by Elizabeth Hines | Nov 5, 2013 | Blog, Leadership, Strategy
Companies within the logistics and supply chain industries are often built around a small number of clients because these clients generate 80 percent (or more) of revenue – The Pareto Principle aka the 80/20 rule. Some companies choose not to openly acknowledge this reality; I believe this is done at their peril. Rather than ignore the elephant in the room, accept it, and establish a culture that addresses this reality. This will mitigate risk and enable you to be able to better manage both time and resources within your company.
Here are tips on how to manage when the classic 80/20 applies:
Build a culture of intellectual honesty
The first step is to build a culture of intellectually honesty. While your employees can probably guess that a small number of clients are generating the majority of your company’s revenue – be open. Take the time to get the entire company on the same page. Establishing a culture of intellectual honesty enables management to implement effective and appropriate risk and management structures to be put in place. Additionally, it empowers employees, because it allows employees to better understand why certain systems and structures have been established.
Exceed expectation, anticipate needs, don’t get lazy
With respect to your high revenue generating clients – exceed their expectations and anticipate their needs. Just because you have a strong relationship with them, and maybe even a long-term relationship, you never know what the future will bring. New management, an acquisition, merger… there are several events that could end the relationship. Never assume that history will make your relationship bulletproof.
Moreover, don’t get lazy. Be proactive. Every time you pick up the phone to talk with the client or every time you meet with them — impress. You need to know their strategy and know their needs — immediate, mid-, and long-term. What’s more – be open with the client. Let them know they are important to you. If there is an issue make them aware of it, let them know you are being responsive, and address the issue ASAP. Furthermore, ask the client for feedback, listen, and be responsive — address their concerns in a timely fashion. Finally, follow up with the client to make sure they feel their concerns were addressed.
Manage talent
Many companies get in the trap of assigning a large number of employees to the revenue-generators. At issue is that if the big client terminates their relationship with you, you may be forced to lay off talent — good talent. Additionally, this type of structure is generally fraught with bureaucracy. Instead, assign a small, focused team to the client. This type of team will have fewer bureaucratic hurdles and will do far better than a bloated team that has to battle red tape. And importantly, if you lose the client, you are more likely to be able to reallocate quality team members.
Establish an evaluation process
Regarding the smaller clients, it is important to have a defined and accountable process in place that evaluates why they are part of the 80 percent. If the client is not a good fit to your model, manage them out of your base. If they are a good fit, delight the client and treat them as if they were the big fish — you never know, one day they could be your biggest client.
Put a leader in charge
Finally, it is essential to put a leader in charge of client acquisition. By putting someone in charge who understands your company culture, the business model, and the company needs, client acquisition will be more effective and more efficient.
by Elizabeth Hines | Oct 22, 2013 | Blog, Leadership, Strategy, Supply Chain
Source: Simply Silhouettes
Within the logistics and supply chain industries, the key to providing your client with an end to end valuable offering is providing the core value yourself and outsourcing the rest. Finding the right outsource partner is critical to success. Here are seven things you need to consider when choosing a new outsource partner.
1. Culture and values
Choosing the right partner goes beyond capabilities. You have to consider the corporate culture as well. In addition to being able to do the work, the ideal partner should be able do it seamlessly by fitting with your team and with your client’s needs.
When evaluating a new outsourcing partner, it is important to look at their mission or value statements. How do these hold up to your own company’s mission and value statements? Are they well aligned? If they are, move on and explore the company further. If not, walk away. Mission and value statements speak to the core culture of the company, so if you can’t find common ground here, it is unlikely you will be able to build a positive working relationship.
2. Standards and metrics
What standards of quality and delivery does the potential partner employ? Here it is important to look at their metrics and processes. How do these compare with the ones within your company? If they are similar, it is not only likely your systems will be able to work well together, but also likely that the two companies have a similar approach to standards of quality and delivery.
3. Investments
Next, take a look at where the potential partner has made investments. Has the company spent in similar areas to your company? Similar investments show business culture or strategy alignment. If the investments are different, find out why.
4. Financial stability
What is the financial health of the potential partner? You don’t want to enter into a partnership only to find out in a few months that the company is not financial stable. Entering into a partnership with a company that does not have its financial house in order is a costly mistake. Take the time to do your due diligence.
5. Where will you stand?
What will your relationship be? That is, will you be a small fish in a big pond or a big fish in a small pond? When times are good this doesn’t matter, but when there is a customer satisfaction issue, it can mean the difference between client retention or client attrition. It is essential to know where you stand inside your partner’s organizational priorities. If you are comfortable with where you will stand, that’s great. If not, find another partner.
6. Long-term strategy
It is also important to look at the long-term strategy of your company and your potential partner’s company. Does the service they will be providing on your behalf align with their continuing plans? And with your ongoing plans? Continuity and service development is important to your company and to your customers. The potential partner needs to be able to provide the specified service for the foreseeable future and also needs to be able to grow with your company’s strategic needs.
7. Credibility
Finally, look to social media. What are others saying about your potential partner in an unfiltered environment? Are people pleased with the service the company provides? Are there any red flags with respect to the company or the service they provide? Social media can help call attention to potential issues.
Also talk with others within the industry – especially people who have worked with the potential partner before. What was their experience? Again, look for red flags.
By following these steps, you’ll be able to better evaluate potential partners and identify partners that are a good fit from both a business and cultural perspective.
by Elizabeth Hines | Jul 31, 2013 | Blog
Earlier this month I wrote a post for EBN about how to manage your company and clients when the classic 80/20 rule applies. That is, when a small number clients generate 80 percent (or more) of your revenue. In the post, I made the recommendation to manage clients who are not a good fit with your model out of your portfolio. Several people responded to the post asking how to go about doing this. Here’s how.
