Supporting Trusting Customer Relationships

Published in: IPA Bulletin, January/February 2006

When buyers place their most treasured digital assets with a supplier, they, in effect, have invited that supplier to move "next to their heartbeat."

CEO recently related that his customers wouldn't commit to digital asset management agreements. Inquiry revealed that his organization, though equipped to service such customer requirements, hadn't developed a single successful agreement. (My intuition voice whispered, "This is a symptom of deeper issues.")

Further inquiry revealed that his company was experiencing in excess of a 25 percent target customer attrition — for most of the last five years. Additionally, margins were understandably under severe pressures (a.k.a. declining), costs of sales were out of control (i.e., noticeably increasing), and spoilage and productivity per employee were worse than published industry averages.

Finally, I asked to see "total results" from their recent customer survey, which was self-administered. (Note: Employees at this organization did not know results of their customer survey.) Customers generally ranked them as a supplier as not much better than average on most day-to-day performance issues, and several performance issues were operating, collectively, as "performance sucking dark holes." These included:

• What's new and improved with the organization (buyers didn't know);
• Sales representative call frequency;
• Value of sales representative visits (serious lack of useful information being provided to buyers);
• Prompt, accurate invoicing (late invoices created disruption and wasted time for most buyers);
• Dispute resolution (disputes were resolved, but only after delays, frustrations, and even threats); and
• Integrity (i.e., is the supplier trusted?).

When buyers place their most treasured digital assets (e.g., publications, mailing lists, customer lists, and graphic images of products and services) with a supplier, they, in effect, have invited that supplier to move "next to their heartbeat." Development of trust, and successful digital asset management agreements between supplier and buyer organizations ultimately emanates "from the gut." That said, such extensions of trust are fed by many subtle — and not so subtle — experiences, communications, expectations, and missed opportunities.

Great company performances and reputations are not accidents or the result of good luck. They also are not built overnight. More often, they appear to be the result of:

• Careful planning, and commitment-based on changing customer and market conditions;
• Vision (from and articulated by) at a senior management level; and
• Relentless reinforcement of the plan.

Similarly, company performance and reputations are not destroyed outright, or overnight, but more often are gradually eroded by deteriorating, rippling effects. And the signs or symptoms of this erosion of customers' perceptions of a supplier are identifiable.

Symptoms of Performance Deterioration

Lack of Target Account Development Planning: When suppliers are reactive rather than proactive, it is usually symptomatic of a lack of understanding of the customer's business environment, and "sources of pain" regarding the customer's objectives and priorities. Too often, sales representatives don't have a "target account development plan," and senior management doesn't require a "target account development planning process." These target account development plans should focus on the next 30-60-90 days and be reviewed at least quarterly regarding what's happened, what was supposed to happen, and what needs to happen.

 

Company performance and reputations are not destroyed overnight, but more often are gradually eroded by deteriorating, rippling effects.

 

 

 

Lack of Senior Management Involvement & Knowledge of Target Accounts: It's too easy to "stay in one's office." There's always something else that requires a senior manager's time. Sometimes I ask my CEO Peer Group, "What's your most important priority?" On cue, I'll hear, "Business Development."

Then I'll ask, "How much of your time, especially at your target account's, do you invest?" If a company is serious about knowing the top 20 target accounts' performance needs, why don't the CEO, CFO (yes, I'm serious), and the director of production/technology each create a schedule to visit each of the top 20 target accounts — with the assigned sales representative — over the next six to nine months? Write-ups of what's learned and follow-up commitments should be mandatory.

Lack of Predictable & Growing Revenues from Target Accounts: Customers operate from budgets. They also have objectives, priorities, and self-promotion, as well as internal and external communication plans. Not knowing their plans for at least the next quarter says, "We're not in their inner circle, yet." Sales representatives should know what projects to expect coming-in — at least on a monthly basis. Additionally, there should be systems for:

• Improving personalization and customization of quote letters and proposals;
• Managing quote follow-up; and
• Improving the organization's quote hit-ratio.

Lack of Target Market & Business Development Strategy: "Go out and sell more" is not a strategy. Best performing companies have a target customer/customer market profile (and often associated groups of products and services) they want to develop and to whom they've demonstrated understanding, elevated performance for, and retention. When identified, everything they're about should be orchestrated to elevate what this group receives from them as a supplier. Examples include education of their own personnel, education of customer's personnel, research on target customer markets, information systems designed to provide target customers with additional useful information, and even the pay plans and hiring of personnel — versed in, experienced — in the target customer market(s).

Note: The key question for identifying target customer markets is not, "Who gives us the most work?" This answer can take us in the wrong direction. Rather, we should be asking, "To whom are we most important, and why?"

Education Of Personnel

Everything in a graphic communications organization lives off of speed, technology, competence (and understanding), and accuracy. That's another way of saying that all education and training should focus on:

• Elevating the individual's skills;
• Elevating the individual's understanding;
• Elevating the organization's understanding of what the customer expects and needs.

Lack of Self-Promotion That Supports Company Strategy: Who is your self-promotion pieces designed to influence? Who is your charitable contributions designed to influence? Who is your education programs designed to influence? From whom are your feedback systems (e.g., customized customer surveys) designed to receive information?

Lack of Frequent, Internal Communications from the President: I'm repeatedly reminded how important president's communications are, and the frequency at which they are needed. If you don't believe that many of the people in your organization don't know your priorities, invest one hour in your shop/plant asking, one-on-one, "What are our top three priorities?"

