Yesterday morning I caught the tail end of a story on NPR about a small social media company in Seattle, Social Strata, that offers unlimited time off for their employees. It began with one dedicated employee caring for her husband after an accident, and was ultimately extended to all ten employees in the company.
There are so many interesting business topics at play in this story. The two I am going to explore are trust and judgment.
In order for unlimited time off to be successful, employers must trust that employees are using the time off productively and appropriately.
If you trust that those you've hired to help grow your business, then you should trust that your employees are using the unlimited vacation time to actually take a vacation because they want to travel somewhere new, to take a long weekend to visit family far away, or use extended time off to care for a spouse or sick child.
You should also trust that they will return to work with renewed focus and gratitude for the opportunity to spend time away without consequences at work.
Next is judgment. Do your employees have good judgment? If they do, they are probably using their time away from the office because they would have a hard time focusing and being productive at work in the first place!
If employees use good judgment in work related tasks, their good judgment probably extends to other areas in their lives. Making it easier for employees to practice good judgment makes for more satisfied employees. For those who take pride in their individual and team success at work, this means employees will find a way to take their sick child to the doctor and also finish their deliverable, as promised, on time.
Social Strata and Netflix, two companies with unlimited time off, made sure to note that employees must finish projects and duties on time. This is an expectation employees must manage responsibly.
NPR reports that companies with unlimited vacation time are more productive and more engaged with unlimited time off. One piece I found to be interesting is that employees began taking actual sick days off instead of coming in to work to spread their germs to co-workers! Imagine that!
For those of you with decision-making power, would you let your company go to an unlimited vacation policy?
For those of you without decision-making power, how do the constraints of limited time off affect your use of vacation days?
Source: NPR.org, August 12, 2010
Kathy: How do you think that your skills and ability in handling business relationships have evolved over your career?
Todd: I think that from where I started to where I am now I have a better appreciation and understanding of my customers’ business. And I think that by that evolution I’m able to talk more of their talk, obviously bring more value because I do understand their business. And by virtue of bringing that value, I believe that creates a better relationship. There is trust, there’s experience, there’s information flow, all those things.
In turn, again, I think that understanding your customers’ business builds a whole foundation for a relationship and things go along with that.
Kathy: So is it just your maturity or your experience of understanding the business?
Todd: Understanding through time, their business, and all the intricacies of their business and what they believe is value, what their issues are as they go about their day-to-day. Of course understanding what we do for them and put it together. These processes build relationships that are pretty much invaluable as you get to the end of the day.
I really believe when it comes to selling and the art of building relationships some of this is just inherent. I think you either have it or you don’t. I don’t think there is an in between.
So yes, you can get a better foundation, a better baseline, but when it comes down to it, to answer your question—I had somebody to show me the door, but when the door was open I inherently knew the things necessary to take those relationships and build on them.
Kathy: Do you look for that in hiring?
Todd: We sure try.
Kathy: It’s easier to teach them product than it is to teach them inherent skills.
Todd: It really is. And unfortunately we’ve hired people and we’ve had to let people go, not because they are not good people, but because when what we are trying to do in the market somebody can be very technically based and understand products.
But when the day is done if they can’t make a connection with somebody and build on that, then it’s not going to work. So unfortunately we’ve hired and let people go simply because they got to a certain point where they had all the technical skills in the world but that inherent piece, relating to a customer, couldn’t be met.
Kathy: Do you think it can be taught?
Todd: I don’t think it can, I really don’t. Some people are better than others in terms of how well they are able to get in there and connect.
One of the conversations I had, Kathy, you know this, is we had a regional meeting a few months ago. We were talking about our staffing and the people. We really tried to assess our competitors. We know what we are about. We know the things we are doing. But we really tried to put our shoe on the other foot of our competitors and figure out what they do better.
One of the things that came up from one of our formidable competitors is that they are just “guys guys,” as we put it. They put a team together that people want to be around. This is the stuff we are talking about—the inherent ability that they hire the people who have the innate ability to get in and make things happen, to build relationships.
