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Listen to the Customer, Everybody Wins!

“Mike, you know, we were talking about it the other day and we aren’t even the same company we were when we first met you last year.  Dave (operations manager) told me that if we hadn’t made these changes over the past year, we wouldn’t even be able to meet our customer demand today.” 

I have to admit, when I look back on it, the changes over the past year were significant; the company had underperformed for the past three years and 2008 had been particularly poor.  They made significant cuts in expenses and were really focused on finding new, significant customers that allowed the company to enjoy consistent profitability.  In fact, early in the year, the president established a list of customers that the company would like to add.  When one of these new customers began ordering products, the president would put a simple checkmark next to the customer name.   By mid-November, there was a check mark next to each name.   Throughout the year, the company did a great job of staying true to the goals and on working to improve sales and margins.

Also during the year the company purchased new operating software.  This allowed the company to begin understanding margins by part and by customer.   In almost every respect, information became accessible on at least a daily basis and generally hourly and even up to the minute. 

That doesn’t mean that everything went as we had hoped…overall sales were down about 20%, but the drop in sales was primarily for goods with poor margins, so the impact on the bottom line was minimal and the company improved margins significantly with the addition of new customers.  Early in the year we recognized that one division of the company was in for a struggle.  Sales would be down drastically.  However, there were opportunities in the remaining division and we concentrated efforts on finding customers and improving margins…the overall result was a profitable year despite lower sales. 

As the company heads into 2010, sales will continue to be bolstered by three new products, again with sound margins.  The president of the company has done a great job of talking to the key customers and finding out what products they would like to offer.  In turn, the company has responded by developing these products and providing them to customers.  The key here is that not only did the company talk to their customers, but they listened and provided exactly what the customers were seeking. 

In turn, the customers recognized that the company provides outstanding support and that recognition helps create greater teamwork between the company and their customers.  This cooperation provided additional opportunities and improved profitability.  Despite the poor economy, this firm has a reasonable expectation of increasing sales by more than 25% this next year.

At an industry meeting, last week, the president was asked what the company had done to prepare for 2010.  He responded by saying that the company had installed new software.  This software provided visibility that the company had never previously experienced.  As he talked to me about it he said, “You know, without you, we wouldn’t have done that.  It took someone from the outside to see that we needed the software.  It wasn’t easy to say that we needed to spend $100,000 for a system, but in retrospect, it was absolutely the right thing to do.” 

And that is what makes my job fun!

B2B CFO®

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