 Which
Companies Will Thrive as the Ecomomy Picks Up?
(ARA) - Companies are facing intense
competition right now. Industry after industry is confronting
a situation called "product parity," in which one company's
product or service looks just like the competitor's when looked
at through the customers' eyes. This results in competition
on the basis of price. What can companies do to relieve some
of the pressure on price?
"You must either innovate or evaporate,"
says Howard Hyden, president of the Center for Customer Focus
and an expert on improving competitive advantage. "The winners
are constantly looking for ways to 'add value' in creative ways
to get away from strictly competing on price."
According to Hyden, innovative companies
are continuously learning. The speed with which an organization
learns from a variety of sources out in the marketplace is what
he called its "learning velocity."
The most important learning source for any
business: their customers. By asking their customers what they
are doing right and wrong and what possible changes they see
down the road, companies can gain valuable information that
will help them adapt and even stay ahead of the competition.
It's what Hyden calls examining your company from the "outside
in."
"Only 7 percent of marketing executives
have incentives tied to customer satisfaction," says Hyden,
who believes that too many companies are unaware of or indifferent
to their customer's needs. Since the majority of executive compensation
is tied to profit and loss, that's what they pay attention to.
They don't spend their time thinking about their customers.
"Instead of just focusing on the financial statements, companies
that listen to their customers' needs and innovate will be the
ones that succeed," he adds.
To illustrate his point, Hyden gives the
example of NorthStar Print Group which has been a long-time
provider of labels to Miller Brewing Company. The brewing company
regularly called on NorthStar to create labels on a rush basis,
but with a lot of other customers to serve, they found it difficult
to deliver. Finally Miller issued an ultimatum: either deliver
on time or they would take their business elsewhere. Because
Miller represented 40 percent of the company's business, they
knew they needed to do something drastic.
Hyden conducted a workshop with the printing
company's employees who said that they were frustrated by Miller's
failure to forecast its label needs. When asked to imagine the
situation from Miller's perspective -- thousands of bottles
of beer coming down the line filled and capped, but held up
because there were no labels -- the printing company's employees
understood immediately the urgency of Miller's needs.
"They were able to turn the situation
into an opportunity to add value for the customer," says Hyden.
The employee team decided to analyze the brewer's past order
history so that they could forecast for Miller and better anticipate
the size and frequency of orders. Not only were they able to
reduce employee stress, but they significantly boosted Miller's
customer satisfaction and have since won numerous awards for
being Miller's best supplier. By listening to the needs of their
customer, they were able to innovate internally and significantly
increase their profit margins.
"This turnaround resulted from simply
changing their focus -- to a customer focus," adds Hyden. "Real
competitive advantage comes not from looking at the bottom line,
but from listening to what your customers have to say."
Howard Hyden is a businessman and nationally
recognized expert who speaks to organizations about how they
can improve their competitive advantage and employee satisfaction
-- resulting in an improved bottom line. For more information,
visit www.customerfocus.org.
Courtesy of ARA Content
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