Tag Archive for 'profitability'

Replace your quality service with a quality process

Successful customer service is the process of delivering value to a customer in exchange for payment.

Surely this is the prime directive of any business.

But this process isn’t truly successful unless the relationship can be sustained; and only quality produces sustainability.

“Quality service” is a 20th century term businesses use to declare a commitment to diligent customer support. But customers typically associate it with, and businesses too often tolerate it as, promptly addressing a problem. Here’s what quality service might sounds like:

“We’re sorry that part was the wrong size. But we’re committed to quality service, so one of our trucks will be there in an hour with a new part.”

In most cases, quality service impresses the customer. But while prompt attention is admirable, it’s not optimal because it has a negative impact on sustainability in at least two ways: 1) The customer was inconvenienced by inaccurate service; 2) fixing an avoidable problem is the worst kind of profit-eating inefficiency.

In the 21st century, successful small business customer service requires converting “quality service” to the quality process.

Executing a quality process, put simply, is serving customers right the first time. Accomplishing a quality process ranges from the very basic – accurate order filling, to the more complex plan of integrating into your operation only those vendors that share your quality process commitment.

The optimal goal of your quality process is sustainability through profitable customer relationships. This is accomplished when customers return to find your profitable business is still there, ready to serve them successfully – again.

Cash is king because the impact of negative cash on a business will take your breath away. And profit is queen only because the manifestation of negative profit takes longer than negative cash, which is the reason why quality service is even tolerated as a business practice.

When you’re ready to stop tolerating profit-eating quality service and convert to the profit-making quality process, here’s a good a place to start: Leslie Kossoff’s book, Managing for Quality, just out now in the new 21st century edition, in hard-copy and e-formats.

Remember, the quality service you’re so proud of may be admirable, but when delivered in response to something that was avoidable, it assaults profitability, threatens sustainability and, therefore, ultimately could put you out of business.

Convert quality service into the more profitable – and sustainable – quality process.

I talk regularly with Leslie Kossoff about the quality process. You can listen or download our conversations here. I also talked more about converting quality service into a quality process today on The Small Business Advocate Show. Listen or download what I had to say.

Check out more great SBA content HERE!

Ten Small Business survival steps to take right now

Last week we talked about assuming a survival attitude. Here are 10 things to do right now to execute on this attitude.

1. Profit is the Queen of business, but cash is King. Ask employees to help cut waste and expenses, plus review operational steps and eliminate or tighten up inefficient ones. What’s their motivation? How about job security? Watch the pennies, and the dollars will take care of themselves.

2. Stay close to accounts receivables and cash management. Many tasks can and should be delegated by a business owner, but right now cash management isn’t one of them.

3. Declare war on excess inventory. Don’t miss a sale, but don’t let one piece of inventory spend the night in your building unless it’s absolutely essential. Inventory is cash you can’t spend until you convert it back by making a sale.

4. Review ALL contracts for services to make sure you still need them. Your customers are doing the same thing; get ready.

5. Make your banker your survival partner in 2009. Keep him or her informed about how things are going, good or bad – especially the bad. Bankers need information, even if it’s bad news. Remember this: An uninformed banker is a scared banker, and no one ever got any help out of a scared banker.

6. Wherever possible renegotiate term loans, including real estate mortgages, to take advantage of lower interest rates. Longer amortization and lower rates preserve cash.

7. If you rent, talk with your landlord about adjustments in the terms of your lease. Don’t expect the landlord to take a major hit, but he or she knows that prospects may not line up to take your space if you leave. This is a good time to be creative.

8. Convert non-performing assets to cash – even if you have to sell for less than you want. What things were worth last year has no bearing on what they’re worth today, and they might be worth less tomorrow. If it’s not performing, cut it loose.

9. If it’s humanly possible, personally call on EVERY customer at least once in the near future, even if a salesperson is calling on them. This isn’t a sales call; it’s a relationship call. Find out what you can do to help them, and then do it. Your company’s future probably depends upon these visits.

10. Payroll expenses must be addressed. Non-performers must go first. Before making other cuts, ask your team to help find creative ways to allocate your bare-bones payroll budget. But don’t forget that now could be a good time to invest in the future by acquiring a highly trained “big business” employee who just got laid off.

Don’t wait - take these 2009 survival steps right now.

Recently, on my small business radio program, The Small Business Advocate Show, I discussed these 10 survival steps in more detail. You can listen to my thoughts by clicking on this link. And as always, I look forward to your comments.




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