We have better technical people, I’m convinced. But at the end of the day a lot of our customers want to be around people they want to be around. I don’t think you can teach that, I think you know it.
Kathy: All the inside sales people that I’ve listened to, the relationships that they have with their customers, is amazing. How do you measure it? How do you know if they are developing good business relationships?
Todd: How I gauge it today is far different than how I used to gauge it. Today, as I look at it is, are we able to use this relationship to make money? Because their—our customers’—job, and I don’t begrudge anybody, everybody is doing the job. But their job is to buy the best they possibly can. Our job is to sell the highest price we possibly can.
Relationships give you the opportunity to negotiate or give you an opportunity to do the work. I’m gauging the relationship today as, ‘Can you do all that and at the end of the day you are making money?’
We want better relationships. We don’t have a training program for that because, again, it is right back to what I said. We know inherently people either have it or don’t. We put them in the position. We want them to get to know people. We want them to do the things that they are doing.
But our managers now are really trying to use relationships. At the end of the day, are we able to use those relationships to make money?
It is not any more or any less just trying to be equitable with our customers. We are just trying to find that equitable approach where we are both winning in that situation.
Kathy: What advice would you give people, be it in sales or finance or operations, who really want to develop their business relationship skills?
Todd: Unfortunately you tend to live in the snapshot of where you are today. Things are changing so fast that you can’t assume anything anymore.
You can’t assume you have the relationship. You can’t assume you have the share. You can’t assume that you are doing great on service.
Make sure you understand what is in front of you because in some cases we are assuming a lot of things out there that just aren’t the case. Again, the economy has forced people to really do things they wouldn’t even consider doing a year or two years ago. That’s the assumption piece I was talking about. We just can’t assume much.
But I still believe on the relationship side of things, that at the end of the day it’s still what is keeping us in the game.
Price is big, but that same survey I mentioned, price was 3rd out of whatever category. It was still about trust and still about the product, the value and then of course price was there. It’s not the end all be all. But I think relationships are still giving us that opportunity to succeed to the best of our ability in the market today.
Business relationships are built and based on many skills we all use daily in our personal lives and our professional lives: communication, trust, respect, strategy. The list goes on.
How many of you extend the same principles that make you successful at work in your home life? Real Simple Magazine guest author Patrick Lencioni employed a few of the strategies that contributed to his success in the office at home and here are the top ten strategies he recommends.
All of these sound good to remember both in one's personal life and at work. I like the application to life outside the office, and it is a reminder that strong relationships--business and personal-- make for successful people who are successful at work.
Source: Real Simple Magazine "10 Business Strategies to Organize Your Family Life," by Patrick Lencioni, accessed May 27, 2010
In India, Wal-Mart Goes to the Farm
Despite the fact that government and its policy do not allow Wal-Mart Stores to sell directly to consumers. In the past two years, Wal-Mart establishes a good relationship with farmers in India, trying to open this market where modern stores make up just 5 percent of the country’s retail industry. Wal-Mart operates in India through a 50-50 joint venture with Bharti Enterprises. Their partnership, known as Bharti Wal-Mart, supplies retail stores that are fully owned by Bharti and runs a wholesale store that sells to shopkeepers, hotels and other businesses.
Wal-Mart has succeeded their relationship with the framer. Many farmers in India say they like working with the company. It typically pays them 5 to 7 percent more than they earn from local wholesale markets and they don’t have to worry about the transportation. Other farmer state that his yields have risen about 25 percent since he started following farming advice from the company and its partner, Bayer CropScience. And other said they trust Wal-Mart because Wal-Mart has been paying on time. We would just like them to buy more
Wal-Mart relationship with the farmer and supplier had set up its supply system in the India. It is the relationship that Wal-Mart trying to built with farmers and suppliers give them good supply and distribution center. Farmers are more willing to provide their product to Wal-Mart, because it is Wal-Mart that helps them to increase their margin.
