As an industry we are really very good at understanding the internal metrics that lead to a well-run business and thus profitability. But what about the customer and their metrics…what are the metrics for measuring our performance against the expectations of the customer?
Look back on the big sales you recently lost. Do you know why? That big account that slipped away last year, did anyone in your organisation pick up on the signs of your vulnerability?
When we were purely selling product the idea of alignment was simple. The customer needs the product; we want to sell them ours. It was a transactional world. Today, however, in a world of services such simplicity no longer applies. When we add to this an ultra-competitive “Zero-Sum” environment and expectations which are continuously elevated by other high performing suppliers, the margin for mistakes gets very slim.
Today we need to be more aligned with the business objectives of our customers, not just our “statement of work”. The customer’s expectations are developed by levels of service and communication from these other suppliers and by their own ever-evolving missions and performance pressures.
I’m reminded of a time when I was visiting with the CFO of one of our largest customers. They were a major organisation with thousands of placements. We had a good relationship for years and I had every reason to believe we were doing an exceptional job. So you can imagine my surprise when the first comment out of his mouth was how dissatisfied he was with our performance. It wasn't the level of product reliability or service, or the satisfaction level of the departments using our product. He was upset because of our delivery times. Our agreement called for delivery within 30 days and we were delivering in half that. Placements were national and complicated to arrange. I thought with beating S.O.W. by 50% we were doing a good job. However, he was not comparing us to our agreement, or even to our direct competitors. He was comparing us to Dell Computer and their legendary supply chain. He could not understand why we could not equal their three day delivery system.
To be candid I first felt it was an unfair comparison. I also felt that if I was delivering better than promised it should be satisfactory and I felt blind-sided by his concern on my performance. I had not heard a word of this before our visit and here it was, clearly on the top of his mind. Then it dawned on me that this was my fault. It had been over nine months since I had been in to visit with him and talk about his priorities and newest objectives. I had had monthly reviews with the Account Manager, but I had fallen behind on the executive exchanges. What might surprise you is that this is the number one reason accounts become more vulnerable. That’s right, communication is the highest area of account vulnerability. It’s not price, or service. These things involved highly developed management processes. Communications are often left to occur without any kind of strategic management structure around them.
Account Forensics, an Atlanta based account diagnostic firm for many Fortune 500 companies has an extensive database of information formed from doing the forensics on account health. Their most recent report on the trends in account management states the following:
“Account support encompasses the total support from the service provider’s account team to the buyer, including both executive and direct client-facing teams. However, data shows that corporate teams took on a significantly pronounced role in causing client accounts to shift from strong to vulnerable in 2014. When buyers mentioned account support as an area of concern in 2014, 58% cited an insufficient level of corporate involvement from the provider as the main reason for their disappointment.”
So what should we do? Obviously we need to take action. Here are some ideas:
1) Build senior executive involvement into the account plan.
Schedule senior executive client meetings and make these part of the account plan. Your company’s senior executives should visit accounts at a frequency that is appropriate given the client’s size, growth potential, and overall strategic importance.
2) Share the load
It might make sense for multiple executives at your company to share the load. For example, it may be advantageous for the vice president of sales to visit during one quarter and the chief financial officer during another. This will not only broaden your company’s involvement with the client, but by introducing different disciplines it may introduce additional approaches to address issues and increase opportunities for performance dialogues and sales.
3) Establish a system to archive and share ideas
It is difficult to proactively communicate ideas to your client if you don’t have a system to store, organize, and share ideas. Many dealerships have invested in a CRM system to accomplish this, but very few have really developed a process that ensures they are really capturing the data that will help improve the relationship. If the CRM is simply something the sales force is forced to use to track activity rather than a management tool to archive customer knowledge, it will fail. Process, not software, is the key. By developing a system to archive and share ideas with your client, both executive and sales teams are able to systematically see which ideas have already been shared, as well as determine gaps so you can proactively make recommendations which strengthens relationships.
4) Listen to your customers at all levels.
Your client’s needs can be driven from many levels within the organization, and these may be in areas where you are not routinely involved. It is important to understand all the direct and indirect influences that are impacting the expectations of your customer.
Evolving to a services business does not mean simply engaging in IT services, or offering MPS. It means a whole new way of interacting with customers. More and more clients are focused on their core issues and competencies. They are expecting that you are communicating, analyzing, and reporting issues and metrics that will help them reach their goals. Helping them accomplish this is the only way we will reach ours.
Understanding the measure of our clients’ expectations is every bit as important as the metrics we call benchmarks. In fact, if we are not aligned with the customer’s expectations, then the internal metrics we spend so much time on are just meaningless numbers.
Article by Ed McLaughlin
Ed McLaughlin has 40 years of experience in the information and imaging industries. He was president of Sharp Imaging & Information Company of America and executive advisor at Sharp Electronics. He is currently president and CEO at Valderus, bringing together dealerships with an innovative approach for shared profitability while retaining local management and brand identity. He is also on the board of advisors at Continuum Managed IT Services., and a strategic advisor to Innovolt. McLaughlin has received many honors during his career, including Marketing Research Consultants’ Lifetime Achievement award and a BTA Lifetime Achievement award, both in 2012. He can be reached at firstname.lastname@example.org.