CP3       

Sales/Business Development is typically responsible for initiating and maintaining the on-going customer direct relationship but they also have some critical obligations and tasks to keep the customer happy, engaged and continuing to buy the company’s products or services.

  • The adage of Under Promise and Over Deliver is in some cases hard for the Sales/Biz Dev teams to adhere to. By being too optimistic and over promising you’ve established unrealistic expectations for the customer which can lead to loss of trust and a damaged customer relationship. In addition, it causes internal conflict between many departments within the company who are left with trying to pick up the pieces when the promise is not met.
  • Written confirmations of the offer, the company’s defined policies and procedures, product performance capabilities, shipping schedules, pricing, delays, product issues and more are ways to create and maintain a solid, trusting and long-term customer relationship. By sharing these with other departments you can make others feel included and informed.
  • Whenever possible, customers need to be pre-qualified to see if they are a fit with the company. Strange as this may seem to some readers not all prospects should be customers. For instance, a company known in the industry for violating MAP (Minimum Advertised Pricing) policies may do more harm than good to the company and its other customers. Same is true for prospects or customers who cause so much turmoil in other departments that they undermine the cohesive synergy of the company and its employees. You have to be willing to turn down or lose the customer if they aren’t a fit for the company.
  • Build on your customer relationships with regular contacts and meetings, meal events away from the office as customers are more relaxed and open in their discussions. Build relationships where possible that are long-term and go beyond business as those are harder to lose and typically less vulnerable to pirating by a competitor. But…don’t let down your guard.

CP4

Accounting, and specifically Accounts Receivable, plays a key role in a company’s success or lack thereof as cash flow is a critical component of survival. Sales and Biz Dev staff typically want to distance themselves as far away as possible from the role of collecting payments from customers and fail to realize the difficulty of this job. An over zealous and aggressive AR Rep or Manager can undermine the customer relationship. Some ways to improve this customer interface are:

  • The AR and Sales/Biz Dev teams have regular calls or face to face meetings to review problem accounts and work together to resolve the issues. Define a plan to improve.
  • Sales/Biz Dev can make sure AR is aware of extended terms and or pricing, disputes, customer cash flow issues, problems or anything that could stall on-time payments.
  • Get the Sales/Biz Dev person involved if AR is unsuccessful in collecting payment.

CP5

Operations is another opportunity to positively impact the customer relationship and the value to its customers. Additionally, Operations can add relationship value many ways:

  • Produce a quality product, package it properly to prevent shipping damage, ship the product on time and communicate any delays or issues to Sales and Customer Service.
  • Have some level of controlled flexibility in shipping lead times and order cut-off times.
  • Work as a team player with Sales and Customer Service to satisfy the customer.
  • If you deliver products to your customers in company owned trucks make sure the trucks are clean and the drivers are well groomed and courteous as they are representatives of the company. They should report back to the appropriate department whenever they hear of an issue with a customer or the delivery.
  • Meet regularly with Sales and Customer Service to discuss customer feedback, conflicts and issues and define a plan to improve.

CP6       

Marketing delivers your company’s messages to the world and strategically positions the company for success. They communicate the company’s value proposition and product or service differentiation in a consistent and strategic manner. Additionally, they should communicate your We Care customer philosophy as part of the many messages they deliver. Some added elements to support customer retention are:

  • They should have a direct connection to the company’s customers for research and feedback about the company, market channel, products, competitors, etc.
  • Be included in key customer and/or prospect meetings as needed to gain more direct input
  • Communicate their plans to the team in advance of launch
  • Track KPI’s for the various marketing programs and share them with the Team
  • Meet regularly with Sales and Biz Dev to discuss their marketing plans and programs

CP7

Technical / Warranty Support is your company’s 911 call center. They are either fielding problem calls or delivering answers regarding products. Your staff needs to be problem solvers and trained to diffuse conflicts. In addition, they should have in depth knowledge of all the company’s products and a general knowledge of competitive products and how they compare to yours.  Customers want quick answers and solutions but also want to feel you care. Some ways to go the extra mile are:

  • A quick follow-up email and/or phone call later in the day or the next day to see if the problem was resolved or to advise that a warranty replacement part or unit was shipped. You can add another layer of follow-up in 30 or 60 days, if warranted, to make sure all if well.
  • Advise the customers Sales Rep of any problems so they are in the loop.
  • Track technical and warranty support calls to create KPI’s that can be shared with the Team.

CP8

Engineering and Product Development are directly responsible for developing products of high quality that do what they say they will do as a bad product can damage, and in some cases ruin, the company’s reputation and damage customer relationships.

They also need to provide a solution to the customer’s needs and/or desires. In many successful companies the end-user and the target channel, or customer base, are included in pre-product planning and research. This allows companies to design what the customer needs and/or wants which leads to success.