http://www.nytimes.com/2010/04/13/business/global/13walmart.html?pagewanted=1&sq&st=nyt&scp=2
Empire Valley Ranch is a family farm in British Columbia, Canada who was using the conventional channels to market their cattle. They would sell their weaned calves on the spot market to area buyers most likely for an established per pound live weight. Essentially they were selling a commoditized product to a faceless buyer. However, they have decided to differentiate their product by taking a risk and switching to a system where they finish their calves on a grass-fed diet and production is free of hormones and antibiotics. This allows them to enter a niche market with fewer buyers and for the time being higher prices and greater margins. They have had to establish direct relationships with their customer base in order to assure their product can be moved. “One must be able to build a real relationship with your customer. Once you build that trust then you most likely will have a customer for life/There is nothing better than a person coming in or calling to say they love your beef.” –Joyce. The risk seems to be working out for them and their new customers.
http://www.bclocalnews.com/bc_cariboo/williamslaketribune/community/89484742.html
I found a brief article describing business to business relationships in the agriculture/food industry. Effective communication through businesses can help reduce environmental uncertainty, improve access to crucial resources, and increase business productivity and effectiveness. Agribusiness relationships are disected into four different types: Spot markets, Repeated market transactions, Formal contracts, and Financial participation. Then, the elements of a good agri-food supply chain relationship are discussed. All information is detailed with two specific examples. The first business to business relationship example deals with the cattle-to-beef process, while the second example details the barley-to-beer/whiskey process. Both examples are perfect for describing great relationships where extreme trust is necessary, especially with quality and safety. Finally, research identifies several success factors for sustainable supply chain relationships and communication. Visit the website at
http://www.sac.ac.uk/mainrep/pdfs/relationshipsinagrifood.pdf
Jason Koss
April 14, 2010
ACE 430
http://www.nestle.com/MediaCenter/PressReleases/AllPressReleases/Kraft+pizzas.htm
http://www.marketwatch.com/story/kraft-trading-pizza-for-chocolate-2010-01-05
Nestlé USA has always had a good reputation for providing quality prepared dishes, such as Lean Cuisine. So on January 5, 2010, it made perfect sense for them to acquire Kraft Foods’ frozen pizza business. Prior to this, Nestlé had only a minimal presence in the frozen pizza industry. They believe it is a good strategic fit because it goes along with the research and development that they have already done with other frozen food, such as direct-store-delivery, convenience, and quality. They are using this acquisition as a way to become major players in the frozen pizza industry, which was about $4.4 billion last year.
Kraft Foods sold their pizza business for $3.7 billion so that they could afford to buy Cadbury chocolate maker for $16 billion dollars. Shareholders are unsure if the deal will go through. However, if it does, chocolate will prove to have a larger profit margin than pizza.
Why is this acquisition significant? Kraft Foods is taking a risk. They are willing to lose a successful aspect of their business for a potentially larger one. They are losing the trust of their shareholders, while Nestlé is gaining popularity in the frozen food business and also letting around 4,000 previous employees of Kraft keep their jobs. If the acquisition of Cadbury goes through, we will see the same thing happen. This appears to be an endless cycle between businesses.
The relationships at hand reveal the significance of knowing who you are working with and how they are going to react. Rare Wines LLC customers reacted to the fraud by filing law suits and suing the company. Due to past experiences of not receiving paid for wine from the company the consumers were more apt to believe that they were never going to get any of their wine or their money back. The same can be said for Wallace and his company with previous troubles of the winery in France failing to supply the wine that was purchased. They knew that the winery did not deliver the wine before, so why should they trust them again - what type of conclusion was drawn? Not only did Rare Wines LLC lose value that has been added to their name, the winery in France has lost its value as well.
Everyone has a role in a business whether it is as the owner, manager, employee, supplier, lawyer or customers. It took a court date for an employee of Rare Wines LLC to step forward and say anything regarding what has been going on. Communication among all the players, trustworthiness, dedication and consistency are all important factors that keep a business to business relationship going well. Rare Wines LLC proved to be have opposite qualities of what a good business relationship should look like, which is why they are bankrupt and not in operation.
Take a look at the article – what do you think?
