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Customer Service is dead. Long Live Customer Service.

Customer Service in this country has been dying a slow, painful death over the last few decades. From poor communication to general rudeness, a lot of factors play into this, including the fact that buyers are more sophisticated and have higher expectations. Either way, the decline in customer satisfaction is real and evident in every industry. The transportation space is no exception.

In writing the business plan for http://www.revolutiontrucking.com, we spent an inordinate amount of time on defining both who our customers are and identifying ways to exceed their expectations. We’ve defined our customers more broadly to include three major stakeholders: employees (including drivers), shippers, and carriers. For the purposes of this paper we are going to focus solely on shippers.

Now that we’ve defined the “who”, we should examine our “touch points”. There is no average shipper when it comes to communication expectations. We have shippers we communicate with using phone, fax, email, text, and Skype. Regardless of the form, the basic principles of good customer service remain true. Share the right information, at the right time, in the right format, to the right people…all delivered in a friendly manner.

It’s really that simple. So, let’s look closer at each component.

Right Information

When dealing with shippers, more than 80% of the time they provide us with incomplete information. Something is almost always missing. Whether it is weight, dimensions, commodity, pickup or delivery times something is either missing or incomplete. It’s our job to make sure we get all the information before there are any commitments. Sometimes this involves speaking with multiple people. We might have to reach out to the production manager or even the consignee/end customer. New employees often get frustrated and become short with the shipper employee tendering the load. This is absolutely the wrong approach. Sometimes in business you have to do “their” job for them. Don’t get upset and blame them, as there is usually a reasonable explanation. They could be understaffed. They might not know where to get the information or who to call. Be patient and help them think through it. Part of our job is to make their life easier and position them as the hero. I’ve always found you secure a lot more business when you can save the day. We are in the business of solving problems, and this is part of it.

Right Time

Although it requires extra effort, nobody was ever penalized for over-communicating. From the first call to book the shipment through invoicing and collections, you should provide clear “touch points” to ensure the customer is always in the know. In addition, we know that 1 out of 5 shipments have some kind of issue. Although you don’t want to alarm the customer (particularly if you can resolve the challenge without impacting quality), if there are real issues that demand communication, we err on the side of communicating with the shipper. Now, you don’t want to show the customer “how the sausage is being made”, but at the same time you need to communicate anything that impacts quality so they can make any appropriate changes. The best example of this is if the delivery time needs to get pushed out and they have production or personnel that will be impacted. If the clock is running you can save the customer a lot of time/money or avoid penalties the sooner they are made aware of the situation.

Right Format

So many times transportation providers will communicate electronically (usually email or text), taking the easy route for them, when really a phone call is much more appropriate. We actually promote the “belt and suspenders” approach. We will send off an email immediately to the right group, but then follow-up with a phone call. Why? Remember, people are busy. They might be in a meeting and not looking at emails. A phone call signals the importance. You also might want to call because you want to discuss the options based on the new information. Back and forth via email is slow and more difficult approach to problem solving.

Right People

More often than not, there are multiple parties on the shipper side that need to know about any changes. For example, the shipment might be an intra-plant move from their production facility in Chicago to their DC in De Moines. In this case, both locations need to be made aware of the current situation. Another situation is when the product is being delivered to an important customer. If the shipper allows it, make sure you communicate with the salesperson or head of customer service so they can take the appropriate action. I don’t know how many times as a salesperson I was walking into a customer location and their was a “burning issue” with their freight. One of the things we implemented in our CRM system is that whenever there was a service issue the appropriate salesperson received an automatic notice, usually via email. This allows the salesperson to be informed before walking into a customer meeting. This eliminates a lot of “song and dance”. Nothing is worse than when the customer has more information about an issue than the transportation provider.

Friendly Manner

It always amazes me how many people communicate information in a non-caring or ambivalent way. Worse yet, some folks are just flat out rude when delivering both positive and negative news. Because at Revolution we always value the relationship over the transaction, we view the shipper as part of our extended team. We communicate in a professional and courteous way. You can diffuse a lot of issues by being friendly. It doesn’t require any more energy, so do it. You will be surprised how many challenges become non-issues when you are friendly. Most shippers understand things happen that are out of your control. That said, we own the solution, so do it with a smile and the shipper will at a minimum respect your professionalism. A little bit of empathy never hurt either. Sometimes their job is on the line.

Summary

In conclusion, great customer service is the easiest part of the job. So why do so many transposition providers fall short when it comes to world-class communication? There are a number of factors that can play into it. Maybe they are having a bad day and they let it extend out beyond their four walls. They are afraid of upsetting the client or dealing with their wrath, so they drag their feet or withhold information. The customer is small relative to their other customers and they let their relative importance change the way they communicate. Or maybe they are just lazy and don’t want to use any energy to do it right. Regardless of the reason, your people need to always rise above their personal reasons, protect the company brand, and communicate the right information, at the right time, in the right format, to the right people…all delivered with a smile.

