A billion dollar computer and network services company engaged SixPillars Research Group to interview 80 of their largest customers. There were over 3,000 total customers, and 400 large ones. We objected to the sample size as wasteful of our time and their money, but they insisted.
Normally we get more than 90% participation of the people identified by our clients as key contacts. In this case though, we were able to interview only 57 of the 80 people listed, or some 71%. The reasons, some of the respondents were not current customers of our client (although the client thought they were.) Also, serveral of the people listed as contacts were no longer employed by our client’s customers. In one case the customer company no longer existed. Our client’s obviously poor recordkeeping was our first indication that all was not well.
The interviews confirmed it. Customers complained universally about the administrative nightmare of doing business with our client. There were many errors in shipment and in pricing, and the difficulty and time consumed in getting errors corrected was frustrating. At least ten of our contacts revealed there were actively searching for a vendor to replace our client.
At a meeting with the President of our client, and several of the Vice Presidents, their comment was, “You are not telling us anything new. We have known about these problems for a long time. Industry surveys show us as better than our competitors.”
It is no wonder that, as many of their largest customers fled, the company failed and filed bankruptcy.
Charles R. Schaul, Partner of SixPillars Research Group, focuses on increasing business profits by resolving the problem of customer attrition. Aligning companies with their customers; generating and implementing strategic initiatives; and promoting employees’ customer focus through commitment, responsibility and accountability combine to achieve the result.
Mar 25, 2008
Mar 12, 2008
The Joy of Management Consulting
It is amazing. I have been a management consultant since 1980, working with several hundred clients, and observing all sorts of business owners and managers. I have seen owners who are risk takers or risk adverse; visionaries, bureaucrats with no vision, or dreamers; driven by sales, technology, or expense management; customer focused or self focused (one regularly referred to customers as “the bastards;” leaders, pushers, autocrats, or those who delegate well; overextended or underutilizing their skills; procrastinators, impulse driven, having analysis paralysis, fear, or hiding in the details; brilliant and not-so-brilliant; great bosses or horrible bosses. And so on.
Yet the amazing thing is that most of their companies earn profits and create wealth for them, the owners. Sometimes I wonder how, other times I am convinced failure is just around the corner. I have seen brilliant people, dreaming and not doing anything, make a little money. I have seen not-so-smart owners get into a fixed pattern and over time grind out a fortune. Each individual is different; their blend of qualities works for them in their circumstance. I have seen fortunes squandered and fortunes made.
The point is, all businesses are different, making the business of management consulting fascinating. It’s our job to figure out who and what we are dealing with and create ways to help them seize opportunities and fix problems. It’s an ever changing mosaic providing new challenges and no boredom. It is the joy of management consulting.
Charles R. Schaul, Founder of SixPillars Research Group, focuses on increasing business profits by resolving the problem of customer attrition. Aligning companies with their customers; generating and implementing strategic initiatives; and promoting employees’ customer focus through commitment, responsibility and accountability combine to achieve the result.
Mar 11, 2008
The Importance of Commitment
Copyright 2008 by Charles R. Schaul, Boulder, Colorado. All rights reserved.
Of all the character traits exhibited by people, keeping commitments ranks at the top of the list for importance. Neither business nor personal relationships can exist where people don't keep commitments.
Here's what I mean. Last winter I moved my residence, and since I live simply, I decided to do the moving myself -- with the help of friends. I needed three friends to load the van at the old house and three other friends at the new house on the other side of town. Sounds easy.
After having heard all sorts of responses, from "I'll try to be there" to "I'll do my best to help you," I began to re-think what it means to receive a solid, full commitment versus what I'll call a "half commitment." I realized I couldn't get the van loaded with half commitments, but only by people who committed themselves completely and said, "I'll be there." Anything less meant furniture on the sidewalk, not in the van, or in the van but not in my new space.
Commitment means accepting an obligation, making a pledge, to either do or not do something. It seems simple, either you will or you will not do something. How is it that for some people the concept seems so vague? Making and keeping commitments is the cornerstone of our society. When you make a sale on credit, you are accepting your customer's commitment that in the future the bill will be paid. When you make a purchase with a credit card, it is done because you have made a commitment to the issuer of the card that you will pay the bill. It's plain and simple -- our business world relies on commitments every moment of every day.
Teachers and writers talk about five levels of commitment. Perhaps this will help understand what it means to make a commitment, versus making "half" of one. Here are typical responses for levels one through five.