Few of us actually remember Ted Lewis' signature line, but the question has even more relevance today than when the pride of Circleville, Ohio sported a top hat and a clarinet while soft-shoeing his way across America's vaudeville stages to the gentle strains of Me and My Shadow. Oregon State University's associate professor Zhaohui Wu has recently published a research paper in The Journal of Business Research that suggests: 1) supply managers should be wearing several hats in the course of their work; and, 2) the ability to do so ought to make supply chain partners happy.
The opposite turns out to be true, according to the study. When the supply manager successfully executes roles as a buyer's negotiator, a buyer/supplier facilitator, a supplier's advocate, and an educator for internal customers, he or she is seen as a many-faced phoney. The outcome? No-to-low trust, doubt of good intentions, and eroding relationships.
Professor Wu indicates that the situation is even more difficult in a tough economy, and that being the middleman in a supply chain relationship is more complicated than ever. It shouldn't take Sherlock Holmes to figure those out. But, he goes on to indicate that the answer lies in more research. Catch these: "Maybe some . . . supply managers are just naturally good . . ." ". . . perhaps there are tools that can help . . ."
Even Doctor Watson knows that the answer isn't hidden in more research. The research has been done, and the results have been well-documented. There are demonstrably successful tools and techniques in how to build strong business relationships, as well as decades of existing case work that demonstrate the importance of interpersonal skills - genuine people skills - that relationship leaders and practitioners use routinely, and with powerful measurable impact on the strength of relationships and supply chain performance.
A related article may be found at www.logisticstoday.com/operations_strategy/make0everyone-happy-supply-chain-0322.
Consultant John Gentle has recently written in his Sage Advice column about the importance of trust in relationship management (www.logisticsmgmt.com). A fast reaction from some might be, "Well, duh, everybody knows that!"
But, as we survey the wreckage of failed business relationships that surround us, it's clear that everybody doesn't know that.
So, for those who get it, the trust observations are a useful reminder. For those who don't, maybe they present an opportunity for a wake-up call.
We continue to run into professionals who are committed to golf, drinks, and pole dancers as three keys to maintaining business relationships. C'mon, it's 2010, and we can do better. After the party's over, more and more supply chain players are figuring out that relationships are really about value and sustainability . . . and trust.
I've been glued to CNN this past week trying to comprehend the catastophe following the earthquake in Haiti. I've been impressed with many things, but one of the things that has impressed me the most has been the power of relationships. In a catastrophe - be it in Haiti or in business-- when everything you had counted on has failed, often the only currency we have left is the power of relationships. Our ability to quickly make connections, create trust and find a common ground can be the difference between life and death. Those in Haiti -- or in business--who are paralyzed by fear, full of self-doubt and want to isolate are really struggling. Those in Haiti --or in business--who have had strong relationships or know how to create them guickly are doing better. They are the resilient ones, and they are the ones most likely to thrive in the future.
The good news is that we can all learn how to be better at creating relationships. There are tools and practices to help us. There is no magic to it. Relationship building is a learned skill. The real challenge is to actively practice those skills before we need to depend on them in life or death situations. I think I need to keep practicing.
Anthony Iannarino is President and Chief Sales Officer for SOLUTIONS Staffing. He is a consultant with B2B Sales Coach and Consultancy, and teaches at Capital University.
Joe Sperry sat down with Anthony Iannarino last week to discuss how his handling of business relationships contributes to his success.
Joe: How has your approach to relationships in business contributed to your personal or your company's success?
Anthony: My personal approach to relationships in business is based upon the idea that creating value together requires a relationship based on trust.
Mutual trust allows us to share ideas and information that might not otherwise be shared to explore potential ideas that allow us to exploit opportunities together, to solve problems, and to share business metrics that help both our companies do better work together than we would otherwise.
For example, 30 days after we start a large staffing project for a call center, we will share our turnover data. Initially some of our clients don't want to share their internal hiring data, but eventually they see it's the best way to discover how we improve our results together. Sometimes we have lower turnover numbers, and we share our on-boarding process with the client to help them improve their own results.