  • James Adams
  • CEO and Co-Founder
  • Revolution Trucking, LLC
  • james@revolutiontrucking.com
  • (330) 975-4145

Do you hear voices? We do.

Although Voice of the Customer (VoC) is a concept that’s been around for nearly 30 years, it amazes me how few companies do a decent job of it. For those unfamiliar, Voice of the Customer (VoC) is a rigorous process for capturing customer’s expectations, preferences, and aversions. There are a number of good books on VoC so we will focus more on what we do at Revolution to keep our finger on the pulse of our customers and the market place.

In the most general sense, VoC is nothing more than research. And there are two main types of research – primary and secondary. Primary research is defined as a methodology used by researchers to collect data directly, rather than depending on data collected from previously done research. Where secondary research involves the summary, collation and/or synthesis of existing research. I suggest you start by evaluating the available secondary research to educate yourself and your team. Google is your best friend here. Then decide what type of primary research you want to conduct.

Before we jump into the VoC process, I would like to discuss three major missteps companies make that you should avoid. First, many companies fully develop new services and then look for the market. I call this the “build it and they will come” approach. This is like trying to add quality into a product after it comes off the assembly line…it’s too late. Before you even develop a new service or a change to an existing service, spend time understanding the “true” underlying needs and potential market dynamics. This investment will pay off ten-fold. In fact, you might decide it’s not worth pursuing.

Second, many companies approach VoC in a robotic way, where the process is overly formalized for every case. VoC is very flexible and can be scaled based on the size and scope of the opportunity. For example, if you are making a minor change to a product or service, VoC can be completed in a week or two. If you are developing a completely new product or service for an industry where you have no experience, this could take weeks to months to do right.

Finally, many companies go it alone rather than employing an outside expert, introducing all types of biases and assumptions along the way that corrupt the findings. If you are unfamiliar with VoC, I suggest hiring a consultant to help guide you through the process until you develop your own internal capabilities. If you don’t have the budget, assign someone to quickly become an expert on the subject…it’s not rocket science.

The first step of the VoC process is to define the universe of stakeholders related to the opportunity. This is usually an existing customer or a potential customer. That said, the customers might cut across demographic, socioeconomic, psychographic, and geographic lines. I like using a Venn Diagram to help understand the differences and similarities.

Once you’ve defined your stakeholder groups, you should try to explain what you are trying to accomplish in the simplest terms possible. For example, are you trying to generate new demand for an existing product or are you trying to motivate existing customers to try a new product. This objective is going to be the foundation of the research you conduct.

Now that you have your goals outlined, it’s time to develop a working hypothesis that you can test with your research. I follow a simple 3-stage process for hypothesis development. First, define the current situation. How does your target market currently act? What’s the complication preventing them from trying your new product/service? Finally, what are you going to do to resolve their complication and get them to trial your service? In each of the three list the supporting facts and assumptions. You will be poking holes in this hypothesis throughout your research. As assumptions become “true” or “false” you adjust your hypothesis accordingly.

With your working hypothesis in hand you put together a research plan to test it (remember this is an iterative process). You may decide to do this yourself or retain an expert. There are numerous ways to engage your target market (you may use one or all of them), but here are the major ones, with pros and cons for each.

Surveys – This is the most common and usually the cheapest way to gather data. Usually conducted online and sometimes via phone, you are asking a few questions to a lot of people. I like to use surveys at the very beginning of the research to get some broad stroke results to challenge the hypothesis quickly and cheaply. Too many times companies try to answer too many questions in a survey because it’s easy. You really shouldn’t ask more than 10 questions, preferably 5 questions. If the survey takes less than 2 minutes you have a much higher likelihood of getting people to complete them. Customer satisfaction surveys are the most common survey. Often conducted quarterly, it’s a way to ensure you understand how satisfied your customers are with your service compared to expectations. Of all the questions, the one you must include is one that supports the Net Promoter Score (NPS). NPS is a way to understand how far your customer will go to support you. The question goes something like this, “On a scale of 0 to 10, how likely are you to refer (your company, products, or service) to a friend or colleague? NPS is very simple and valuable, so you should always include that question in your CSAT surveys.

In-depth interviews – IDI’s are perfect to dig in deeper on specific issues and opportunities. It’s basically a list of questions you go thru with an individual. IDI’s are good to conduct when you want to better understand certain information from the surveys that might be unclear. IDI’s are best conducted in-person so you can see the body language of the participant during the questioning. Most IDI’s last no more than one hour in duration.