If "looking after customers' needs with urgency and consistently" isn't mentioned by everyone you ask, there's a problem. (If you don't get the same answers, there's a problem.) Certainly, folks may have some confusion about the top ten priorities, but there should not be any confusion over the top three.

Lack of Education & Training of Customers: Customer education and training drives additional business, however, I have on occasion heard a CEO say, "We had a customer education program last year. We're committed."

One program does not a program make; however, a "once-a-year program" does probably elevate buyers' expectations (that eventually, and understandably, leads to disappointment). A once-a-year program also probably creates a market opportunity for your competitors — and especially those with fewer capabilities.

Lack of Education & Training of Personnel: Education and training of personnel has become a requirement for doing business — and not just in high-tech environments — with Starbucks listed as Exhibit A. Everything in a graphic communications organization lives off of speed, technology, competence (and understanding), and accuracy. That's another way of saying that all education and training should focus on:

• Elevating the individual's skills;
• Elevating the individual's understanding; and
• Elevating the organization's understanding of what the customer expects and needs.

Education and training represent strategic competitive advantages; your customers would vote for it, and your suppliers can support it. Those organizations that aren't committed are already paying for ongoing education and training of their personnel — they just don't get to enjoy the benefits.

Lack of Education & Training from Your Suppliers: Most suppliers in my experience do not have a clue what their target customers are wanting to accomplish. Additionally, most suppliers have significant education and training resources, along with useful market-relevant information their customers don't know about. Test the issue with your primary graphic communications suppliers, and be prepared to be shocked at what's available, and how much your suppliers want to elevate their value to you — through their already existing resources.

Lack of Company Performance Reviews: Most graphic communication organizations do not conduct at a senior management level — either monthly or quarterly — a company performance review that includes reviews of: comparative financials; customer performance; department performance; sources of new business; customer complaints; what customers asked for to which the company couldn't respond positively; what's coming up for which we need to prepare; on-time delivery of proofs; on-time delivery of jobs; number of customers (and percentage of your business) adding services from your company; names of customers whose margins are increased, and why; names of customers whose margins are down, and why; and what the company committed to improve at its last review, and subsequent results.

Lack of Semi-Annual Personnel Performance Reviews: This practice starts at the top. Key personnel too often don't know what's expected by the CEO; there was little put in writing at the last review, and once a year is totally inadequate. Personnel Performance Reviews should be strategic — and coordinated.

Lack of Performance From New Personnel: Through-out this industry, almost regardless of company size, lack of written expectations regarding new personnel occurs. The minimum should include for each of the first 30-60-90 days:

• What a new employee is expected to learn;
• What they're expected to demonstrate; and
• What they're expected to accomplish.

Also, there should be a written performance review at the end of each of those 3D-day periods. At or before the end of 90 days, you will know whether or not you have an employee (regardless of title or function) who is worth your time to develop. And through such a process, there are few surprises; and you're not developing plans and making commitments on foundations that are inadequate.

Lack of (Customer) Feedback Systems That Drive Performance Improvement: Important feedback can come from suppliers, inside your organization — as well as from customers. But continuous improvement should become a cultural standard from which a graphic communications organization relentlessly ensures its future and customers' trust in future performance.

Lack of Employee Acknowledgement & Accomplishment: Low morale is a symptom of deeper issues. Too often the only celebrations that occur are when treasured employees leave your employment. Celebrations and acknowledgement should reinforce values (i.e., standards of performance) and company direction. Potential issues to celebrate or acknowledge can include:

• What's been accomplished;
• New milestones of achievements — for an employee, department, or even supplier or customer; and
• Positive customer feedback.

Lack of Institutionalization of a New Buyer Program: New buyers represent a repeated threat to most suppliers in our industry. Yet, few suppliers create an organizational response that can become a part of self-promotion and development of trust from the target account's enlarged buying center. This differentiation is available to organizations of all sizes and capabilities. Benefits to both buyer and supplier are significant. What's required? Primarily, commitment and relentless follow-through.

Lack of Periodic Business Reviews (PBRs): PBRs are expected by the best customer organizations and slowly are becoming a standard by which graphic communication suppliers are judged. From more than one client we've heard the testimonial, "The director of procurement wanted to know if we'd teach the process to their other suppliers. I think he was half serious."

Who should receive a PBR at least annually? All customers with meaningful potential to your organization. A final word of advice: If you have what you consider to be an excellent working model for a PBR, then you should monitor its use for relentlessly improving the process, and results.

The key question for identifying target markets is not, "Who gives us the most work? Rather; we should be asking, "To whom are we most important, and why?"

Check Your Basic Fundamentals

To accomplish sophisticated transactions with customers, such as digital asset agreements, usually involves elevated risk and demonstrated supplier competence — of many dimensions. However, if "the basics" are not being executed in a reliable, consistent manner, promises and low prices are irrelevant to your buyer.

If you question the veracity of this statement, ask GM — with the reputation they've built for running their business relative to their best competitors — how easy it is to sell cars in today's environment.

Customers' financial resources are too precious to "buy cheap" if there's a gut feeling the supplier won't deliver on all promises and expectations — explicit and implied. Penalties to the buyer are multiple, and dire, if a wrong supplier is chosen. And I, for one, believe that buying decisions — with commitment implications — ultimately occur in "the enlarged buying center's stomach."

Go back and check your basic fundamentals, particularly as they relate to direct customer contact issues. The above outline is but a starting point. That's where the truth of your company's value to your customers is being created, and your future is being determined.