It's not always easy to build this trust, and sometimes there are individuals within some companies who cling to the idea that vendors are disposable. But once they have a successful business relationship, they understand the great value that a trusted business partner can help create.
Joe: How has proactive relationship management impacted both your organization's top-line and bottom-line performance?
Anthony: We schedule quarterly business review meetings with our clients. In addition to being a differentiator, this proactive approach has allowed us to improve our top and bottom line by defining the relationship as something more than a "vendor" could offer. In many cases, this approach by itself has helped a number of clients to move to us exclusively. This, in my opinion, is the response to "act like a vendor, I'll treat you like a vendor." Because we take a serious interest in our performance and how it impacts our client's performance, we are treated as something more than a vendor.
Joe: Do you have any advice for beginning relationship or account managers?
Anthony: Create value before claiming it. Understand that trust takes time to build, and you have to walk the walk before that trust will be developed as much as it can be. Have a presence. Have a presence. Have a presence. Never hide from problems or challenges, even if it makes you uncomfortable.
Thanks, Anthony! Business Relationships Members, do you have any questions for Anthony? Leave a comment if you do!
Anthony Iannarino is the President and Chief Sales Officer for SOLUTIONS Staffing, a professional sales coach, and a consultant for a firm he started, B2B Sales Coach and Consultancy.
Mr. Iannarino is also Adjunct Faculty at Capital University, where he teaches Persuasive Marketing, Social Media Marketing, and Personal Selling in the School of Business.
Anthony Iannarino is President and Chief Sales Officer for SOLUTIONS Staffing. He is a consultant with B2B Sales Coach and Consultancy, and teaches at Capital University.
Joe Sperry sat down with Anthony Iannarino last week to discuss how his handling of business relationships contributes to his success.
Joe: How has your approach to relationships in business contributed to your personal or your company's success?
Anthony: My personal approach to relationships in business is based upon the idea that creating value together requires a relationship based on trust.
Mutual trust allows us to share ideas and information that might not otherwise be shared to explore potential ideas that allow us to exploit opportunities together, to solve problems, and to share business metrics that help both our companies do better work together than we would otherwise.
For example, 30 days after we start a large staffing project for a call center, we will share our turnover data. Initially some of our clients don't want to share their internal hiring data, but eventually they see it's the best way to discover how we improve our results together. Sometimes we have lower turnover numbers, and we share our on-boarding process with the client to help them improve their own results.
It's not always easy to build this trust, and sometimes there are individuals within some companies who cling to the idea that vendors are disposable. But once they have a successful business relationship, they understand the great value that a trusted business partner can help create.
Joe: How has proactive relationship management impacted both your organization's top-line and bottom-line performance?
Anthony: We schedule quarterly business review meetings with our clients. In addition to being a differentiator, this proactive approach has allowed us to improve our top and bottom line by defining the relationship as something more than a "vendor" could offer. In many cases, this approach by itself has helped a number of clients to move to us exclusively. This, in my opinion, is the response to "act like a vendor, I'll treat you like a vendor." Because we take a serious interest in our performance and how it impacts our client's performance, we are treated as something more than a vendor.
Joe: Do you have any advice for beginning relationship or account managers?
Anthony: Create value before claiming it. Understand that trust takes time to build, and you have to walk the walk before that trust will be developed as much as it can be. Have a presence. Have a presence. Have a presence. Never hide from problems or challenges, even if it makes you uncomfortable.
Thanks, Anthony! Business Relationships Members, do you have any questions for Anthony? Leave a comment if you do!
Anthony Iannarino is the President and Chief Sales Officer for SOLUTIONS Staffing, a professional sales coach, and a consultant for a firm he started, B2B Sales Coach and Consultancy.
Mr. Iannarino is also Adjunct Faculty at Capital University, where he teaches Persuasive Marketing, Social Media Marketing, and Personal Selling in the School of Business.
I am amazed by the number of people who act as if they believe this….the fake smiles….the insincere comments….the lack of integrity. Yet, some seem to believe that this is the way to build relationships. Obviously, there are several problems with this approach.