Intercepts – Sometimes referred to as Street or Store Intercepts, they are the perfect tool for when you want to capture a consumer’s thoughts during the buying decision of your offering. Essentially, you have a researcher “intercept” them while shopping. You often see these researchers in shopping malls with a clipboard and pen. The advantage of intercepts is that you get the feedback from the participant while they are on the buyer’s journey, or “in the act” so to speak.

Focus Groups – A focus group is a demographically diverse group of people assembled to participate in a guided discussion about a particular product/service before it is launched, or to provide ongoing feedback on an existing product or service. A typical focus group consists of 7 to 10 people that are guided through a collaborative discussion by an experienced moderator. They are typically conducted off-site in a conference room with the session being recorded for future use. They can last anywhere from 1 to 3 hours depending on the complexity of the topic. Individuals are usually paid anywhere form $100 to $1,000 to participate. Focus groups can be a highly effective means of getting true insights into the hypothesis. That said, the value of the results depend directly on the experience of the moderator and the quality of the moderator’s guide.

Beta Testing – Although the concept of beta-testing came out of the software industry, it can apply to any product or service. In short, a beta test is the second phase of product testing in which a sampling of the intended audience tries the product out. Beta testing is also sometimes referred to as user acceptance testing (UAT) or end user testing. Find a small group of trusted, leading-edge users that value innovation and let them “kick the tires” on your product offering. This helps your team “work out the kinks” in your offering and provides feedback before you go to market. You might also consider a “soft launch” of your offering before you go wide and deep with your marketing efforts.

Summary

In conclusion, although the Voice of the Customer process can be intimidating, it’s worth investing time to do it right. Although marketing usually owns the process, it’s extremely important to have executive oversight. I highly recommend bringing in an expert to get you going in the right direction. Once you have the foundation, it becomes second nature and VoC becomes engrained in the organization. I also recommend you include some of the outputs as key performance indicators (KPI’s) in the monthly executive dashboards. It’s that important. Time to get your finger on the pulse of your existing and potential markets. Remember, most markets are fast moving. The payoff of implementing VoC best practices are substantial and will ensure you don’t get blindsided by the competition. Do you hear voices?

  • James Adams
  • CEO and Co-Founder
  • Revolution Trucking, LLC
  • james@revolutiontrucking.com
  • (330) 975-4145

How to Fix the $350 Billion “For-Hire” Full Truckload Industry

As most of you know, full truckload (I refer to it as just “truckload” in the rest of the article) is a mode of freight for larger shipments that typically occupy more than half and up to the full capacity of a 48′ or 53′ trailer. According to the American Trucking Association, the US Full Truckload market is approximately $600 billion ($350 billion handled by for-hire fleets, $250 by private fleets).

I’ve always viewed the truckload industry as a commodity. It’s stable, efficient, and the markets treat service as nearly equivalent without regard to which company provides the service. For me, this represents an excellent opportunity for innovation.

The purpose of this article is to highlight 3 of the major opportunities to both improve service and reduce costs in the for-hire full truckload industry. These include: shipper over shopping freight, lack of quality information, and service mismatch. In our estimate, if we were able to resolve these challenges shippers, carriers, and brokers would enjoy a $50 billion, or 8%, reduction in direct and indirect costs. Let’s get started.

Shippers Over Shopping

Many shippers and brokers believe it’s possible to lower cost and improve service by including MORE carriers in the quoting process. Shippers will email out an opportunity (or post to a bid board) to 10 to 100 different providers in order to receive a quote with the goal of selecting the lowest price carrier that can still make service. Surprisingly, our experience is that the service-to-cost ratio is actually improved when using fewer carriers (three to five) where the freight requirements better match the service requirements of the carriers. By tightening up the quoting process to those carriers that can “truly” provide service, the industry would enjoy the reduction of millions of hours of wasted time quoting on freight that they don’t really want, freight where they cannot make service, or freight where they will be uncompetitive.

Lack of Information and Misinformation

We all know there is a lot of bad information in the truckload industry. All participants play a role in this issue. Whether it’s the lack of information from the shipper (true weight, dims, commodity, freight availability, etc.) or carriers/drivers that are not being quite honest (capabilities, location, ETA, etc.). This cloud of uncertainty can cause all sorts of issues throughout the process; usually leading to safety issues, additional expense, or pick-up/delivery times being compromised.

At Revolution, our Carrier Excellence Program includes a Key Metric, Ease of Doing Business. This metric is both qualitative and quantitative. The quantitative component measures the number of times a carrier deviates from the process. The qualitative component is handled through monthly internal surveys with the individuals that “cover loads” and deal directly with the carriers/drivers. They rate “honesty” on a scale of 0 to 10. This information is then fed into our TMS and carrier selection process for a given shipment to ensure those carriers that are “less honest” move down the “pecking order” leading to fewer loads.

