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Sunday, 29 September 2019

"The Customer is Always Right". Always? Really?

The old adage that the customer is always right is generally true from the customer's perspective but is it always the same case for the supplier?

I had a consultancy client who was importing finished and packed foods mainly from Europe and selling to wholesalers and large retailers.

He sold to a total of around 250 wholesale outlets and had perhaps 10 major retailers on the books.  He decided to do a Pareto analysis (80:20 rule) of the customer list and it changed his life and the life of the business.

As might be expected approximately 20% of the customers generated 80% of the turnover as well as gross profit.

In addition he found that a high, too high, proportion of his staff were involved daily dealing with the orders from the smaller customers.

What was more, the number of complaints, returns, arguments about price and very slow payments meant that most of the people were engaged in the wholesale sector and the important group of customers was not being given the attention it deserved.

Accordingly he took a major decision, a very brave one, and wrote to virtually all his wholesale customers telling them that he would no longer be supplying them from three months hence.

He also negotiated a deal with a major food service company to take on the 250 wholesale customers and the job was done.

In fact their new ability to devote more time and effort to the major retailers resulted in enhanced relationships with the result that his turnover and net profit almost doubled within a year.

In another case the client was in thrall to a major national outlet with in excess of 50% of his output (about £3million) going to the one customer.

Reading the values statement of the retailer would normally lead one to believe that they loved their suppliers, that their relationship was all-important and they desired mutual satisfaction and success.

Really?  They could have fooled the world at large that they were a lovely company to deal with, but certainly not my client. He came to a meeting one day and announced that he was stopping supplying the intransigent retailer and would give them 3 months.

Another brave decision. In fact he replaced the lost business within six months at better prices and then took the major retailer back (at their request) on very enhanced terms.

What it says, of course, is that we need to look as carefully at customers as we do our suppliers. For example how often have we heard sales people complain that we can't chase an unpaid account too hard for fear of "losing a good customer"? For my money a good customer is one who pays on time with a cheque that doesn't bounce.

If we really analyse the true cost of a slow payer we would be surprised. For example how about all the telephone calls to their accounts department plus the cost of the hours taken up? Add to that the fact that the customer is using you as a bank and ask yourself do the prices charged really reflect the costs incurred?

Start with a Pareto analysis and take a good look at the 80% of customers to see which ones are good to deal with and are profitable.  Then check on those that take up an inordinate amount of time and effort compared to their level of profitability.

Derive a list of dodgy customers and tell them that there will be an immediate price increase in order to bring them to a level at which it is worthwhile trading with them

If they decide to go elsewhere congratulate yourself that they are now diminishing your competitor's profits, and then search out the good ones on your sales ledger.

If a customer can’t deal with you on an adult and commercially viable basis then it is time for the sailor’s farewell. On the other hand identify the good ones and remember that great service leads to great relationships and great customers.

Tidy up your customer list and make sure that, as far as possible, you are optimising the returns from your efforts.  The results can be startling.

Ivan J Goldberg
Author, professional writer, content producer and leadership specialist.      
Email me me for a discussion via ivan.goldberg@maa-uk.co.uk

Sunday, 22 September 2019

Do You Have the Power? Use It Sparingly and Never Abuse It!

It's strange how many entrepreneurs are frustrated by the apparent reluctance of some of their senior people "to be as committed as I am to the business".

They tell me that they (the leader) work really hard, is totally committed to success in the business while some of their people seem to work hard but just don't go the extra mile.

I gently point out that ownership of the business generates a different ethos from those who are employees but they still don't always see it that way.

The fact is that it comes down to two words - Perceptions and Power.

The perceptions of the leader and the team are frequently at opposite ends of the same spectrum.

For example the team sees the car parked in the CEO space, notes when he/she is out for lunch (again), compares holidays and destinations and experience a slight frisson of envy.

They don’t necessarily see (or want to see) the long hours, the incessant demands on the leader's attention and time, the concerns that are kept from the team for good reason and the constant feeling of responsibility for the business and its employees.

But then again, our perceptions are our reality so that is what counts.

In the other direction, the leader can fall into the trap of expecting everyone to do as he/she does and then feels irritated that the same level of dedication is not forthcoming.

This all seems rather negative but in fact it is a function of the perceived power of the leader to whom the employees normally defer.

Note that it is not necessarily the persona of the leader that occasions these feelings but rather the title and position of a leader.

As an example I had cause to interview the CEO of an enormous paper-making business. He had been in post for only six months or so having been promoted from his previous job of Chief Operations Officer.

He told me that before his promotion the five or six directors worked closely and very effectively as a team, were able to challenge without rancour and met socially outside the business.

