- Benchmarks for Best Practices -
Establishing a Customer-Driven Culture
Objective:
Creating a performance-driven culture that focuses on customer satisfaction.
Thirty years ago, customers' primary demands were related to product quality. Once international competition met and ultimately surpassed the existing quality standards, it became critical to build quality assurance into most elements of the manufacturing process in order to remain competitive. With that accomplished, while still necessary as the price of entry, quality could no longer be considered a significant competitive advantage. Twenty years ago, with higher quality standards in place, service became a competitive advantage and the driving force in winning market share. Consequently, demands for service forced suppliers to look at customer satisfaction as the primary criterion for success.
Now, the focus has shifted again. Due to the nature of the competitive environment where a quality product with similar features and benefits and a commitment to service are mandatory to even enter the sales arena, the critical focus has become the absolute need for added value. World Class sales forces, through a proactive analysis of what the customer needs, leave nothing to chance when ensuring customer satisfaction. They recognize that an effective sales effort goes beyond merely selling products or services; it demands that priority be given to increasing the customer's productivity, which can only be measured through the customer's increased revenues or reduced costs. Thus, the added value offered is the improvement of the customer's business results. From this perspective, the World Class sales forces assist their customers in ways that were never before considered, and may even appear to have little to do with the products or services they sell. To provide the customer with these value-added services, the seller's entire organization must embrace a customer-driven culture that wholeheartedly supports the sales force.
Method:
A major shift of focus from selling "products/services to selling "increased customer productivity through improved revenue streams or reduced costs.
Critical Component:
Increasingly formalize the customer needs analysis process as the size and complexity of the individual customer increases.
Through various approaches, sales forces are investigating and analyzing their customers' needs and challenges. Suppliers are then reorganizing their internal processes, identifying critical skills required, creating new standards, and committing to the need for continuous improvement. With customers that account for a smaller percent of the business, the agreement to meet the customer's need may be as simple as taking the form of a guarantee. However, the larger and more complex the customer, the more critical it becomes to formalize a mutual agreement that details the customer's expectations and the supplier's commitment to provide product, service, and added value. This agreement may even be formalized to the extent that it includes periodic and mutual reviews and adjustments.
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- Case Example -
AT&T Middle Market uses its Stewardship Agreement to define and detail the customer's expectations, needs, and desired level of service. This is a structured vehicle used to "push the Account Executive to develop a needs analysis with the customer and "pull the customer into the process of developing and monitoring the agreement, bringing visibility to AT&T's performance with direct, face-to-face feedback. Several "template customer profiles are in place to help the Account Executive develop the agreements. Entered into with approximately 25% of its key customers, this written agreement details their expectations of AT&T. It is tailored to the customer's needs and desired level of service, and states how AT&T is going to add value to the customer's business. It is also used as a vehicle to review products, services, and the added-value benefits delivered.
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Critical Component:
Transactional Quality Management focused on the critical needs of the customer.
A performance-driven culture focuses on continuous improvement, not just meeting the expectations of today. The control process requires ongoing measurements as a sale progresses, not after the fact, and at each step of the way there should exist a checkpoint to ensure the process is working and that the focus continues to be on satisfying customers' needs. IBM tracks not only overall customer satisfaction through annual surveys, but specifically looks at the transaction itself, e.g., the solution, the installation process, the time required for installation and to get the application up and running, the availability and efficiency of technical support, etc. These results are used as benchmark performance standards as well as to facilitate the relationship with the customer.
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- Case Example -
Several years ago, a decision was made at Allegiance Healthcare to address both sides of the sale; one side is selling the product, and the other is servicing what had been sold. While at one time these functions were handled by the same person, presently the Field Service Representatives (FSR's) have responsibility for monitoring the partnership accounts and ensuring that transactional issues such as service, product, price, and delivery are as they should be; this individual takes care of what was sold yesterday. FSR's are day-to-day problem solvers who, by focusing on all "after-the-sale processes, make sure that the customer stays sold. If a problem surfaces, in some instances, FSR's conduct root cause analyses to determine the source of the problem and then prevent it from recurring. |
Critical Component:
Shared risk/shared savings partnerships focused on selective preferred customer relationships.
In a dramatically new business model, some suppliers are moving toward shared risk/shared savings partnerships with their key, or critical, customers. In a broad definition, the supplier and the customer sign an agreement stating a cost saving goal. The supplier agrees to waive the "transactional charge for goods and services, but will be paid a percentage (usually 50%) of the savings accrued. Should costs increase, the supplier will participate by assuming responsibility for part of the increase. Obviously, the supplier is very motivated to improve the procurement process for its customers.