Bottom line, every department and employee in the company is responsible for the company’s success. By harnessing the talent of the TEAM and creating a collaborative working environment, long term customer retention becomes part of the company’s DNA and operating personality.  This will be obvious to customers as they interact with the various departments and a sense of WE, not I, will permeate in every aspect of your business. I recommend developing KPI’s (Key Performance Indicators) to track major focus points and use those as a scorecard of your company’s performance. One additional method of grading your company’s performance can be gained through annual customer satisfaction surveys. If done correctly these can be quite eye-opening and a valuable self-improvement tool.

By: Steve Weimar STI Enterprises, Inc.



Is there an ROI on a Forecasting System?

September 12th, 2019

A Client Question
Since forecasting can deliver significant benefits with increased levels of service, inventory turnover and margin improvement, the question that inevitably arises is whether it makes sense to purchase a forecasting or demand planning system. Of course, the answer is: “It depends”.

In one client situation, goods were manufactured in Mexico and purchased from Asia. Key customers were large retail outlets. Demand seemed to change daily.  Yet, lead times were in the months if the ‘right’ stock wasn’t in the ‘right’ place at the ‘right’ time. Of course, they could cover some small changes by adding freight costs but that isn’t a recipe for profit. Improving the forecast would improve their success. So, the question turned to whether a system would have a ROI.

The Answer
In their case, they could achieve a rapid return on investment by using a forecasting system. However, let me say upfront that more often than not, I do not recommend a system. It completely depends on whether it will drive the appropriate level of improvement and associated results or not. In this case, we could easily drive dramatic forecast accuracy improvement since we started out at such a low level of accuracy due to the business environment, industry and key customers. The people understood the importance of the providing forecast feedback and although the key customers didn’t have “good” forecasts to provide, they could provide data we could analyze. In these types of situations, we are able to reduce inventory by a minimum of 20%.  It should be noted, though, that results can be far greater.

Food For Thought
Although forecasting systems can be a great idea to drive service, inventory and margin improvement, they do not always provide a return. Take a step back to understand your industry from a forecasting point-of-view:

  • Is demand constantly changing?
  • Are you supporting small numbers of customer/location points with less than 25 items or is it 100 fold?
  • Are you able to gain key customer input and/or point-of-sale data?
  • Do you have anyone familiar with demand planning and forecasting to be able to make sense of what a system is telling you?
  • And, last but definitely not least, have you found the appropriate scale for your forecasting system?

Trying to kill a fly with an assault rifle is overkill. If you are interested in running your situation by us, contact us.

Did you like this article?  Continue reading on this topic:
The Strategic Benefit of SIOP
Are You Ready for a Systems Transformation?
Systems Pragmatist



Is CRM Valuable?

July 30th, 2019

A Client Question
When clients decide to upgrade ERP, they also look at CRM (customer relationship management) because it makes sense to align the technology infrastructure into a common platform that will be fully integrated and scalable. However, what if it isn’t part of an ERP project? When does it make sense to jump into the CRM world? One client asked us just this question.

The Answer
In their case, they could achieve a powerful return on investment with CRM. It provided the tools and technology that would strengthen their relationship with their current customers, as well as help them expand sales with current customers and create a pipeline of new customers. Specifically, when meeting with customers, the sales reps gained insights into customer preferences and ways to strengthen the relationship. If they captured those ideas into CRM on the spot, the next person who interacted with that customer could see the notes and tailor the conversation. These seemingly small preferences can go a long way!

In terms of expanding business, they needed robust sales reporting that would tell them if they were falling off in a particular area or if they sold one product without its complimentary product so that the sales rep could follow up. Last but not least, they wanted a way to track potential new customers and expansions of business. For example, if a reseller was opening a new facility, they wanted to track it in CRM so that everyone had access to the timing, forecast, and other critical information. Also, since it was a collaborative sales environment, they wanted a way to track potential new customers and where they were in the sales cycle so that they could forecast future sales and the likelihood of it occurring. Sales forecasts were the 80/20 of success in this client because it was in a high growth mode where cash forecasting is of critical importance.

 A simple CRM solution fit the bill. A few years later, they were ready to upgrade their ERP infrastructure. At that time, they had the base CRM disciplines functioning and so it was an easy transition to a fully integrated system with CRM functionality. This client has been recognized multiple times for its substantial growth and success.

Food For Thought
Although CRM systems can be a great idea (as it was in our client’s case), if your sales and support teams aren’t ready to enter at least the key data, you’ve just bought an Audi that sits in your garage.

Start implementing process disciplines early. Enter information about your customers that will be handy at a later date.

Start tracking key meetings and prospects. Are you able to make good decisions from what you are tracking? If not, wait!

Aggressively push to start tracking vital information about your customers, even if you put it in Outlook or a spreadsheet to start. Soon you’ll be ready for a simple CRM solution, followed by more powerful ones as you get used to driving your car on city streets, you’ll be ready to brave the freeways.

If you are interested in running your situation by us, contact us.

Did you like this article?  Continue reading on this topic:
Obsession with Your Customer
A Systems Checkup