Service-Price Mismatch

I’ve always said that not all freight is created equal. The freight might be the same but the end-customer is new or is an important client. The freight might be the same but the pickup or delivery locations are different (busier shipper or consignee location, more remote, etc.). The freight might be the same but it’s paramount to get the freight off the dock by a certain time in order to book revenues for the quarter (time or speed). There are many other reasons, but you get the point. These slight differences cause the shipper to need different/additional services or superior performance than the traditional requirements. Unfortunately, shippers always want a higher level of service but do not want to pay the required premium. In short, they want the Mercedes service for Yugo prices. To meet this requirement, carriers and brokers are forced to do one of four things: reduce margins, cut corners, compromise service, or flat out lie to the shipper. All are bad.

At Revolution Trucking, we have come up with a solution to resolve this disconnect. We call it Service Select©.  Service Select© is a new and proprietary offering that matches the shippers service requirements to a specific carrier and even a specific asset or driver. Service Select© has 4 service levels with increasing price: economy, standard, premium, and guaranteed, each of which have a different level of service expectation.

Based on our data, approximately 80% of full truckload freight still goes Economy and Standard, which is no surprise; however, the other 20% is equally split between Premium and Guaranteed. Guaranteed service is very similar to the dedicated ground expedite market – a market that has been getting diluted over time. This more refined segmentation allows shippers to “buy-up” or “buy-down” based on the specific needs of that shipment and get the proper carrier match. More choices for shippers both add efficiency and improve service. A good thing.

Conclusion

I put all three of the challenges listed above in the “being lazy” category. All parties involved can do better, but deadlines, stress, and concerns of losing a shipment/customer force us to compromise our brand promise. Unfortunately, cutting corners leads to all forms of downstream supply-chain issues and ultimately the various parties start blaming each other when the freight doesn’t arrive in good condition, on-time, or at the quoted price.

A wise professor once told me that when a business takes on the task of changing industry norms that you should expect an uphill battle, regardless of who benefits and by how much. Like people, most industries abhor change. At www.revolutiontrucking.com we are up for the challenge. We want to be known as the company that spearheaded innovation in a massive industry rooted in its ways.

  • James Adams
  • CEO and Co-Founder
  • Revolution Trucking, LLC
  • james@revolutiontrucking.com
  • (330) 975-4145

Focus on Great, Not Big

Don’t get me wrong; growing a company is a “great” thing. The most rewarding times in my career were helping companies attain growth rates that were multiples of the industry average. However, I’ve found that executives get consumed with growth when the best way to grow is by focusing on becoming great. Why the disconnect? Simply speaking, most executives focus their energy on quarterly financial performance, not how the financials are generated. So they ask their teams to put up certain numbers in a specific time frame but never ask the simple question, how can we become great?

It is generally recognized that acquiring new customers costs approximately 5 times more than retaining an existing customer. This depends on the industry and product/service, but my experience is that it’s fairly accurate. There’s another important axiom to me: it requires 5 times the effort to secure a new customer than to capture that same amount of revenues from existing customers (different products/services, divisions, geographies, etc.). I’m not suggesting doing one versus the other; my point is that being “great” is the most cost effective way to grow.

When you are great, your customers become your sales people. I will assume most of you are familiar with the Net Promoter Score (NPS). Although once controversial, it’s widely accepted as the single best measure of client satisfaction. On a scale of 0 to 10, how likely is it that you would recommend our company/product/service to a friend or colleague? In my mind, NPS is directly correlated to “greatness” and proportional to market share (for a given segment). In other words, it’s a measure of how well you are delivering on the customer promise.

Hang on a second. Don’t we need to define what “great” means? Well, your customer defines that and it can vary between customers and change over time. I’ve always found the easiest way to determine the answer is to just ask (a novel concept). I can tell you that most sales people don’t ask the question. Marketers usually fall back on the established quality-service-price triangle (personally, I would add “options” and call it the square). By the way, throughout my career I’ve had people suggest that you can only have two of three. That’s rubbish on a number of levels, but that’s for another blog.

So once we know how the customer defines “greatness” through surveys and in-depth interviews, what’s next? Well, look at the complete value chain for delivering your product or service and how it supports the clients vision of being a “great” supplier or service provider. Although there are a number of factors, it typically comes down to the robustness (speed, accuracy, and precision) of key processes your company controls or influences. By the way, Henry Ford’s “you can get it in any color you want as long as it’s black” wasn’t about a lack of capabilities, it was about cost and quality. Making inexpensive and dependable cars for everyone. Old Henry was really the founder of Lean Six Sigma (Lean = cost, Six Sigma = quality). Herb Kelleher used the same darn approach when he started Southwest Airlines. See, there really aren’t any new ideas.