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- Case Example -
Allegiance Healthcare works with its customers to lower costs through a standardization of the customer's internal process that helps to reduce supply usage and labor costs. In what is called a "shared risk/shared savings agreement, Allegiance and select customers share the savings when supply and related costs fall below an agreed-upon level. If costs exceed the target, Allegiance would share the added expense. In essence, Allegiance and its customers agree that their mutual goal is ensuring the profitability of each of their organizations. Mac Brown, Region Director says, "To do that, we understand that our customers need to use less product (physically fewer items) and pay less for those items whenever possible, and that we need to maximize the economics of personnel and resources. We are not altruistic in this. We believe that if we do a good job, customers will use a greater array of Allegiance products because we are a valuable partner. That becomes the basis of our relationship, which is a very powerful driver for both organizations. |
Critical Component:
Strong leadership to refocus sales personnel from the traditional sales and service role to customer business consultants.
In a continuous effort to improve their customers' business results, World Class sales organizations are repositioning their sales personnel as business consultants. The removal of these representatives from day-to-day transactional issues is facilitated by the availability of systems and personnel to support customers' administrative needs. The sales force is then equipped with a wide array of tools that provide the information needed to consult with the customer.
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- Case Example -
The repositioning of its sales personnel as business consultants by Boise Cascade is reflected in a commitment to its "Lifetime Customer Satisfaction Model, which is fundamentally a planned approach to consultative selling. The selling process is highlighted by the "Needs Satisfaction Selling Program, which provides the tools and support needed by the sales representative to function in the business consultant role. A pilot Lead Generation Program will pre-qualify prospect segments via telemarketing; this program feeds information to the sales representative so a segment-specific sales presentation can be provided on the initial call. Through pre-call planning, the sales representative develops a comprehensive understanding of the specific customer and how the sales call is to be approached. Using Data Base Marketing software, the sales representative examines a customer's buying pattern which can lead to a formal business review with the customer. During face-to-face contacts, the sales representative seeks areas in the customers' organizations where process improvement is a possibility. This can involve flow charting various processes with the customer. Sales usage reports enable the sales representative to advise customers on buying trends in the categories of paper, furniture, computers, and office supplies. As part of the initial training effort, sales representatives are educated on an Activity Based Cost Management System (ABCM) that is used in needs analysis with the customer. This system measures costs by activity, by customer, and by product. |
Critical Component:
Take responsibility for educating customers in any areas that can improve performance results.
More sophisticated and discriminating corporate customers are looking for suppliers who can bring technical and applications expertise to the table. They seek a salesperson/consultant who can analyze a problem, conceptualize a solution, and assist in implementation. More than simply taking on challenges for the customer, World Class sales forces acknowledge the value in serving as an educational resource to their customers. In addition to the partnering of the shared risk environment, Allegiance Healthcare brings together major accounts for educational purposes and to discuss customer issues. Executive Leadership Symposiums are conducted bi-annually. For example, administrative and operating room personnel are brought in for a three or four day visit to discuss new trends in the marketplace or to be shown new products, building a network of leaders and executives who will feed information back to Allegiance. Within GE ICS is a program called Change Acceleration Process (CAP); the concept is how to make change happen faster and how to make it stick once it happens. The effectiveness of this program prompted an initiative to introduce customers to CAP. Subsequently, key customer decision-makers are introduced to CAP and how it can positively impact their business. GE knowledge and best practices are shared to help customers, and vice versa. GE makes a considerable investment to learn and refine its own business practices, and that information can be shared with customers at no additional cost.
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- Case Example -
A significant customer partnership is built through GE ICS's Six Sigma program. Essentially, Six Sigma is a methodology with both an internal and external focus. It requires addressing issues that are holding GE ICS back, and identifying the issues that are preventing its customers from being more competitive in their marketplace. While the internal focus is on what is lacking within GE ICS, the external focus involves sitting down with the customer and identifying action items, called Critical to Quality factors, that the customer cares most about. When Six Sigma is taken out to the customer, time is spent with that customer, educating them, identifying projects, and working out their issues. This is a major investment of time and resources on behalf of both GE ICS and the customer, but the ultimate result is better customer service, and hopefully the start of a relationship between GE ICS and the customer. Jeff Cull explains, "It's a partnership of GE ICS and the customer working together in the same Six Sigma training session, identifying with the customer a list of critical issues and resolving them in that training session. In addition, we work with them on a day-to-day basis within their own organization after they've completed the training, forming alliances and partnerships with mutual benefits." |
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