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Power to the People

How diligent are you at maintaining your most important asset?

by Frank Hurtte

Distribution is a people business and our people are our most important asset. In my 30–plus years around distributors, I've heard this phrase used at least a zillion times. But last week as I reviewed the Profit Report of a distributor trade association, guess what I found in the column marked employee training? Zip, zero, nada, nothing. How could this be? Maybe it was based on the dramatic effects of the recession, so I went back to 2007 numbers. The results were the same – no measurable evidence of investment in employees.

If people are our most important asset, then we aren't being very diligent in maintaining our investment.

Close your eyes and visualize your building. Now let's think about the same building without maintenance. The grassy lawn has turned to a waist-high weed patch. The sign which once proudly displayed your company name is faded and has a couple of letters missing. And the paint is peeling back to display a kaleidoscope of old colors, rusty metal and decay. But we're not talking about our building. With people, the signs of maintenance are less visible.

Our discussion of people can't stop at the payroll department (if there is such a thing). We must remember that even though our business is officially classified as business-to-business, our customers are people. All too often discussions of selling situations stray from this central fact and wander down discussions of SIC codes, market segments and all the rest.

Before we get started, allow me to go on record. Distributors need a sales process, scientific marketing strategies and formalized plans for pushing their business forward. As a consultant to the distribution channel, I generally talk about process, programs, planning and profits, not people. Trust me, as I developed my thoughts for our time together, it was painful to step away from the quasi-science of the mechanism. Don't expect this to be a management manifesto or treatise on the laws of leadership. I am not going to suggest we hold hands and sing a round of "Kumbaya," I promise. This isn't about soft skills or inner motivation, it's about profit and the people side of making your business grow.

The People Side of Sales
I grew up around my family's gasoline and tire distribution business. As a kid of 10 or 12, I became aware of the first rule in dealing with people: call them by name. It was 1964 and we weren't allowed to use first names. Our greetings were formal – hello Dr. Smith, thank you Mrs. Mazzotti and the like. There were three requirements: we spell properly, pronounce correctly and incorporate the customer's name into our conversation. From car wash boy (me) to experienced mechanic, my dad insisted on it. He would call you aside if you didn't follow the rules.

What does this have to do with modern distribution? Distributors maintain lists of customers, often thousands of names. Yet, I continue to see poorly maintained lists. Contact names are misspelled, titles are incorrect and company names are poorly abbreviated. When I speak to the marketing teams of these organizations, I learn of "CRM" systems where e-mail addresses are missing and incorrect phone numbers loaded.

One customer VP with an unusual (and difficult to spell) last name shared the frustration of receiving regular correspondence with his name spelled incorrectly. His words were something to the effect, "I spend millions of dollars with this company – it would seem like they would take the trouble to spell my name right." This isn't a pitch for you to spend 10 grand on a new CRM; it's a call to make the correct name part of your company culture.

The social media phenomenon has spread through our lives like wildfire. Nearly everyone I talk to under the age of 60 has some kind of presence on Facebook, LinkedIn or some other social media site. I believe it's time to spend just a bit of time and energy working on developing some process around using these tools. Because I know many of you wonder about the value of investing time here, let me spell out a quick scenario.

During the recession, hundreds of thousands of our customer contacts (the people) found themselves on the wrong side of the downsizing pink slip. For 99% of these people, the only connection we have with them is through their old company – company phone, fax, e-mail, etc. Suddenly they disappear from your radar screen.

Think about this. These are people who understand your company. They often are walking and talking experts in your product lines. More importantly, these contacts know the value you can provide. Almost without exception, they ultimately find new work performing a similar job at another company. Wouldn't it be wonderful if you could maintain contact with them through their crisis and on the other side once they are again in a buying position? These social networking sites provide a mechanism for keeping the contact alive and staying in tune with cultivated contacts. If you believe in the adage "people buy from people," this contact equates to an investment. Keeping lines of communication open drives good business.

The People side of Customer Service
Everyone has a theory on customer service. Most revolve around things like answering the phone and entering orders. But here's the deal: in our business, things like missed delivery dates, product quality problems and other little disputes show their ugly faces on a far too regular basis. This too is customer service. Many consider these events to be a bad thing – and they certainly are a source of stress. But, like the proverbial silver lining in the dark cloud, these little pains provide an opportunity. New research (outlined in the book Human Sigma) proves that handling people the right way actually builds loyalty.

There are two categories of satisfied customer:

• Rationally satisfied
• Emotionally satisfied

Rationally satisfied customers are those who appreciate your company for all the good things you do. They cognitively understand your value and know how to put it to work. Emotionally satisfied customers are different. Not only do they understand your value, but they feel an emotional attachment to your company.
Rationally satisfied customers are only slightly more loyal to your company than unsatisfied customers. They know you provide strong value. They rate themselves as extremely satisfied. Yet, they are just as likely to drift to a competitor as someone who is not satisfied with your service. Emotionally satisfied customers are different. Their emotional link to your company makes them nearly competition proof.

Here's the surprising part. Emotionally satisfied customers get that way based on experiencing a problem. That's right, problems! They become emotionally attached because you handled a negative issue in a positive way. The researchers describe a six-step process for handling these customer complications. With limited discussion, here are the six steps:

1. Acknowledgement – Confirm the problem
2. Apologize – Apologize for the inconvenience
3. Take ownership – Take ownership of the problem by telling the customer you personally will get involved
4. Handle on the spot – If possible, handle the issue on the spot, quickly, instantly, painlessly
5. Quickly escalate – If the problem can't be solved by the first level contact, you must quickly (in minutes) move the issue to a higher authority
6. Leave the customer better off than before – After the problem is resolved, the customer feels as though they came out of the process with greater than normal value

Interesting thoughts, but what's the point?
We started our time together talking about people. Our customers are people, our employees are people, our suppliers are people. Heck, deep down inside even some of our competitors are people. When we face them in black and white, these points seem elementary. The question begs, why do we continue to see customer issues handled incorrectly? How can little things like customer contact names be misspelled? And, why does that rep from a promising supplier insist on calling me "buddy" instead of Frank? The answer is because we are human. And, humans fall into bad habits.

I grew up around Hurtte's Texaco. During those formative years, I developed habits around capturing and using customer names. At age 56, I still sometimes refer to people using the sir and ma'am that was the other part of the process. Some of you reading this may have similar experiences. But, it's a serious mistake to assume everyone shares our mutual connection to customer names or courtesy.

Similarly, we can't assume that everyone instinctively understands the right process for building an alternative communications channel via social media. We sure as the devil can't assume that our teams realize the steps to building emotionally satisfied customers. This brings us full circle.

There is a competitive advantage in people. Competitive advantages equate to profits. Small gains in customer retention and marketing provide the thrust into higher growth. For things like building and vehicle maintenance, we have a process. We change the oil at 3,000 miles, we service the air conditioner filters in May and we turn on the warehouse heaters in October. This sounds simple but nevertheless is a process. Companies without this process find themselves spending more in the long term.

It seems to me, if we want to move forward with our biggest investment (something like 65% of our revenue is spent on people), we need to build a process around maintaining them, too. Allow me one parting question. What have you done to add a little power to your people?

 

Frank Hurtte, founder of River Heights Consulting,
brings 28 years of distribution industry experience
and a lifetime in sales. Reach him at (563) 514-1104
or frankehurtte@riverheightsconsulting.com.

 

This article originally appeared in the Sept.Oct. 2010 issue of Industrial Supply magazine. Copyright 2010, Direct Business Media.

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