Remember, before you get your hopes up, being great is a never-ending journey. I posted in the previous blog that more than 80% of the Fortune 500 corporations from 50 years ago are gone. When greatness becomes a continuous improvement discipline, then it becomes part of your company’s DNA. And once that happens, you are on the road to becoming big. See, it’s not even a chicken or egg problem. Focus on being great!

Objects in Rearview Mirror May Appear Closer Than They Are

I remember it as if it were yesterday. Sitting in Driver’s Ed, excited about getting my Driver’s Permit. There was one lesson that seemed odd…make sure to check your side and rear view mirrors every 3 seconds (I believe they’ve since extended that to 5 seconds). At the time it seemed a bit excessive, but with cars whizzing by you on the Dan Ryan Expressway like it’s the Daytona 500, I can understand their concern.

In business, looking back too frequently is the beginning of the end for your company, for three reasons. First, when you relish the past and constantly talk about the golden years, you create a culture that believes the best years are behind you. It’s demotivating to your leaders. Second, the argument that “those who cannot remember the past are condemned to repeat it” is a complete fallacy. Every situation is unique, the environment was different, and the variables are many. Don’t fall for the trap. Finally, if you become consumed with what the competition did or is doing, you lose touch with what is important to your business today and in the future.

Like everything, it’s a balancing act. Make sure you spend the vast majority of your time looking forward, understanding the fundamentals of the marketplace and how customers’ needs are changing. Yes, know where your competitors are and what they are doing, but don’t dwell on it or it will become a distraction to your leaders. Best-in-Class companies understand the market, create a vector of differentiation, and focus their energy on what matters most. Remember, everyone eventually gets to the right answer, but leaders get there faster.

We all know the past is a tricky thing. It provides us valuable lessons and at the same time it clouds our judgement. For me the past provides a measuring stick for continuous improvement.  We get better or we get worse…we never stay the same. Whether your KPI is customer satisfaction, win percentage on new business, or number of defects per thousand, it’s critical that you measure what’s important in your business, and more importantly, that you focus on getting better every day. And when the KPIs go backwards (in a statistically significant way), do a root cause analysis to understand why it happened. Focus on removing that “why?” and you will drive positive change and get closer to your goals.

As every leader knows, business is a game of inches. Consultants will tell you, just do this and that and you will solve all your problems. Unfortunately, it’s never that easy. There is no silver bullet. It’s a combination of things you must do to get your company back on track. Caution: that combination of things typically spans the enterprise and is rarely owned by a single individual (but that’s for a future blog post).

Objects in Rear View Mirror May Appear Closer Than They Are. This phrase was put on mirrors back in the 80’s to avoid consumer lawsuits; however, it provides us an excellent reminder to not panic. You put a lot of thought into developing a bullet proof strategic plan. Stick to it. Take the market’s temperature quarterly, but don’t act rash and jump to the next idea. Companies that are members of the “initiative of the month club” find themselves with mediocre results and “me too” offerings that won’t get you closer to your goal. Winning requires discipline and patience. If you are persistent, you will get it; if you are consistent, you will keep it.

The 7 Secrets to Finding, Hiring, and Retaining Strong Leaders

Companies with high employee retention aren’t necessarily successful; however, successful companies almost always have high retention. For as important as this metric is, it doesn’t get near the attention it deserves. That’s the impetus for this paper: to bring employee retention to the forefront and share proven strategies for hiring and retaining top performers.

Your workforce is in constant flux. That’s normal. Although reasons vary (changing demand, strategy, regulations, etc.), management and employees are constantly making decisions that affect the size and make-up of your employee base. In addition, healthy businesses are constantly pruning under-performers or those individuals that just don’t fit. All of that is a natural part of a businesses life-cycle. However, if management is not aligned, retention can become a problem.

Executives understand that high employee turnover ultimately manifests itself in lower revenues and profits. The insidious part of turnover is that it has a short- and long-term effect. It can negatively impact your company in five primary ways:

  1.  Lower Customer Satisfaction
  2.  Increased Costs (see sidebar)
  3.  Distraction to Operations
  4.  Loss of Institutional Knowledge
  5.  Low Employee Morale

However, there is a new retention challenge. Gone are the days of a homogenous, one-size-fits-all workforce. Today, the workplace has 4 distinct generations: Baby Boomers, Gen X, Millennials, and Gen Z Kids. Each group has a unique set of priorities and beliefs, the most interesting of them being how they define their career. On one end of the spectrum, Baby Boomers focus more on job stability and disposable income (to acquire assets such as cars, houses, etc.). On the other end, Gen Z Kids are looking for personal fulfillment, opportunity for growth, and free time to “experience” life. These diverging priorities make retention a much more complex issue than just a few years ago. That, and the fact that as of 2017 millennials make up the largest segment of the workforce. This demands thought…and flexibility!

