Perfecting Service Management

Issue #36

Tuesday, January 20, 2004

A Logistics Perspective: Being a Preferred Supplier
by Craig Thompson

Achieving preferred supplier status is one of the best strategies for ensuring a long-term relationship with your key customers. In this and the next three postings of A Logistics Perspective, we will: 1) explore the role and meaning of being a Preferred Supplier, 2) identify the attributes common in preferred suppliers, 3) share some successful methods to gain (and maintain) that status, and 4) provide helpful tips and insights as well as reveal some pitfalls to avoid.

Being your customer's preferred supplier means that your enterprise is perceived to provide services of higher value to that customer than the corresponding services of your competitors. In this regard, preferred supplier status goes beyond product and price to comprise the set of activities that define "doing business with you." Typically, these activities include fulfillment, order management, billing and collection, claims and returns, sales and communications, special services, and adherence to the customer's instructions and requirements and the total cost of doing business. Collectively, these determine what is required to do business with you.

Beyond the activities themselves, it is the manner in which they occur that will make the difference. More than just the "whats", it is the "hows" that will form the basis of your customer's perception of your performance and shape his evaluation of you as a service provider. Above all else, a preferred supplier is seen as one that is easy to do business with!

So, what are the characteristics of a supplier that is easy to do business with? Since we are all customers ourselves, we can think of those suppliers (to us) that we like, frequent, and often rely upon. With a specific example in mind, it is a straightforward process to identify those things that differentiate our preferred suppliers. Let's take the case of transportation to and from the airport (being a "road warrior" this is a category close to my heart). There is a variety of products (and prices) available at all major airports: buses, taxis, courtesy vans, rental cars, personal cars, "public" limousines, "private" limousines, etc. In my case, I frequently travel long distances and arrive home at late hours. A high level of comfort and service is important to me at these times and I usually choose a private limousine service. There are several limousine companies I could choose from and I have tried many of them. It didn't take long, however, for me to identify one in particular that I preferred doing business with.

How did I single out a preferred supplier? I had found that all of the companies offered similar services, but one in particular provided something else. Airplanes often arrive late and, sometimes, flights are cancelled. At other times, I find I must change my flight at the last minute. With most of the limousine services I used, I found they couldn't (or wouldn't) make the necessary adjustments to accommodate my last minute schedule revisions and I would drag my weary bones to the long taxi lines and ride home in a clearly inferior level of comfort. However, one supplier was always able to adjust to my circumstances. Even though in more extreme circumstances there might be a price increase, the fact that I could count on them being there was clearly a greater value to me. I perceived their services as being clearly superior they were, therefore, providing greater value. They were my preferred supplier and I would use them all the time, just in case I would have a last-minute schedule change.

In logistics terms, we would identify the differentiating characteristics of the preferred limo service in terms of responsiveness and flexibility. These are, in fact, 2 of the attributes defined by the Supply Chain Council that shape logistics performance. There are several others and they all will be reviewed next time.


Rewarding and Incenting Customer Service Representatives (Part 4)
by Craig Bailey

We are pleased to provide the fourth article in the series on "Rewarding and Incenting Customer Service Representatives." Now that we have completed our discussion on the prerequisites for effective rewards and incentive programs, we will now begin to discuss the "how to's."

Provide immediate recognition

Your customer service representatives have two audiences that they perform for: co-workers (including management) and customers. Both audiences constantly observe your customer service personnel. When employees are "caught" doing something right (at exceptional levels), you need to provide immediate recognition. As previously mentioned, it is critical to reward the behavior you want repeated. If the reward is immediate, the benefits realized will be even greater.

Forms of rewards for immediate recognition don't have to be expensive or complex to administer. Movie tickets or gift certificates to popular restaurants or a local mall are examples of simple, immediate rewards. A more complex, yet highly effective incentive, is a program where customer service representatives earn points for exceptional levels of performance and are allowed to select from a menu of larger prizes. The more points they accumulate, the more valuable the prize.

Another key aspect of immediate recognition is to make it public. When a customer service rep receives a "kudo" (whether from a peer within the organization, or a customer), post the memo/email for all to see. A physical "kudos corner" can be a wall in a common area that employees frequent, with a big sign. As kudos are received, place them in simple frames and post them on the wall for all to see. This can also be highly effective when you are providing customers a tour of your facility; they will get a kick out of seeing kudos provided to your customer service personnel from customers and other employees of your firm. If your firm is geographically dispersed, create a "logical" kudos corner by posting the kudos on your intranet.

Though not a form of "immediate" recognition, you should also acknowledge your "exceptional performers" at your town hall or all-hands meetings. Having a senior manager of your firm read a very brief synopsis of the situation and naming the individual(s) will go a long way towards increasing your customer service personnel's desire to perform at exceptional levels.

Finally, if you wish to put in place an effective immediate recognition program for your customer service representatives, ASK THEM what they would find rewarding! The ideas provided here could serve as fodder for that discussion.

In the next and final edition we will discuss Financial Incentives.

View previous articles in this series


Becoming a Preferred Supplier

Recommended Reading

Rewarding and Incenting Customer Service Representatives

Contest Winner Submission


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Recommended Reading
A strong supplier relationship is important for both the supplier and the buyer.  For a look at supply-management from a buyer's perspective, check out Frank Bannister's article in, "How to negotiate a better supplier deal."

Contest Winner #1:
 Robyn Grable

Robyn Grable of ADP National Account Services was one of the winner of our recent "Rewards and Incentives" contest, designed to generate unique ideas for rewarding and incenting customer service personnel.

In her submission, Ms. Grable writes:

"As an incentive to provide World Class service, we have a quarterly compensation plan that focuses on both quantitative and qualitative metrics.  In addition, we facilitate business fun campaigns that promote focus on the metrics, client satisfaction, call handling skills, (target skills that increase client satisfaction), and team building."

The full submission can be viewed on the Customer Centricity website.

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In short, we align the resources of your organization to exceed your customers' expectations in the most effective and efficient manner possible.

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