Community Partnering For Greater Retail Success (1526 Words)

Car DealerWalking to my car, I heard loud music. This was not exactly what I expected in Grants Pass, Oregon on a warm Saturday July evening. I had just returned from an exhilarating jet boat excursion to Hellgate Canyon and enjoyed a ranch style dinner on the Rogue River.

The music was getting louder and louder as I approached the parking lot. It was coming from across the street. It was an automobile dealership, Mock’s Ford, and it was alive with action. There was a band playing, with folks of all ages dancing to the music, a barbecue filling the area with its popular aroma, and yes, people were buying cars. The excitement and activity drew me like a magnet to metal.

In front of the sales office, a local radio station, Cruisin’-FM, was conducting a live-remote broadcast allowing all in attendance to be involved. I located the dealership president, Don Carr, and during our chat he told me that they had sold almost as many cars so far that weekend as they usually sell in a month. To top it off he said, “We’re not giving these cars away.” Carr created a weekend partnering alliance with his community and won big.

How would you like to sell your products at that rate and still make a profit? You might be saying, “That’s great for selling cars, but what about me?” The answer is to get involved with your community in a way that serves people and created high-level exposure for your business. You’ll need to be creative and develop some fun, helpful, exciting community activities. Remember, being unique is not an absolute necessity, but it’s very helpful.

Creativity in Retail

Creativity has always been, and will always be, the retailer’s call to battle. Creativity is also one of the key ingredients necessary to create value in the eyes of your customers. The way the national big box category busters (i.e., Wal-Mart, Circuit City, and Office Depot) develop perceived value is through selection and low price, not necessarily service. If you are an independent retailer and you’re trying to do battle in their arena, they will clean your clock. But, creativity is not necessarily a word that big boxes, at the local level, understand.

For years, Baby boomers have been the pig in the python in our economy. They were heavy-duty consumers in the 1980s, buying their first houses and filling them up, buying luxury cars and all the outward trappings of success. In the 1990s they traveled and purchased RVs. Now, with most of the Boomers having grandchildren, they will buy almost anything if they perceive it’s a good value. Also, determine what they perceive as value-added in how you run your business and give it to them—they’ll reward you with profits through their loyalty. Don’t forget about the X and Y Generations. While many were part of the dot com bust, they still seem to spend freely.

Create a unique position for your business in the minds of your customers and your competition in the marketplace is greatly diminished. Remember though, unique means one of a kind, (not just a bit different) and that’s what you must be if you plan to survive and prosper throughout this decade and beyond.

Earl Nightingale, co-founder of Nightingale-Conant Corp., at the time the worlds largest producer and distributor of audio and video learning systems continually offered this suggestion for creativity: take a yellow pad each morning and spend a quiet hour thinking about the major challenges for the day. He would go to work listing all ideas he could think of—no matter how crazy, impossible, wacky or boring the idea might appear. “Some ideas you’ll use and many you’ll toss out,” he would say. The important thing is to capture the ideas and take action on the ones you believe will assist you in achieving your goals.

So, how does all this creativity and uniqueness talk help you to partner with your community? You can’t just copy what others have done and make it work for you. You can, copy the process used but not the results. Your community is uniquely different, your neighbors have special needs, and you must use your creativity to find a winning combination.

Get Started

Here’s how to get started. Head for your chamber of commerce, if you’re not a member yet, and join! Ask for their list of clubs and organizations. Do any interest you? I know you don’t have time for that kind of stuff. Trust me, you do! It’s all in how you choose to participate. There are more ways to participate than just showing-up to their meetings and events, be creative.

Volunteer to chair a fundraiser, one that you can have at your location—yearly! The event can be in your store, in your mall or center, on the sidewalk in front of your store or in your parking lot.

  1. Flea market or rummage sales are about the easiest to put on and quite profitable, find an interesting twist though. You can arrange to have leftovers picked up by a local charity.
  2. Community holiday theme party such as a Halloween costume party. Do this after hours, charge for attendance and give the profit to your organization. During the day offer a discount for those who shop in a costume.
  3. If you are on a busy street try a Saturday barbecue, possibilities are endless.

You might be wondering why you need to have these activities in conjunction with a community organization—for PUBLICITY! In the example I mentioned at the beginning of this article, Carr paid for all the advertising. When you work in conjunction with a local group you get public service announcements (PSA) free of charge and you ALWAYS mention the location (yours) in the news releases.

If you want more help in doing news releases or publicity, head for the public library and go to the non-fiction # 659 section. While you are at the library, stop by the reference desk and ask to look at the Gale Directory of Print & Broadcast Media, you’ll find the address and phone number of all the media in your area. They are whom you notify for your up-coming event.

Another idea might be to head a local organization that you care about from your place of business. Be sure it’s a high profile organization; this can bring you closer to your community. It will give many potential customers another reason to visit you.

Local Exposure Without Joining Community Organizations

For you die-hard’s who want exposure to the community but refuse to join a local organization, here are some ideas. Hold a parking lot aerobics class (in warm weather) three days a week at no charge; allow everybody to participate. The ones who enjoy the benefits will love you and who knows how many hundreds of people will take notice as they drive by.

Try working with the local city government and have a bus stop in front of your store or better yet, as one ski shop in Camarillo, California did, organize a city sponsored bus service to the beach in the summer (the pick-up was at the shop). Be creative and have a winter service too.

Work with your school district; offer incentives to students who achieve high grades, as does a surf shop in San Diego, California. Many schools and cities have work programs for youth; get signed up with these kinds of programs. Go to the source, ask local school principles how you might assist, let them know that you want some exposure in trade. Many of the franchise chains have jumped all over that idea. Also, don’t forget about sponsoring youth sport teams.