The Foundation of Retention

Your top performers are the reason you are successful. Without them, you have no business, so you need to protect them at all costs. Top performers have some fundamental requirements, regardless of company or industry, which I refer to as the Hierarchy of Retention. I represent it as a pyramid on its point because it’s a constant balancing act, and from the bottom-up, as each builds off the foundation created by the other.

Strong-Positive Culture

When it comes to success, culture is both critical and ethereal. I’ve seen definitions range from having a clear mission statement framed in the boardroom to allowing employees to bring their dogs to work. That’s clearly inadequate. Culture is the collection of social behavior and norms that ultimately motivate employees to act. I define culture with two simple dimensions. Is the culture positive or negative; is it strong or weak. High-performers gravitate to strong-positive cultures where they believe they can thrive. Do individuals look forward to coming to work? Do they treat each other with respect? Do they want to win as a team? Zappos is an excellent example of a strong-positive culture that attracts top talent. On the other end of the spectrum is Radio Shack, a bankrupt company that continues to downsize and where employees are at best ambivalent about their future.

Strong Leaders

Now that you’ve defined your culture, you can instill it in the most important asset in your company – your managers. Throughout this paper I use the word “manager” in the most general business sense. A manager is simply a person in charge of the activities, tactics, and development of a team. A manager can reside at any level in the organization. I also use some descriptive words interchangeably, including “best manager”, “top-performer”, and “high-performer”. To us, these mean something specific – those that rank in the top quartile (25%) of the normal performance curve (see sidebar, next page). We refer to these individuals as Strong Leaders and certify them along behavioral and practitioner lines.

Empowerment

With the right culture and people, you can now empower them. NOTE: Don’t waste your time hiring great managers if you won’t empower them. Many executives make the mistake of bringing on top talent and then micromanaging them right out the door. Remember, they have options. Bring on the best, set expectations, put a few guardrails in place, and get out of their way. Make midcourse corrections as needed, but ensure they have the resources they need to succeed and that’s a good start. One final item: I have seen companies that empower their people only to crush their souls with stifling bureaucracy, including overly complex processes and redundant authorizations. I’m a proponent of SOPs, but don’t enslave your employees and hinder their creativity.

 Development

Managers leave for two primary reasons. They are either underpaid or over-worked…or both. We determined the root cause for managers leaving is that they have not been armed with the skills to make their life less chaotic. In other words, because they are unable to address the inefficiencies and opportunities in the business, they become “burned out” and leave. Very early in our company’s history we analyzed the behavioral and performance data for top managers with tenure over 7 years. We found they shared a common trait – they made decisions as if they were the owner. From this single observation, we created a complete leadership training certification process called H.A.L.O, or How to Act Like an Owner. This online 90-for-90 (90 seconds for 90 days) micro-training complements your corporate training and focuses on leadership skills such as goal-setting, team-building, issue resolution, and communication.

 Summary

These four building blocks form the foundation of a best-in-class company with low employee turnover. This conclusion isn’t controversial, but it’s not obvious to many executives.

  • James Adams
  • CEO and Co-Founder
  • Revolution Trucking, LLC
  • james@revolutiontrucking.com
  • (330) 975-4145

To Diversify or Not to Diversify, That is the Question

There is no disputing it. Diversifying your investment portfolio is an important strategy to protect your personal wealth. Although your overall returns will be tempered, it hedges risk, smooth’s returns, and ensures liquidity. No, the diversification I’m talking about is a set of business strategies that expands your market and therefore your opportunity for growth.

If we get into our time machine and go back to the latter half of the 20th Century, you would see that diversification was the primary strategy for most companies. With few exceptions, those companies ending up losing their way. More than 80% of the Fortune 500 corporations from 50 years ago are gone (lack of innovation also played a role). For a story on how diversification can be taken to an absurd degree, read the History of the American Machine and Foundry (AMF) Corporation, founded in 1900 and now just operating bowling alleys.

Before we get into how and when diversification makes sense, let’s first talk about the risks. There are three main pitfalls you need to consider when going down the path of expanding your service offering. Each of them alone could ruin your business. All three are most certainly lethal.

It becomes a major distraction. If your company is like most, you have limited resources. Resources include people, money, and time – all three are usually in short order. When you embark on a diversification strategy, some of these resources get redirected (even in the case of acquisitions).  And guess who gets distracted?  Your best people, since you assigned them this important initiative. How will this impact your current business? I know both your employees and customers will miss them.