Level 1 commitment - "I won't do it"
Level 2 commitment - "I'll do it if it's easy"
Level 3 commitment - "I'll try"
Level 4 commitment - "I'll do my best"
Level 5 commitment - "I will do it (provided it is moral, ethical and legal)"
This makes commitment seem easy.
Level 1 is a strong commitment -- not to do something. Level 5 is a strong commitment -- to do something. None of the others commit a person to achieving results, only to an effort (unless the task is easy.)
Level 2 commits a person to an activity provided it is easy. What happens if the task becomes hard? Would you want to rely on someone who gave you a level 2 commitment?
Level 3 - "I'll try" is the biggest cop-out of all. Trying gets you nowhere. It commits you to making an effort, and not necessarily good effort, but does not commit to achieving results.
Level 4 - "I'll do my best" sounds good, and in essence is a strong commitment -- but to an activity and not a result. What happens if "my best" is not good enough? Do you stop there? If you have made a level 4 commitment you do, because you committed to an effort and not to results.
Level 5 - "I will do it" (provided it is moral, ethical and legal) means that within the framework of what is moral, ethical and legal, everything possible will be done. This is a commitment to achieving results. Just like Level 1, there is absolute clarity here about what will happen. There is nothing weak or wishy-washy about Level 5 commitment.
Think of it this way, commitment is for the hard tasks -- you don't need it for the easy ones. Keeping commitments builds personal character, builds business reliability, and builds business relationships.
Remember the vendor who promised to "try" to get your important supplies to you on time, and then didn't. Were you told they would "do their best." Did that keep your machines running, or your copier supplied, or your freezer stocked for tonight's dinner crowd? What about the customer who "does his best" to pay his account with you. Can you spend "his best?" Would you rather receive the promise "I will have money to you by 3:00PM," versus "I'll try to get money to you by 3:00PM."
How many times have you waited to have a carpet cleaned, or a lawn mowed, or a TV fixed, and had to call the company later because no one showed up? Were you told "we're sorry, we tried?" As inconvenient as it is, when US West tells you the service person will be at your house between noon and 6:00PM, you can count on that happening. US West has learned a method of making schedules so that they can keep their commitments. That's better than promising a specific time for the service work and then not keeping the commitment.
Commitment doesn't have to be with others. Commitment to yourself has equal importance. If you set out to do a task, do you commit to it at Level 5, or at some lower level? Do you quit when difficulties arise, or do you use that commitment to get you through the tough times, to expand your thinking and your efforts to achieve a result that otherwise looks impossible. Commitment to a result will create a result. Lack of commitment to a result will create frustration, disappointment, failure.
Is this just semantics? Some people would say so. They are the ones who don't make strong commitments, who try and do their best most of the time. For those who make only those commitments they can keep, and then make sure they keep them, this is not an exercise in semantics.
Do you make commitments? Do you keep your commitments? Think about it the next time you tell a customer, client, vendor (or your children), "I'll try." Think about the words you will use next time you are asked to commit yourself to a task or an appointment. Level 1 or Level 5, or something in between?
Charles R. Schaul, Partner of SixPillars Research Group, focuses on increasing business profits by resolving the problem of customer attrition. Aligning companies with their customers; generating and implementing strategic initiatives; and promoting employees’ customer focus through commitment, responsibility and accountability combine to achieve the result.
Of all the character traits exhibited by people, keeping commitments ranks at the top of the list for importance. Neither business nor personal relationships can exist where people don't keep commitments.
Here's what I mean. Last winter I moved my residence, and since I live simply, I decided to do the moving myself -- with the help of friends. I needed three friends to load the van at the old house and three other friends at the new house on the other side of town. Sounds easy.
After having heard all sorts of responses, from "I'll try to be there" to "I'll do my best to help you," I began to re-think what it means to receive a solid, full commitment versus what I'll call a "half commitment." I realized I couldn't get the van loaded with half commitments, but only by people who committed themselves completely and said, "I'll be there." Anything less meant furniture on the sidewalk, not in the van, or in the van but not in my new space.
Commitment means accepting an obligation, making a pledge, to either do or not do something. It seems simple, either you will or you will not do something. How is it that for some people the concept seems so vague? Making and keeping commitments is the cornerstone of our society. When you make a sale on credit, you are accepting your customer's commitment that in the future the bill will be paid. When you make a purchase with a credit card, it is done because you have made a commitment to the issuer of the card that you will pay the bill. It's plain and simple -- our business world relies on commitments every moment of every day.
