The answer may have a tremendous impact on your enterprise value!
It is difficult to manage high-rate-of-change businesses. Inadequately managing this change can result in failure of a business. Management becomes more difficult when there is a lot of “noise”. By “noise”, we are talking about the activity that comes from what seems to be an out-of-control process.
For the purposes of this discussion, we will talk about Account Services (often called Customer Service). This department has been chosen because it always seems to be a sponge accumulating all the change in the business in one place. Account Services seems to always be covered up in activity and abuzz with talk of all that is wrong with the business.
Account Services can be managed much like other areas. Developing process controls is critical. What makes Account Services somewhat unique is that there are two main driving forces that exist. We classify them as Human Interaction (HI) and Mechanical Processes (MP). All too often, these 2 forces compete for resources and, usually, HI wins out. You need both. There should never be a “trade off”.
Without the proper design, Account Service associates will be faced with the decision of what to focus on. Typically, this happens throughout the entire day. This creates a ton of stress and hurts both MP and HI. Sound familiar? If your Account Service staff is honest with you... it should. This is not “the nature of the beast”. It is a by-product of wrong thinking.
One of the metrics that we encourage our customers to track is incoming calls and emails from customers, or depending on your process, from salesmen. We can then see a Calls per Order ratio, or what we call the Noise Ratio. We call it this because these calls are largely “noise” that distracts the customer service team from performing its primary functions; from receiving and entering orders, creating production schedules, invoicing orders, communicating with customers (proactively) or whatever else the function requires in your business .
Communicating with the customer is key, whether it is a phone call, email, text or even fax. But this communication should be initiated by you, proactively. Ideally, other than the customer sending the order, they should not have to reach out to you. You probably send them some sort of acknowledgement when you receive their order and some sort of shipping notice/invoice once the order ships. They should trust that you will process the order and they will receive it per your standard lead time or service agreement. We view nearly all incoming communication as a failure. The only reason a customer must reach out and talk to us is because we failed to meet their need beforehand. We develop measurements to help us see these fail points and put in corrective actions. Pitching versus catching is a mentality... a culture that looks inwardly with a strategically critical eye. We are not saying that communicating with our customers is bad, but when they must take time out of their busy schedule to contact us about something we should have already handled, we have failed them. They deserve better than that.
Why can’t they price that item? Did we not teach them our pricing strategy? Is it too complex? Why don’t they know their delivery date? Is our inventory correct? Do they have timely visibility of it?
Have we, as business leaders, created an environment where pitching is not only possible, but expected? Or have we covered up our failures with overhead. The dangerous thing is that people tend to rely on (and even defend) the excess capacity built in to handle noise that should be eliminated. We use the Noise Ratio to task our Account Service leaders to drive the unneeded activity out of the department.
We know that there will be unavoidable situations that might cause an order to be delayed. When that happens, you should have a process in place that ensures the customer is informed of the situation. Pitch to them. They might not like what you have to say, but the honest approach and timely information will go a long way in managing your customers’ expectations. In its simplest terms your Account Services processes should:
Define the HI that should be performed
Define the MP that must be performed
Always consider Pitch vs Catch
Develop an environment where accountability for both is readily visible
Assure there is adequate capacity to handle both
Taking charge of communication gives you the edge in managing expectations. Creating predictability adds tremendous value to a supplier. Predictability has a positive impact on revenue, operating expense, and therefore, on the organization. Building processes around pitching versus catching has a tremendous impact on enterprise value. It also makes the work of being in a pitching organization easier than being in a catching organization.
If you want to learn more about how to convert to a pitching organization, contact Title 2 Business Services. We have made this conversion many times to great success for our businesses and our clients!