Once you have determined that a client is not a good fit with your model, manage them out. Managing a client out of your portfolio is tough, tricky, and essential for you and for your client. If your client isn’t the right fit with your model, then you will not be able to provide your client with the best service. This is the crux of the issue. You, as a company, need to do the best job possible for your client. If the client doesn’t fit your model, you are not doing a good service by keeping the client in your portfolio.
Saying good-bye
Begin by doing a thorough audit of your relationship with the client. Identify why the client doesn’t fit your company’s model. That is, pin-point the disconnect between your client’s needs and what your company offers. As you do this exercise, look at the relationship with your client over time. Have you grown apart as your businesses have changes/grown? Has the relationship never been a good fit? It is important to drill down and truly assess the relationship. Document everything.
Next, set up a meeting or a call with the client – breaking up over text or email is unacceptable. Begin the conversation with honesty and tell the client that you believe they could receive better service and better value if they worked with a company that better fit their model. If possible, provide the client with names of companies that would be a better fit.
Talk with the client about putting together a transition plan. Let the client know that the relationship isn’t over immediately and that the lines of communication will always be open. Alleviate fears that the transition will be difficult.
It is vital that when you talk with the client, you talk about your client’s needs and focus on these. For example, look at the difference between these two approaches:
#1: You tell your client: “Your business is a niche company not only in terms of product offering but also in terms of location. I have really enjoyed working with you and watching your company grow. Because I value you as a client, I believe you would be better served by a company that is well-positioned in the Atlanta metro area and really knows the model car industry. We just aren’t that company, and I feel we are holding you back.”
#2: You tell your client: “Your business isn’t right for my company. We don’t have the time or people to devote to your needs. Our model and yours doesn’t match, we need to recognize this and move on.”
Approach #1 shows your client you understand their needs and that you value the relationship.
Breaking up is hard to do, but if you do it right you will likely receive a call down the road from the client thanking you for breaking up with them.
by Elizabeth Hines | Jun 25, 2012 | Blog
It can happen to good companies as well as weak ones. Your organization makes a “relationship defining” mistake with a new customer or even worse, one of your best customers. How do you handle it?
On a recent client engagement where we were retained to increase sales force effectiveness, we got to see firsthand our client company reaction to an operational mistake in one of their after-market spare parts service engagements. It wasn’t pretty. Once the service break came to light, their first reaction was to go into “denial-mode” as they disputed the customer claim. After that didn’t work, they moved on to “shirk-mode” where they cited other factors that may have caused them to miss their service obligations. Lastly they entered “apology-mode” where they went overboard apologizing profusely instead of solving the problem in the first place. At that point, it got pretty ugly with their longstanding client.
What could they have done differently to remedy the situation and save the customer relationship? Here’s what I like to see my clients do and the advice I give them. It’s a pretty simple 3 step formula that everyone in your organization should follow when there is a service disconnect of any proportion.
- Get to the heart of the matter immediately. Don’t look for back doors or contributors to help share the blame. If you make a mistake, own it outright and clearly. Don’t be wishy-washy. Be strong in your admission and stronger in your statements of reparation. Then move to step 2.
- Contain and problem solve. Putting your company’s energy here instead of trying to distance yourself from the problem will not only limit the damage, it will show your customer that your organization has core values and that your intent is to limit your customer’s exposure and then fix the service break. You don’t need to be super-heroes here, be focused, listen and act decisively. Then move to step 3
- After the smoke has cleared and tempers have subsided, reaffirm your company’s commitment to your customer and reiterate the steps you took to solve the problem in the short term as well as the steps you will put in place to insure that the issue will not reoccur. Do it in writing. Conversations fade as well as memories. Everyone will remember the pain of the service issue, make sure they remember the short term and longer term solution. One note of caution here; this is not the time to be patting yourself on the back. You screwed up, but you made it right for the long term. That’s why your customer chose you in the first place. Reaffirm your commitments to your customer and do it in writing.
Customers don’t like mistakes, and they have a bigger dislike for mistakes that come with a lack of ownership and path to resolution. Follow these simple steps above and keep more customers for the long term.
by Elizabeth Hines | Jan 30, 2012 | Blog
I was recently involved with a client’s business planning process for 2012 through 2014. You know the one, the typical 2 year process where after the first 12 months of forecasting, the data really starts to get fuzzy.
When I asked my client why they were so confident about the first 12 months and so ambiguous about the second 12 months, her reply was “we always go by our gut instincts that far out”. I then asked what results this “gut instinct” had gotten her organization. To this, she replied, “that’s why you’re here”.
From there, it was pretty straight forward. The client’s first 12 months of data was iron clad. Sales revenue, expenses, contingency planning, headcount…all buttoned up nicely. The second 12 months, not even a shred of data. When I asked her why, she replied, “I never ask for data that far out.” That’s when things started to click for her….
In forecasting or any kind of business planning, your results are going to be as good as the data you build your model with. As a manager or executive, demand proof of data and look closely at the assumptions. Data is easy to produce; accuracy is the tougher piece, so look at the assumptions and see if they make sense. If it’s a new program, encourage a simulation or better still, a pilot. You can learn a ton from live pilot programs, all before you go “really” live.
Using the “trust but verify” method with your team will streamline your planning process and yield more accurate and better results.
