Is Your Company its Own Worst Enemy?
by Jack Waksman
Depending upon their size, most companies spend between 3 and 10% of revenue on SG&A expenses. You attract and keep customers through the efforts of the people you employ to manage sales, marketing and customer service. You pay for marketing materials such as brochures, advertising and a website. You hire the best people you can find to grow the business by expanding sales to current accounts and exploring new markets for your products. The question is- are you wasting all that money by chasing away those same customers that you just spent so much time and effort to attract?
A case in point…
I recently decided that I need a new home computer. I found a unit advertised in my
Sunday paper that appeared to meet all my needs at a reasonable price so I went to the website to order it. Unfortunately, the website couldn’t process my order because it couldn’t handle my discount. No problem. I called the 800 number.
The sales person on the line was very friendly but couldn’t find the advertised model. When he did locate it, he got the price wrong. Then he suggested I purchase a “better” machine (“Why, is there something wrong with the other one?) at a still higher price only to stumble over the fact that the specifications on the two units were exactly the same. Next, I had to wait for a call-back about the discount. All in all, the process took three hours.
The unit arrived with a software problem that prevented it from printing. Customer Service reported that the warranty did not cover the software they had sold me. Even worse, they tried to sell me a software warranty that cost as much as the entire computer. Only when I made it clear that I wasn’t going to buy it or anything else from them ever again did the representative tell me the simple fix to the problem. I was so incensed that I emailed the CEO of the company to explain why they had lost me as a customer. That led to an executive calling to offer his help while trying to figure out if they had just antagonized someone who could impact sales such as the CEO or IT Director of a major company.
So here is a company that discounted a product, advertised it in the newspaper, trained a sales force and designed a website that together couldn’t tell a coherent story in an efficient manner. They devised sales and customer service policies designed to drive away any customers that they hadn’t already upset. Even worse, they couldn’t tell if their efforts were harming their core business so they devoted hours of executive time in an attempt to patch things up. All in all, this wasn’t a very efficient use of resources.
Nobody sets out to waste money. It just happens when a lot of seemingly good ideas and processes don’t match up with each other. However, if you are going to spend scarce resources, then you should at least make sure that you get a return on your investment and recognize the importance of customer service. Here is a checklist of what you should be looking at.
1. Examine your Sales Process: What has to happen to make a sale and how is that coordinated with your fulfillment process?
- Is the process customer friendly? Do all the components (advertising, web site, product claims, product warranty, etc.) agree with each other?
- Are your sales people properly trained to answer product and delivery questions?
How does the order get into the “system?”
- What cross-checks are built into the system?
- Is the system accurate?
- Can you track specific orders?
- Can you generate system-wide metrics?
- Who gets this information for analysis (Sales, Production, Financial, Management to name just a few) and is it distributed on a timely basis?
2. Order Fulfillment: How do you get the product out to the customer?
- Does the product ship on time? (Note that 100% is the only acceptable measurement.)
- Does the product shipped match exactly what the customer ordered?
- What does the company do if the shipment is late? How do you let your customer know what is happening to their order?
- Is the shipping address correct and method of shipment as specified by the customer?
- Is it invoiced accurately and on a timely basis?
- How are “customer accommodation costs” tracked and accounted for?
3. Customer Service: What is your Customer Service Policy? Are you sure?
- Is it written down?
- Are your representatives trained in how to apply it?
- When are they supposed to hand off a problem to their manager?
- Are you tracking “failure” costs?
4. Customer Retention: How do you know if your customer is happy with your work?
- Reports by Sales. Is your Sales Department in regular contact with each customer on a scheduled basis? How do they report their findings to Management?
- Customer Surveys. Are you conducting customer satisfaction surveys using either internal or contract services? (Note that use of outside survey services is not all that expensive).
- Is your management team following up on these results with your customer management to discuss problems and your plans for corrective action? This can be done in person or on the telephone depending upon the situation.
How you accomplish everything on this checklist is industry and product specific. The fact that it needs to be done is not.
Keeping existing customers is a lot more cost efficient than prospecting for new ones. After all, you’ve already paid the acquisition cost. Spending your time and energy replacing lost accounts means you have that much less time for growing and improving the business. Besides, how many industries have unlimited numbers of potential new clients who can’t easily check out the reputation and credibility of new suppliers?
Through its actions, your company can delight its customers by giving clear, concise and prompt answers to customer questions and by following though on its promises to ship products that meet or exceed their specifications on time and exactly as ordered. Or, you can repeatedly clean up the same systemic problems and drive your customer into the arms of your competitor.
How do you want to spend your time and money?