It cannibalizes existing sales. It’s very common for companies to diversify in a way that causes them to unwittingly steal market share from existing products or services. For example, when a company realizes they are stuck in the high-end of the market and feel the need to offer something at a lower price point to drive volume. The problem is the new product, even when it has a different name, can provide a higher value-price ratio than your existing offering and customers may make the trade-off, go down market, and reduce your total share of wallet.

It damages your brand. I put this last as I believe this could be the greatest risk. You’ve spent years building and honing your reputation. Your customers have come to expect a certain level of quality, service, and price. When the new product/service falls short of expectations, you’ve hurt your brand equity. This could negatively impact a large swath of customers, taking you years to recover.

Now that I’ve sufficiently scared you away from even mentioning the word diversification, let’s talk about when and how it makes sense. When you have become a dominant player in your market and you are enjoying excellent margins with a stellar reputation, diversification could be an exciting opportunity. There are 5 fairly unique diversification strategies that make sense. Remember to start small.

New Geographies.  The easiest form of diversification is geographic diversification. If you sell in a region of a country, sell in other regions (Northeast US to Midwest US). If you are in one country, look at the next logical country (US to Canada), and so on and so forth. As I’m sure you know, selling into other countries comes with it’s own set of challenges; however, these are easily overcome with the right people. The Internet has made the world borderless (nearly), so ignore this at your own peril.

Product Line Extensions. This is typically a minor change to a product in the same category that can expand your market. It could be as simple as a new flavor, color, or package size. Coke is the simplest example. Cherry coke was created because people were adding cherry syrup to regular coke. Diet coke for those people that didn’t want the calories. 2 liter bottles for people that wanted to save money by buying in bulk. All of these carry low risk and provide a pivot that expands your market. Who would argue with that rationale? Of course, do the proper market research and testing to ensure you are delivering on your promise.

Add on Services. This is one of my favorites and often overlooked. GE saw they could make more money from financing the equipment than on selling the equipment. GE Capital was born. How about buying insurance for your phone from BestBuy. You would be surprised how lucrative service contracts can be because the cost to service is so low and you have a captive audience (low sales and marketing costs).

Brand Extensions. This is where you leverage your strong brand equity to sell a new product in a similar market. Under Armour provides a classic example. They developed a breathable material and developed casual sportswear for active people. They used athletes to market their product because if it’s good enough for them, it must be good enough for the weekend warrior. Using that same technology, they moved into running shoes, golf shoes, sports accessories…all targeted at the same active consumer.

New Industries. This one is trickier than it sounds. Just because a product or service is used in multiple industries doesn’t mean the price, quality, and volume expectations are the same. This can be as easy as going from the industrial to the consumer sector or as complex as going from serving business offices to serving hospitals, the difference in expectations can be vast. Be smart and find a new industry that requires a small pivot but provides significant upside and small risk.  Again, it probably requires you to hire an industry expert, but that is small price to potentially multiply your available market.

Then there are some companies that have taken all of these to the extreme. Think Richard Branson and the Virgin Group. From a small record company in 1970 to more than 400 companies today (including a global commercial airline). That is one powerful brand.

Diversification can provide quick upside without a large investment when done right, or it can challenge the strongest companies. Remember, you don’t have to go it alone. You can partner, white label, or acquire your way into diversification strategies, but that’s for another blog.

Like Magic, Selling is Both Art and Science

Everyone loves a good magic trick. You want to believe in the supernatural even though you know it’s just slight of hand. The reason I like magic tricks is because they are filled with both art and science. The art involves ones ability to gain the confidence of others and hold their interest. The science is that magic tricks often play off the basic laws of physics.

Like magic, most people feel that the sales role is either really easy or really difficult. This binary outcome can be attributed to the fact that more than any other function, sales is a role that requires both a strong right and left-brain. The art (right-brain) includes marketing, relationship building, and negotiating. The science (left-brain) requires skills like pricing, pipeline management, and contracts.

For this discussion, let’s take the need for right-brain skills as a given. If you cannot earn someone’s trust, be able to connect with them emotionally, and motivate them to act, there is no reason to continue. That’s the art…and yes, it can be taught. Instead, let’s focus on the science, or left-brain, requirements of growing top line revenue.

In my experience, successful salespeople utilize three interdependent left-brain components: analytics, process, and technology.

1. Analytics: Surprisingly, most salespeople are not comfortable with numbers (except when it comes to calculating their quarterly commissions). That’s because they are left-brain dependent and got into the business because they prefer relationship building. I’ve always looked for solid analytical skills, because like an economist, the salesperson needs to be able to account for a number of variables to deliver the optimal outcome. I’ve secured major deals because I was able to calculate a number of factors in my head during negotiations, helping to short-cycle the sales process. The other reason I like analytical salespeople is they tend to better understand the financial aspects of their role, e.g. the interplay between pricing, volumes, margins, and probabilities and how it impacts forecasting and the income statement. A side benefit is that I don’t always have to double-check their work.