Teachers and writers talk about five levels of commitment. Perhaps this will help understand what it means to make a commitment, versus making "half" of one. Here are typical responses for levels one through five.
Level 1 commitment - "I won't do it"
Level 2 commitment - "I'll do it if it's easy"
Level 3 commitment - "I'll try"
Level 4 commitment - "I'll do my best"
Level 5 commitment - "I will do it (provided it is moral, ethical and legal)"
This makes commitment seem easy.
Level 1 is a strong commitment -- not to do something. Level 5 is a strong commitment -- to do something. None of the others commit a person to achieving results, only to an effort (unless the task is easy.)
Level 2 commits a person to an activity provided it is easy. What happens if the task becomes hard? Would you want to rely on someone who gave you a level 2 commitment?
Level 3 - "I'll try" is the biggest cop-out of all. Trying gets you nowhere. It commits you to making an effort, and not necessarily good effort, but does not commit to achieving results.
Level 4 - "I'll do my best" sounds good, and in essence is a strong commitment -- but to an activity and not a result. What happens if "my best" is not good enough? Do you stop there? If you have made a level 4 commitment you do, because you committed to an effort and not to results.
Level 5 - "I will do it" (provided it is moral, ethical and legal) means that within the framework of what is moral, ethical and legal, everything possible will be done. This is a commitment to achieving results. Just like Level 1, there is absolute clarity here about what will happen. There is nothing weak or wishy-washy about Level 5 commitment.
Think of it this way, commitment is for the hard tasks -- you don't need it for the easy ones. Keeping commitments builds personal character, builds business reliability, and builds business relationships.
Remember the vendor who promised to "try" to get your important supplies to you on time, and then didn't. Were you told they would "do their best." Did that keep your machines running, or your copier supplied, or your freezer stocked for tonight's dinner crowd? What about the customer who "does his best" to pay his account with you. Can you spend "his best?" Would you rather receive the promise "I will have money to you by 3:00PM," versus "I'll try to get money to you by 3:00PM."
How many times have you waited to have a carpet cleaned, or a lawn mowed, or a TV fixed, and had to call the company later because no one showed up? Were you told "we're sorry, we tried?" As inconvenient as it is, when US West tells you the service person will be at your house between noon and 6:00PM, you can count on that happening. US West has learned a method of making schedules so that they can keep their commitments. That's better than promising a specific time for the service work and then not keeping the commitment.
Commitment doesn't have to be with others. Commitment to yourself has equal importance. If you set out to do a task, do you commit to it at Level 5, or at some lower level? Do you quit when difficulties arise, or do you use that commitment to get you through the tough times, to expand your thinking and your efforts to achieve a result that otherwise looks impossible. Commitment to a result will create a result. Lack of commitment to a result will create frustration, disappointment, failure.
Is this just semantics? Some people would say so. They are the ones who don't make strong commitments, who try and do their best most of the time. For those who make only those commitments they can keep, and then make sure they keep them, this is not an exercise in semantics.
Do you make commitments? Do you keep your commitments? Think about it the next time you tell a customer, client, vendor (or your children), "I'll try." Think about the words you will use next time you are asked to commit yourself to a task or an appointment. Level 1 or Level 5, or something in between?
Charles R. Schaul, Partner of SixPillars Research Group, focuses on increasing business profits by resolving the problem of customer attrition. Aligning companies with their customers; generating and implementing strategic initiatives; and promoting employees’ customer focus through commitment, responsibility and accountability combine to achieve the result.
Mar 6, 2008
Alignment for Profit
Copyright 2008 by Charles R. Schaul, Boulder, Colorado. All rights reserved.
In a recent engagement we worked with a warehouse distributor of an automotive commodity, conducting what we call a “customer alignment” project for them. As is almost always the case, we were able to show our client that better alignment with their customers would produce substantially more profit, conservatively estimated at more than 30 times our fee for the engagement.
In speaking with customers of our client we learned that compared to competition our client had excellent inside sales personnel, provided far better delivery service, handled the few errors in shipping and pricing quickly and with no hassle, and provided excellent warranty claims handlinThey also were better in helping customers keep their inventory clean and balanced.
Many customers said they were willing to pay an extra $1.00 to $3.00 per unit for the overall level of service, especially the delivery service.
A second thing we learned was that some customers purchased only low priced products, but received all the same excellent services. Adding the cost of handling the product in and out of the warehouse to the cost of the other services provided, we found the company had negative gross profit on sales of low end products. Obviously, if a customer bought only low end products, the company lost money by selling to that customer.