First, they confuse personal relationships with business relationships. While having good personal relationships can be a very important part of a quality b2b relationship, it is only one part.
Second, they seem to think that people can’t see through them. In my experience, most people cannot be fooled for very long.
Good relationships are built on trust and reciprocity. If either party is insincere, it won’t be long before that insincerity will interfere with, if not destroy, the relationship.
My advice is to be yourself, be direct and be honest. If what you say doesn’t match what you do, you will lose their trust and undermine the entire relationship.
There are many ways to build relationships.
We can come in fully trusting and respectful of the other person. The danger is that our respect and trust may be ill-founded and the other person disappoints us, destroying the relationship. A few experiences like that and the second approach to relationships may be used:
We can come into the relationship having been burned many times before, willing to give the person the benefit of the doubt. In this situation, we may be watching to see if that person will, through his actions, gain or trust and respect. That’s coming into the relationship with a bias against relationships.
Paradoxically, the first approach to relationship building seems to work best, whatever the individual’s experience. People can approach each relationship as if it were unique, whatever their past experience. As Daniel S. Hanson says, in his Cultivating Common Ground: Releasing the Power of Relationships at Work, “When we build relationships with each other based on an unconditional respect for the individual and trust in each other, we move from being individuals to being part of a greater whole without losing our unique identities. We go from I to we without losing me."JSperry
The Lighter Side - Trust in a Bottle
I was in the airport recently for a trip to Baltimore and grabbed a few magazines at the newsstand. One of these magazines, Science Illustrated, had lots of colorful pictures which I thought would be perfect for mindless tarmac sitting.
As I was flipping through the pages a picture of a bottle of Liquid Trust caught my eye. Liquid Trust a blend of water, alcohol, and Oxytocin is suppose to make people more trusting of you with a few squirts. It’s easy enough to find just go to Amazon.com and one can buy a less than one ounce bottle of Liquid Trust for $30.
A Squirt Will Do Ya
Also accompanying the small note about Liquid Trust was an article on Oxytocin (unfortunately the article isn’t posted on the internet). Oxytocin is best known for its role in female reproduction. However, it is also being studied for its role in communication and bonding particularly the possibility of helping those with communication impairments like autism and social disorders. A few studies using Oxytocin have been shown to increase one’s trust in other people…hence I'm guessing the reason someone created Liquid Trust. Just a few squirts and your business associates will start trusting you more.
Wow, just think of the potential. No more sales pitches of having to actually quantify the value of your product or service. No more endless training sessions on influence without authority…you’d have all the authority. Just a few squirts and your word will be taken for gospel.
Tarmac Dreaming
As I daydreamed on the tarmac a few problems start to enter my mind. If it causes others to be more trusting wouldn’t you be more trusting as well. If a customer said “I just can’t afford that price” wouldn’t you be more willing to trust them and maybe lower your price without any push back or reduction in services or price. Hmm. I wonder if one could spray others instead of yourself? What about an anti-trust potion? You’d spray on Liquid Trust while drinking an anti serum potion. That way others would be more trusting but maybe you’d be exempt.
The Next Superhero
Maybe this could lead to another Marvel Comic super hero like the Green Lantern or Superman. Instead of super strength one could have super positive communication powers. Then Disney (who recently purchased Marvel) could create a whole new theme park where one doesn’t fear communication but where say husbands and wives could come and enjoy the land of “Open and Honest Communication”.
The possibilities are endless. Well, according to the article they say the product is unproven to have any effect on trust behavior. Bummer. I guess I wasted 15 minutes that I could’ve been reading “How to Win Friends & Influence People”.
"Ha um Ford em su futuro!"
That's Portuguese, more or less, for "There's a Ford in your future!" Good news for Ford, maybe not so much for the North American auto industry. A Detroit writer has suggested that there may never be another auto assembly plant built in the USA by a domestic manufacturer. He may not be absolutely correct, but he's definitely on to a trend that may become a movement.
