Fire Your Customer Tom Reid

1. Fire Your Customer Tom Reid

2. FIRE YOUR CUSTOMER! Tom Reid Chief Problem Solver Certified Contracting Solutions, LLC October 17, 2005 3:45 – 4:45 NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

3. Fire Your Customer! “In the last economy, owning capacity was your source of strategic control. Today there tends to be overcapacity around the world. What’s critical now is understanding the customer and, whenever possible, owning the relationship with the customer.” Adrian Slywotzky, V.P., Mercer Management Consulting and author of Value Management (1995), The Profit Zone (1998), and Profit Patterns (1999) NCMA Aerospace & Defense Contracting Conference Understanding and Preparing for a Changing Business Environment

4. Customers Have Changed • Isolated Connected • Unaware Informed • Passive Active Source:The Future of Competition, C.K. Prahalad & Venkat Ramaswamy; Harvard Business School Press (2004) NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

5. Customer Service Musts • You Must be Competent • You Must Perform the Contract • Cost • Schedule • Quality • Quantity • You Must Work on the Relationship NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

6. Words of Wisdom "It takes less time to do things right than to explain why you did it wrong." --Henry Wadsworth Longfellow NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

7. Building the Customer Relationship • Communicate Continuously • Spend Some Time in your Customer’s Shoes • Make the Transaction Memorable • Demonstrate Customer Appreciation • Learn to say “Thank You” in Every Conceivable Way NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

8. Building the Customer Relationship • Make Two-way Communication Easy • Develop the Relationship • Make Referrals • Ask Directly How to Improve your Service • Recognize that Each Client is Group of One NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

9. Words of Wisdom “Sell a customer what they Want, Deliver what they Need.” - Rick Beneteau NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

10. Good Customer Management is a Skill “When you are not practicing, remember, someone somewhere is practicing, and when you meet him he will win.” Ed MacauleyBasketball player and coach NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

11. Words of Wisdom “To succeed, jump as quickly at opportunities as you do at conclusions.” – Benjamin Franklin NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

12. Customer Service Check-Up • Assess: • Delivery of your goods or services to your customer. • Your company's problem-solving ability from your customers’ perspectives • Innovation brought to your customers. • Timeliness of delivery to your customers. • Competitiveness of your pricing. • Your value-added features from your customers’ perspectives NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

13. Words of Wisdom "Satisfied customers are apathetic. Loyal customers will be your advocate." -- Jeffrey Gitomer NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

14. Ask Good Questions • Active listening • Paraphrase • Eye Contact • Confirm “Don't wait for mentors to seek you out. Don't ever wait for your phone calls to be returned, your letters to be answered, your faxes to be responded to. Keep going out and asking question.” -- Denis Waitley NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

15. Internal Practices Affect External Perceptions • Customer Service First Impressions • Time Charging • Compensation • Rules on Expense Accounts • Portal to Portal Charging • “Surprise” Billings NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

16. Persist! By perseverance the snail reached the ark. - Charles Haddon Spurgeon NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

17. What Matters Most • What are the most important factors in winning a proposal? • Accuracy of the content • Addressing the customer’s needs and objectives • Case studies/ Success stories • Clarity of the Writing • Completeness • Compliance • Conciseness • Cost Justification/ROI/Life Cycle Cost Analyses • Facilities section NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

18. What Matters Most (con’t) • Graphics • Management Plan • Pricing • Prior Experience • Project Plan • References • Resumes • Technical Innovation • Technical Plan • Vendor’s History/ Capabilities/ Experience NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

19. Three Keys • Addressing the Customer’s Needs • Addressing Requirements of the RFP • Cost justification/ ROI/ Life Cycle Cost Analysis Source: www.santcorp.com NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

20. Words of Wisdom  ”They will remember how poorly the work was done long after they have forgotten how quickly it was done.” Cason’s Law of Customers NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

21. Creating Superior Returns • Who Owns the Customer? • Who is accountable for the profitability of any given customer or customer segment? • How significantly does your company differentiate its interaction with different customers? NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

22. Be ROTten • Be ROTten to all of your customers • Be as ROTten as you want to be • Make being ROTten a way of life Attributable to Bob Lewis, “Keep the Joint Running,” 8/2/04 www.itcatalysts.com; rdlewis@issurvivor.com NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

23. Why Be ROTten? Relationships Over Transactions NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

24. Haven’t You Heard? Sincerity is the key to successful relationships. Once you learn how to fake sincerity you’ve got it made. - Annonymous NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

25. Words of Wisdom “Of all the properties which belong to honorable men, not one is so highly prized as that of character.” – Henry Clay NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

26. Customer Centered Companies 95% of companies consider themselves “Customer Centered” Source: NFI Research; Chuck Martin; chuck@nfiresearch.com NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

27. The Pareto Principle • 80% of your profits come from 20% of your customers • 80% of your problems come from 20% of your customers NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

28. Take Away Selling • You Can’t be All Things to All People • Supply and Demand is the Key • Must Make your Customer want you • Make the Customer Afraid they will Lose you NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

29. Why Take-Away? • Commands Respect • Excellent Time Management Tool • Weeds out the “Not That Serious” • Allows for Increased Margins NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

30. How do you Take-Away? • Letters to Past/Bottom 20% Clients • Thank them for past referrals • Overwhelming demand forces new restrictions on new work clients • Letter to Present Clients • Same Story • Offer same services at old fees for 6 months NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

31. Results of Take Away • Weeds out the bottom 20% • Current clients feel privileged • Clients feel good about you • Gives them a value-added item for their business contacts NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

32. Value-Draining Customers • Not all customers add value to your company • Cost of serving these customers costs more than your cost of capital • MUST identify value-draining customers NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

33. Words of Wisdom “The creation of value is the only and everlasting source of profits.”  - Denis Waitley NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

34. Identifying Demon Customers • Think of your company as a portfolio of customers • Manage each customer for superior returns • Create, communicate and execute competitively dominant customer value NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

35. Customer Value Propositions • Significantly increases data demands • Not just a technology issue • Must use technology in a formalized business process • Must measure the right things • Must properly analyze data NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

36. Process • Gather the information • Determine profitability of each customer • Make business decisions based on that data • Learn to work with customers more effectively Angel Customers and Demon Customers, Larry Selden & Geoffrey Calvin; Penguin Books (2003). NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

37. Usual Cause of Failure? Customer specific overhead is rarely attributed to that customer NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

38. Customer Service Musts • You Must be Competent • You Must Perform the Contract • Cost • Schedule • Quality • Quantity • You Must Work on the Relationship NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

39. And If You Do? You will have more customers than you can handle and can fire the bottom 20% of your customers every year. NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

40. The Results • Take-away Selling Works • Makes the whole ROTten company work better Be Customer Centric, not Customer Frantic NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

41. Closing Thoughts “We make a living by what we get. We make a life by what we give.”– Winston Churchill NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners

42. Final Thought "It's good to have money and the things money can buy, but it's good, too, to check up once in a while and make sure that you haven't lost the things money can't buy." -- George Horace Lormier NCMA 5th Annual Commercial Contract Management Conference Make the Connection: Your Customers, Suppliers, and Partners