And Then What?
Published Articles
Published: IPA Bulletin - May/June 2009
It is customers who ultimately determine who stays in business - and even what technologies will dominate.
And then what? I've observed Warren Buffett more than once ask this question of different news journalists who were suggesting a course of action for either a company or our government. The journalist poses a provocative question or statement; and then Warren, with that boyish giggle and great sense of humor, politely asks, "And then what?" The relevance of this introduction ties-in to repeated proclamations from at least one national association that frequently reports on "members activity levels" and "resulting profitability." I, too, want to ask, "What are the causes of their activity levels - and then what?"
From my viewpoint, their reports are a smoke screen at best, and at worst an intentional charade. I've even heard other consultants wryly accuse the reports of being little more than "bayoneting the wounded."
The only reason a customer should invest precious funds with a supplier in our great industry is, based on some meaningful probability, with the expectation to improve that customer's economic well-being.
It is within the framework of improving that customer's economic well-being that we have a reason to exist as a supplier and as an industry. Note: the same should be said for any association serving our industry - as a member, I want my association to credibly show me how to improve my economic well-being with my customers. Don't just explain how to invest in more technology and equipment or tell me who has the best deal with health insurance.
Why? Because if I have my priorities straight, it is customers who ultimately determine who stays in business - and even what technologies will dominate. It is not my health insurance provider or my software and equipment provider that determines who gets to stay in business; though, without a doubt, each of those issues is important.
What's Required?
Sociologists tell us that when resources in a society become scarce, people (and groups of people) form collaborative, supportive alliances. In other words, as market conditions get tougher - or remain unusually demanding - we should expect our customers to be more selective in whom they do business with. And it is on this point that we need to deeply understand that low price is not what determines the winning supplier - especially when senior management in the buyer organization is offered a better option such as improved revenues.
For buying organizations with senior management actively participating in decisions to change suppliers and award contracts, the fundamental question is "Who brings the best total value?" And increasing a customer's revenues tends to trump all other performance issues - including low price!
To have a meaningful probability of providing the most value - and contributing the most toward increasing your customer's revenues - it is essential that you understand your customer's business model, including:
- Sources of pain;
- Priorities;
- Organizational structure;
- Culture, and values;
- Market differentiation;
- Products and service offerings;
- Near-term (and often long-term) performance objectives and goals; and
- Even changes in their target customer profile.
It is only from these understandings that you can take a step back; turn to your collective resources (including technologies, equipment, suppliers, and collective employees' skill set); and begin developing and recommending options and strategies that support your customer's ambitions.
Consider the Following Customers
Colleges and Universities: We should be prepared to credibly assist their ambitions for rebuilding their connections and loyalty with alumni; improving faculty recruitment (and services that can support faculty achievements, such as print-on-demand); improving student recruitment; and improving quality of "student life."
Nonprofits: We should be prepared to credibly assist their ambitions for identifying and segmenting different donor classes; cost-effectively improving fundraising strategies and results, sometimes regardless of what the herd of fundraising organizations are doing; improving the sense of involvement and connectedness that contributors experience; and serving their mission.
Publishers: We should be prepared to credibly assist their ambitions for identifying and cost-effective contracting current as well as new customers; improving their channels of distribution; getting their offerings effectively promoted; and insuring that their offerings and customers receive first-rate service from any print-on-demand capabilities we supply.
And for each of these examples, we should work to "better understand their business model."
Manufacturers: We should be prepared to credibly assist their ambitions for identifying new target constituencies; customizing their promotions for their distribution channels and target constituencies; cost-effectively supporting their needs for storage and fulfillment, of many designs; and improving customer retention and overall satisfaction.
Health-Care Organizations: We should be prepared to credibly assist their ambitions for improved communications - through different media - to target customers; improved customer retention; and improved efficiency of communications, as well as improved and cost-effective new business development.
Be Involved with Your Customer's Business
And then what?
To the point that a statement has become a cliche, "Our customer's success really does determine our success."
If that is true, our just partly or even mostly true, doesn't it follow that we should design and orchestrate our business - including the people we hire, train and reward as well as the suppliers we want to collaborate with (really all of our resources) - as part of the overall formula or mix of what we use to elevate our contributions toward our customer's business performance.
And if we're doing that for our target accounts - and I submit that probably 2 percent to 7 percent of our industry is (a fact that isn't being reported by associations) - then the reports of "business activity" and "resulting profits," or "lack of profits" is at least misleading, and probably irrelevant.
Those few organizations that are contributing in a meaningful manner toward their target customer's economic well-being are experiencing increases in business - not decreases!
However, if we don't understand our customer's business - in-depth and for the purpose of providing strategic recommendations that improve the customer's business performance - then we are "sucking wind" with the outdated model of low price wins.
So ... then what?
Just because you're receiving (steady?) work from a target account, don't believe that everything is going well and is OK. Remember, the last one to know that a change in suppliers is occurring is the current supplier. Stay systematically involved with the changing sources of pain, priorities, competition, government regulations, strategies, objectives and goals, and even the changing profile of their target customers.
Few things in this world are static, and it is the supplier who repeatedly contributes to the customer's economic well-being who earns the right to "stay involved."
So what would I specifically recommend be different tomorrow? Get your CEO out of his/her office and go visit target customers and prospects - everyday! Get to know their top executives, do your homework before you go, and do your homework after you walk out. Set the example through both qualitative and quantitative performance that inspires your people, your suppliers, and your customers' senior management.
And then what?
Do it again!