Ford has just built its most advanced assembly plant in the world in Camacari, Brazil. It's in Bahia, not even in the more industrialized south. The plant, one of the leanest on earth, shows visible signs of best practices from all over - flexibility in multi-platform assembly; egalitarianism in dress, appearance, and food alternatives; and seamless, nearly invisible, integration of suppliers into physical operations and flows. All that, and they've got their own port facilities, too.
Defying stereotypes, this isn't one more case of American jobs being lost to low-wage/low-benefit exploited workers in some impoverished third-world outpost. It is all about the potency of business relationships when their power has been unleashed.
I'm guilty of some level of passion about the potential to do better - lots better - when suppliers and outsourced service providers have been embraced with progressive relationship management programs and practices. Camacari may provide a global examplar of what I've been feebly trying to illustrate.
Suppliers - outsourced parts and assembly providers - don't merely deliver their goods to production lines just in time in the correct sequence, a common practice in the US, presuming they haven't been driven into bankruptcy. They put together their products and deliver components and assemblies, in a synchronized flow, to assembly lines. You can't tell who's Ford and who's Lear or Visteon without looking very closely. They and their work are totally integrated into overall manufacturing flows. Just imagine the mutual trust and confidence involved.
The operation is highly automated, with robots galore, adding to quality, speed, and flexibility performance. How is this possible? Relationships. Relationships with the workforce that not only permit, but encourage and celebrate innovation. Business relationships with suppliers and service providers that not only knock down walls, but act as if they were never there.
These, despite marginal advances on the domestic front, are what we don't have - and aren't likely to anytime soon - in the domestic North American industry. We may simply have too much baggage. The bloody days of organizing the UAW, followed by nearly 70 years of contentious dealings. The unrelenting cost pressures on outsourced independent suppliers and parts supplier spin-offs.
Replace those with genuine business relationships, and we might have a fighting chance. But, we're behind the wave. The future seems to look more like Brazil. Or, maybe Mexico, where Ford also makes excellent vehicles, and has more-or-less insourced supplier activity by bringing it back from Asia to "near-shore" locations to serve assembly in Hermosillo.
What's your take? Am I too pessimistic? Whether or not it's too late for us to take advantage of serious and positive relationship building, is the quality of relationship management a key to global success in this industry?
View the new Ford plant in Brazil.
There are still firms trying to get a handle on what exactly service quality is so that they can deliver it. I can help a bit, drawing from the wonderful research done in the 1980s by Valarie Zeithaml, A. Parasuraman and Leonard L. Berry. Their conclusions appeared in the 1990 Free Press book Delivering Quality Service: Balancing Customer Perceptions and Expectations. This may seem old information to some but it’s been interesting to see how few of our customers really know this source. In that book the three authors break service quality down into five determinants, from most important to least important:
Reliability: Ability to perform the promised service dependably and accurately
Responsiveness: Willingness to help customer and provide prompt service
Assurance: Knowledge and courtesy of employees and their ability to convey trust and confidence
Empathy: Caring, individualized attention the firm provides its customers
Tangibles: Appearance of physical facilities, equipment, personnel, and communication materials
This may seem like common sense, but the three authors’ conclusions are the only researched determinants of service quality we know. Almost everything else defining service quality is an educated guess.There are some interesting conclusions that can be drawn from these five determinants. The most important, I believe, is that the three most critical determinants come before empathy, on which many service people are hired.
The conclusion is that service quality, while it includes “niceness,” is in fact a detailed performance issue. If your firm is not reliable, responsive and knowledgeable, it will do it no good to focus solely on empathy. And yet much customer service training, in experience, focused on empathy and ways to use it.
To rephrase their conclusion, a firm which seeks to offer quality service most start with the actual expectations of customers and then create systems which allow the firm to provide consistent reliability, responsiveness and assurance.
In designing quality service, a firm needs to see it as a matter of cultural alignment, and not just customer service people being empathic. This is especially true of strategic accounts, where a given person at the account might phone any employee at the firm to get his questions answered. If there has not been effective training and the firm resource called is nice but knows neither the account nor the answer to questions, it sends a message that may be hard to erase in the customer's mind.