As a result of the study we recommended adding $1.00 to $2.00 to the selling price of high end products; and either dropping or reducing delivery service to customers buying only low end product, The increase in profit from implementing these recommendations added very significantly to the profit of this automotive commodity warehouse distributor. The margin in this industry is very thin. As a result of our work our client added some 30% to their gross margin.
As usual, we finished the engagement with a feeling of great success. We had proven once again that alignment with customers produces both quick and long term increases in profit, as well as customer loyalty.
Charles R. Schaul, Partner of SixPillars Research Group, focuses on increasing business profits by resolving the problem of customer attrition. Aligning companies with their customers; generating and implementing strategic initiatives; and promoting employees’ customer focus through commitment, responsibility and accountability combine to achieve the result.
In a recent engagement we worked with a warehouse distributor of an automotive commodity, conducting what we call a “customer alignment” project for them. As is almost always the case, we were able to show our client that better alignment with their customers would produce substantially more profit, conservatively estimated at more than 30 times our fee for the engagement.
In speaking with customers of our client we learned that compared to competition our client had excellent inside sales personnel, provided far better delivery service, handled the few errors in shipping and pricing quickly and with no hassle, and provided excellent warranty claims handlinThey also were better in helping customers keep their inventory clean and balanced.
Many customers said they were willing to pay an extra $1.00 to $3.00 per unit for the overall level of service, especially the delivery service.
A second thing we learned was that some customers purchased only low priced products, but received all the same excellent services. Adding the cost of handling the product in and out of the warehouse to the cost of the other services provided, we found the company had negative gross profit on sales of low end products. Obviously, if a customer bought only low end products, the company lost money by selling to that customer.
As a result of the study we recommended adding $1.00 to $2.00 to the selling price of high end products; and either dropping or reducing delivery service to customers buying only low end product, The increase in profit from implementing these recommendations added very significantly to the profit of this automotive commodity warehouse distributor. The margin in this industry is very thin. As a result of our work our client added some 30% to their gross margin.
As usual, we finished the engagement with a feeling of great success. We had proven once again that alignment with customers produces both quick and long term increases in profit, as well as customer loyalty.
Charles R. Schaul, Partner of SixPillars Research Group, focuses on increasing business profits by resolving the problem of customer attrition. Aligning companies with their customers; generating and implementing strategic initiatives; and promoting employees’ customer focus through commitment, responsibility and accountability combine to achieve the result.
Insurance Agency Expansion
Copyright 2008 by Charles R. Schaul, Boulder, Colorado. All rights reserved.
A client alignment engagement for a large, high quality, locally owned insurance firm revealed their customers have a very high level of confidence in the firm and expect to have a long term relationship with them. The staff is well qualified. They made sure their customers covered all risks, and helped with risk management. They shopped markets for the best coverage at the lowest cost. In other words, they were completely customer focused, as well s very competent. Everything was great.
With one exception.
Many of their customers would like to buy health insurance and other employee benefits coverage from the agency. The agency, not knowing this, offered “personal lines” coverage for the executives of their customers, but nothing for the employees.
When we reported the level of interest their shown by their customers, our client decided to expand his health and benefits staff and enter the market. The result was spectacularly successful, adding some 30% to the agency’s revenue and profit.
Charles R. Schaul, Partner of SixPillars Research Group, focuses on increasing business profits by resolving the problem of customer attrition. Aligning companies with their customers; generating and implementing strategic initiatives; and promoting employees’ customer focus through commitment, responsibility and accountability combine to achieve the result.
A client alignment engagement for a large, high quality, locally owned insurance firm revealed their customers have a very high level of confidence in the firm and expect to have a long term relationship with them. The staff is well qualified. They made sure their customers covered all risks, and helped with risk management. They shopped markets for the best coverage at the lowest cost. In other words, they were completely customer focused, as well s very competent. Everything was great.
With one exception.
Many of their customers would like to buy health insurance and other employee benefits coverage from the agency. The agency, not knowing this, offered “personal lines” coverage for the executives of their customers, but nothing for the employees.
When we reported the level of interest their shown by their customers, our client decided to expand his health and benefits staff and enter the market. The result was spectacularly successful, adding some 30% to the agency’s revenue and profit.
Charles R. Schaul, Partner of SixPillars Research Group, focuses on increasing business profits by resolving the problem of customer attrition. Aligning companies with their customers; generating and implementing strategic initiatives; and promoting employees’ customer focus through commitment, responsibility and accountability combine to achieve the result.
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