2. Process: Most salespeople abhor process. They usually associate process with bureaucracy (sometimes they are correct). In fact, most salespeople circumvent processes, even the processes they helped create. You could write a book on why process is critical to this role, but let me discuss two. First, a scalable and repeatable sales process is about time management. Others in the organization know how and when to get involved each step of the way. Second, a robust sales process ensures consistency in the deliverables (presentation, pricing, contracts, etc.) and the quality improves each time.

3. Technology: When I first started in sales in the 80’s the available technology was a pen, day planner, calculator, and marketing materials. Cell Phones, computers, and the Internet were still years away from being ubiquitous. Today, technology is a must-have and it starts with your CRM system. CRM helps streamline processes and makes real-time decision making possible. The better question is how are salespeople using the technology? I’ve helped numerous companies that had all the technology, but didn’t know how to properly utilize it. Technology is about two things. First, having access to information that allows the salesperson to make better decisions. That could be the price of certain commodities or it could be a service failure that happened 10 minutes before a client meeting. Second, technology is about time-management. My goal has always been to maximize the amount of time the salesperson is in front of the client. Each minute saved is another minute they can push an existing deal over the finish line or prospect for a new client.

There is a reason why the average tenure for the VP of Sales position is only 2 years. Most of that turnover can be attributed to their inability to tap into their left-brain and setup a scalable sales organization based on rigorous analytics, repeatable processes, and time-saving technology. Obviously, there are other factors; however, when these three are implemented properly, your sales organization will become a true growth engine and your top line will see significant and immediate lift.

Crisis in Lead Generation for Complex Sales

Many organizations rely on inside sales departments and/or third party firms to generate leads for their outside sales teams. Investments in marketing automation systems, such as Marketo, Hubspot, Eloqua, and others, along with increased inside sales headcount and program budgets, have set lofty expectations for your business.

The crisis is that for many companies, the investments are not generating significantly more qualified leads for the sales organization. Why is that?

Three major factors are contributing to the crisis:

1. Office Phones Are Rarely Answered. Contacts that are able to make decisions within large firms are rarely in their offices due to meetings and travel, so they rarely answer phone calls from unknown numbers. Calling their cell phones would be a logical alternative, right? Two major challenges exist in that department: the contact’s cell phone is often not in the lead list or CRM system, and calling cell phones is risky except for the most skilled people making outbound calls that know when to call. And in many organizations, leads are delivered to outside sales people for the sales person to try to set an appointment. Think about it—the inside sales or third-party organization succeeds in getting through to the prospect. Then they say thank you very much and I’ll have the outside sales person contact you to set up an appointment.

2. Emails Aren’t Getting Through.  Your and your competitors’ marketing automation systems are carpet bombing email addresses, so getting your snazzy template emails through is hard and getting harder. There is a whole industry focused on stopping the mass emails from marketing automation systems, and they are good and getting better. And if your outbound emails are not highly targeted and customized, they are rarely opened. Email average open rates are in the low 20% range, with average click through rates (CTR) less than 5%. The higher the person is in the organization, the lower the open and click through rates.

3. Sales People Don’t Like Leads From Marketing Automation Systems. Marketing automation systems easily handle hundreds of thousands of email addresses for marketing campaigns. Companies didn’t make marketing automation investments to deliver the same number of leads as before automation. Typically, we see lead generation goals increase by multiples once the systems are up and running. So the number of leads handed to outside sales teams increases by approximately the same multiple. The issue is that the quality of the leads decreases. To that end, the outside sales teams lose confidence in the leads and tend to ignore all but the most encouraging leads.

The sales leaders are key to solving the crisis. Sales organizations scream for more and better leads from marketing. Unfortunately, rarely do sales managers incorporate lead management discussions with their sales people. Sales leaders need real-time reports and dashboards so they can monitor how well their teams are following up on leads and the corresponding results. It is critical that low quality or bad leads be tagged with the right amount of feedback so marketing can understand how they need to adjust their qualification criteria and monitor the effectiveness of their calling resources.

All of these challenges can be addressed in most organizations, but the marketing department cannot tackle it on their own. They need help from sales leadership and the marketing operations teams. It often requires a revamping of processes, adjusting expectations, reestablishing trust with the sales organization, and providing sales leaders with tools so that they can be front and center on addressing the crisis. It’s not easy, but we can’t afford to ignore the crisis, as it will continue to be a drag on firm growth.