Monday, April 7, 2014

Do You Even Know What Your Company Looks Like to Your Customers?
Do you even know what your company looks like to your customers?I spent some time working with a company that sells what is essentially a commoditized product, utilizing an indirect distribution channel of independent sales reps.

For a variety of reasons, the company wound up having a problem with the manufacturer of their product, one that impacted its availability, causing many of their end-user business customers to have to scramble to look elsewhere for a replacement product. And by not arranging in advance to have a replacement product readily available, the company negatively impacted both the end-user AND the independent distribution channel, which consists of sales reps who depend solely on commissions for their livelihood. The bigger problem, though, was that the company made a deliberate decision to NOT provide a heads-up to their distribution partners, even though there was ample time to do so. So the sales reps — AND their end-user customers — were blindsided. And by deliberately choosing to NOT get in front of the problem, the company alienated both their distribution partners AND the end-user customers (as well as more than a few front-line employees, who bore the brunt of the distribution channel's overall dissatisfaction).

Unhappy Customers Tend to Become Former Customers

The short-term result was as you'd expect: The company lost whatever anticipated revenue had been attributable to the product that was now no longer unavailable. But it was the mid- and longer-term result that really got the company's attention: Many of the affected distribution partners/sales reps decided to shift their business AWAY from the company, creating yet another hit on the company's bottom line.

Surprising? Hardly. In spite of countless recommendations to the company's leadership to reach-out to the affected sales reps and properly manage their expectations, senior management chose not to. The company's rationalization was was a combination of straight-up denial ("The ones who are complaining are just 'outliers,' who are always complaining about something"), and a naive presumption that the independent sales reps would continue to do business to the company, because… well, that's what they'd always done in the past.Business as usual. Of course, that's NOT what happened. And so the company experienced a significant —- and sustained — revenue shortfall.

Institutional Myopia Creates Blind Spots

Senior managers and owners are frequently guilty of institutional myopia. There's a tendency to deny that customer service problems exist, because to do otherwise is to acknowledge their own shortcomings as managers. And for those service-related complaints that do bubble-up through customer service channels, it seems easier to dismiss them than to see them as symptomatic of a larger, institutional problem.

Get the Facts

Whether it's accurate or not, when a customer says they're unhappy with you, they are right. Their perception of your organization really is all that matters. And the quickest way to get to the bottom of the issue is simply to ask them. And whether you use a simple phone call or online survey tools like SurveyMonkey or Constant Contact, the goal is the same: Finding out what your customers think about your organization, your product, and your service. And, more importantly, opening-up a communications channel that allows them to become a true partner with you in making necessary improvements.

Short and Sweet

Phone or online, keep your initial survey short and to the point. The fewer the questions, the more likely your customer or prospect is to participate. To be effective, you need a formalized process, with non-leading questions, and you need to tabulate and track responses. Questions can include:
  • Product questions. Does your product meet their needs? If not, what should be changed? Are there products that you don't currently offer that you should consider offering?
  • Service questions. Are they happy with your current service levels? If not, what should be changed?
  • Frequency and types of communications. Do they receive enough communication from you? Or too much? What's the ideal frequency?
  • Referencability questions. Would you recommend us to a friend or colleague?
Some questions can be "ranking" questions ("On a scale of 1 to 10" or "bad to good"), others might be multiple choice, but always allow for some open-ended questions where the respondant can use their own words to tell you exactly what they'd like to see improved. This helps to ensure that you don't miss any important feedback on something that you might not have even previously considered. And for "ranking" types of questions, always use an "even" number (i.e. 8 or 10). It forces respondents to make a conscious decision, one way or the other, instead of simply choosing a non-committal "average" (i.e. choosing '3' out of 1-to-5).

Make it a Habit

You should conduct formal surveys such as these on an annual basis... or even more frequently, if you feel the need. Survey not only your customer base, but also your prospect base. Obviously, for a prospect, you'd utilize a different set of questions that would be relevant, but the responses you receive can make all the difference in whether or not that prospect will ever become a customer. More importantly, the survey responses — as well as your analysis of them — must make their way to the appropriate levels of management, in order to initiate any appropriate corrective action. Otherwise, you've just wasted your time and that of your respondents.

It Works. But Only if You Actually Do It.

If the organization in our opening paragraph had bothered to formally survey their customer base, they would have learned about their customer's pain points, and most likely would have been able to decrease the severity of their revenue loss. Equally important, they would have properly repositioned themselves for a "comeback" in the near future.

Remember, it's always less costly to retain an existing customer than it is to acquire a new one. And what better reference for a new customer, than one coming from an existing one who's happy to do business with you? 

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