Because today’s market is served by a surplus of retailers, customers have the power to penalize retailers who infringe on their time through delays, mistakes or inconveniences. Has a “customer from hell” ever penalized you? And more important, do you understand the full cost of your recent mistakes?
During the last 12 months, how many times has someone forgotten to order a carpet? Or ordered the wrong color? Or been unable to find an order? Or ordered a product that should have been in the warehouse, but wasn’t (yet it turned up later)? Have you forgotten to cancel your order with a supplier after the customer canceled on you? Have you forgotten to bill a customer? Or caught an employee stealing? Have you missed the manufacturer’s discount on an accounts payable? If you’ve experienced such errors more than once, you have a process problem. Your loss exposure is far larger than your actual losses to date.
To err may be human, but to repeat an error is a mistake. And a mistake is simply a waste. As inventor Thomas Edison said, “Waste is worse than loss.” With so many retail choices now available to consumers, the customer is no longer king -- she’s dictator! Very few customers will stick by you if they have to tolerate mistakes.
On top of that, customers have been spoiled to EXPECT better service. When other companies offer flawless and instantaneous performance, customers want it from you, too. Basic, hassle-free service isn’t enough. Customers demand premium service, and they continually raise their standards for it.
If your store has a trusted reputation, you have less to fear from outside competition than you do from internal inefficiency, discourtesy and bad service. However, if you don’t deliver on their expectations, customers will make you pay.
Recently, my wife and I suffered from a car dealer’s mistakes (repeated errors). We took our 1-year-old sport utility vehicle to the dealership to have a strange sound fixed. The service person told us we needed to replace the transmission and, fortunately, the work would be performed under warranty. He set an appointment to have the car serviced.
On the appointed day, we took the vehicle in. After several days of hearing nothing, we called to ask if the car was ready. The service person said the work wasn’t finished, because the transmission had yet to be delivered. (“Hadn’t he ordered it before setting our appointment?” we asked ourselves.) So, we picked up our SUV and asked the dealership to call when the transmission arrived.
We waited several weeks, but received no call. Instead, we telephoned the dealer. The customer service rep told us, “Oh, I was going to call you. It came in just yesterday.” Yeah, sure.
We brought in the vehicle for service and again we waited. However, this time, the dealer eventually DID call us. The service rep told us that our car had fallen off the rack and incurred extensive damage. Fortunately, no one was hurt. “We’ll fix your car good as new,” he promised, adding that he’d call in two days to let us know the extent of the damages. Guess what? He never called. So, we called to complain. Finally, seven days later he reported the damages.
It’s now been a full month since the car toppled. The dealer still hasn’t produced the car. The only time we talk with the dealership is when we initiate the call.
My wife’s been a trooper through the whole thing, but she’s at the edge. She’d like revenge, which includes punishment and torture!! I don’t consider her reactions abnormal. What do you think?
We can understand an accident -- “stuff happens.” But we can’t understand why they wouldn’t keep all of the promises they made. Why weren’t they proactively calling us? Was it their systems? Or was it their standards?
In today’s competitive environment, running your company without mistakes is table stakes for survival. If survival and profitability are your goals, you have no options. All companies have to become operationally excellent -- not just to eliminate mistakes, but to keeps costs down as well. Retailers can no longer raise prices in lockstep with higher costs. Rather, they have to try to lower costs to accommodate rising customer expectations.
Operationally excellent companies optimize and streamline their processes to minimize costs and hassles. They standardize, simplify and tightly control their operations, thus leaving few decisions to employees’ discretion. Their management systems focus on integrated, reliable, high-speed transactions. Their culture abhors waste and rewards efficiency. Operationally excellent companies execute extraordinarily well, and their proposition to customers is guaranteed low price and/or hassle-free service.
How does your store’s execution compare to that standard? Have you written an operations manual explaining your standardized processes and performance standards? Have you documented the processes that empower your staff to deliver hassle-free service EVERY TIME to your customers? Do you even know where to start?
Try this: think of every process. Find out how many times someone touches an order. How many of those times could you eliminate? Another example: Does your payment policy require salespeople to obtain a customer’s signature before you order the materials? (Today, you can buy simple computer software to automate such processes and save time.)
Have you put together a written checklist that tells your customer exactly what to expect on installation day? If so, do you require salespeople to review that checklist with every customer? Does your work order clearly tell the installer what he is supposed to do, what materials he needs, the directions to the job site, and the phone numbers to call if problems arise?
The processes you implement should eliminate hassle and waste. Design them to be easy to learn and use. Employees should find it practically impossible to let anything fall through the cracks. In addition, your processes should help you identify and measure the outcome of those actions that produce the most efficient results.
Most small-business owners still try to run things by the seat of their pants, as they did when they opened the store. At first, they did everything and managed largely by intuition. When the store grew busy, they hired someone to help. When everyone was busy selling, however, they overlooked critical things like cleaning the bathrooms or billing customers. (I know. I ran my store that way for too long.)
If you just want a job, you might get by with that. However, if you want to build a business that has some value on the day you leave it, you need to remodel your company into a well-oiled machine. Until then, you may never compete with the big boys.
Starting this week, get your work clothes on, rebuild your machine and get the oil it needs. Becoming operationally excellent is an essential strategy.
However, it’s only one of the strategies you need to survive. I know at least two others. Once you’ve transformed your business into a predictable profit-making machine, you’ve got more work to do. In my next columns, I’ll detail steps 2 and 3.