When he was appointed CEO, he said, the atmosphere changed immediately. He had told the other directors that "his door was always open" and he expected that the happy relationships would continue.

He was quite wrong, he told me. Not only did they not solicit his thoughts and advice but their very attitude was one of coolness.

It was the power problem raising its ugly head. Irrespective of the individual, the perception is that the leader has power over them and could use it malignantly at any time.

Deep seated maybe but there is little doubt that similar feelings are more common than we like to admit.

So what is the solution?

Whatever the leader decides to do it will take time and a lot of patience. The most important parts of the solution are great communication and genuine transparency.

The leaders needs to demonstrate a measure of humility in showing the team that he/she trusts them and their opinions and thoughts are vital to the business.

Whatever the leaders decides to do in order to build relationships, to develop engagement and alignment of purpose, it must be visible to everyone in the business.

A wise sage once said that there is nothing so demeaning as to be expected to achieve other people's objectives.

Trust your people. Build a society of high performers with great attitude and tell them at all times how good they are.

It does take lots of time and lots of patience. Celebrate successes, however small with everyone in the business and demonstrate that you trust them by visible non-interference.

In the end an engaged and openly aligned society is the ultimate objective.  Remember that power is a trait that should be possessed, seldom used and NEVER abused.

Ivan J Goldberg
Author, professional writer, content producer and leadership specialist.      

Email me me for a discussion via ivan.goldberg@maa-uk.co.uk

Sunday, 15 September 2019

Is Happiness Becoming an Industry? No Government Interference Please!

A little homespun philosophy this week.

There seem to be a number of relatively new concepts currently going the rounds and some of them are becoming almost an industry.  For example Mindfulness is gaining adherents as is Thought Leadership and the indications are that there is a move towards self-examination, even introspection.

However, the one that has sparked my interest is that of Happiness which for fairly obvious reasons is an objective worth the pursuit.  For starters could we have a Brexit-free day on radio and TV?  That would certainly make me happy.

I do have some concern about it however, that when Governments start to latch on to a fashionable idea they can latch on with a heavy hand (if that isn’t a very mixed metaphor) and drain all the life out if it.

How on earth can Government affect or even try to affect the happiness of the people?  Government is there to legislate and as the majority of legislation is there to prevent us from doing something (if you don’t believe me just check it out) then hoping to bring happiness to us is a fallacy.

Please just get the economy right and accept that is the best you can achieve.

Happiness is a feeling; it is not measurable as some academics and psychologists would have us believe. Indeed it is probably an absolute in the same way as “unique” in that we are either happy or not.

It is not the same as contentment, enjoyment or pleasure; all of those can contribute to our happiness but they are not happiness in themselves.

It is an intensely personal and transient feeling.  What makes each of us happy does not necessarily do so for anyone else.  It is transient because external influences can affect us both positively and negatively and often quickly.

Contributors to personal happiness are many and varied and again are appropriate to different interpretations.  For example, the acquisition of a new possession, a walk in the park, good friends and family relationships, animals, good conversation, spirituality, meditation, the list is endless.

It is worth examining how each of us achieves happiness.  Is it through one of the situations above or do you have something in your life that really makes you happy to the exclusion of everything else?

I heard a piece on the radio recently when a Buddhist monk was interviewed having been described as “the happiest man in the world”.  Who made this decision wasn’t mentioned except that it appeared that someone had managed to evolve a technique that they claimed could measure happiness.

Neuroscience would have it that finding which parts of the brain are stimulated positively and monitoring those parts would enable a measurement of happiness to be defined. 

I am extremely sceptical about this possibility.  Because of the transient nature of happiness it would seem very unlikely that it would occur during a brain scan.  It’s a laudable attempt but please, leave us to be happy without the burden of scientific analysis.

Business leaders would always claim that they “have a happy workforce”.  Do they mean contented (apathetic) or perhaps the people exhibit a positive attitude?

Recent statistics would lead us to believe that productivity in UK industry is the lowest in Europe, being defined as the value produced per hour of work.

There must be a correlation; I would have thought that if the workforce is happy then there should be a high level of productivity or am I being naïve?

Perhaps the answer is to implant a culture into the business which encourages people, which gives then the freedom to act positively, that doesn’t weight them down with unnecessary bureaucracy and with a leadership that show concern for their wellbeing.

Those are the sorts of criteria that will lead to a happy workforce.

In my case it would be a comfortable chair, the dog asleep on my lap, listing to great music (me not the dog) and getting outside of a large bowl of ice cream (again, me not the dog)

Ivan J Goldberg
Author, professional writer, content producer and leadership specialist.      
Email me me for a discussion via ivan.goldberg@maa-uk.co.uk

Like I said, it’s intensely personal and very transient but it’s great while it lasts.