Take notice as to what your community does already. Ask yourself, “How can I add to the activities currently in place?” Take time every morning to view and list your options in solving your challenges and things will appear simpler and solutions will become known. Be sure to understand the value your customers are looking for in that which you offer and find your uniqueness. Achieve these things and you will get a greater piece of your area’s retail pie.

Six Additional Ideas To Partnering With Your Community:

  1. Show the community that you care by words as well as deeds.
  2. Write articles that will be of interest and assistance to your community in your business area of expertise. Then offer the articles to the print media.
  3. Get on a local radio or TV show and talk about the state of the swimwear industry or how the different styles flatter different shapes.
  4. Use the Public Access equipment that the federal government requires cable TV businesses to provide and produce a video for broadcast. The cable companies will teach you how to use their equipment. Remember the production needs to be “informational.”
  5. Contact your state highway department and join their “adopt the road” program. Your store cleans a mile-section quarterly and you get your name on a sign on the highway for all who drive by to see.
  6. Hold pasta feeds for sports teams. Consider local high school or college teams, and remember to tell the media.

Eliminate Your Customer’s Emotional Obstacles to Buying with the Retail Success Triad

Retail Triad

Eliminate Emotional Obstacles with the Retail Success Triad

Emotional Obstacles…how long have you known that you need to lose weight? Quit smoking? Improve your selling skills? If you have known that one or more of these issues are important to your life, why haven’t you done something about it? I’ll tell you why. You have intellectually known things you must do to improve your life of business but you have no emotional ownership in the issue. Where does the emotional ownership come from?  It usually comes from a critical life experience that puts in your face that you must confront. You have the intellectual knowledge but must also have the emotional ownership to change your behavior.

The same is true for your customers. They have intellectual knowledge of the stores and services in their area but only do business with the ones that they have an emotional connection. Maybe you’ve experienced this phenomenon but didn’t realize it.  It might have been when you said to yourself, “I don’t get it, why didn’t she buy?” Does this sound all too familiar? If so, you could be missing your customer’s emotional need to buy at three different levels before you get to see their purchase order, money or plastic.

At your first selling seminar, you were most likely taught what I share in my entry-level seminars, that people buy on emotion and use logic to justify their buying emotion. I bet you’ve been told, as I tell my clients, that your customers buy benefits and not features. You even understand that the benefit to having your products is the emotional side of the sale and the features are the logical side. “That’s fine but they still are not buying,” you might say.

Help and hope are on the way! Every customer who walks into your store or place of business must make three emotional purchases before you can hear the sound of your cash register. The order of which, is less important yet the three purchases must be made. They are emotional product purchase, emotional store/business purchase and the emotional salesperson purchase. If you look closely at successful businesses, what you’ll find is a continual selling effort at these three levels.

To achieve the Retail Success Triad, you must have an integrated business. This is a business where partnering at all levels is the complete business strategy. When I say partnering, I’m really referring to building QUALITY interpersonal relationships. Relationships with other businesses, with your suppliers, with your customers, with your employees and you becoming the type of person that all others want to be around and do business with. For the Customer Triad Purchase to be made at the three emotional levels, all the persons involved in your business must work in harmony. Additionally, they must tirelessly strive for the same common goal.

Emotional Obstacle 1:

This is your product offering, it’s the area where you usually focus on the features that create benefits. The benefits make your customer’s live better as a result from owning or using your product. This generally is what most of the books and articles on selling cover in great detail. Be careful not to make the mistake of expecting your customers to buy on features alone. Remember, even if your products are fabulous and offer exceptional value, you still have two more sales to make before you can take the cash to the bank.

The elements that affect how your customers view your product mix and quality are important to review regularly. If you look at your store’s offering, not as your product, but as the property of your customers (currently being held in your custody). You most likely will view the following elements differently and hopefully make some improvements.

  • Quality/Price, this is always on a sliding scale.
  • Selection, is it the selection your customers want?
  • Merchandising and Display, the silent killer. Just because it looks good to you, does not mean it looks good to them.
  • Product presentation and supporting marketing materials in relationship to outside sales.

Emotional Obstacle 2:

This is your company. This obstacle to selling covers all things from your physical building or plant and location to your company’s reputation in the community and marketplace. An important item to keep in mind is that your customer’s only reality about your business is the conversation they have with them self about your business. At this plane, perception is everything. While you may not have much control over your physical building and location, you surely have some control over how it to your customers.

Contributing elements to success in emotionally selling your business include the following:

  • Policies, this is an area in which you have plenty of control.
  • Reputation, your years of service to the community or marketplace can be your greatest asset of your worst baggage depending on how you have served.
  • Layout, while this has to do with merchandising, more importantly it has to do with flow. How does your place of business FEEL? Does it flow? Can your customers easily find what they need?
  • Physical building, its history and location are important aspects of emotional selling. How does your building look? When the outside is awful, the inside will be much weaker, despite your efforts. What about the history of your building?  In Camarillo, California, a favorite restaurant of mine is Octtavio’s. They have a copy of the original Spanish land grant for the property on which the restaurant rests. What do you know about the property and building’s history? Have any old photos you can display? Maybe even create a sales event wrapped around a theme of the era in which the building was constructed. Your imagination is your only limit.

Emotional Obstacle 3:

This is the Salesperson. An important question to ask is what can you do to assist your salespeople to improve? While I believe my Sales Training Program to be superior, most sales improvement programs available today are quite good. Despite which you select, select a program and start your training. The element that spells disaster for most training programs is the lack of commitment by the sales staff and that of management. The following elements for success will help you and your organization in getting unstuck. Additionally, you’ll draw on your (and their) unlimited capacity to achieve even higher levels of performance and excellence:

  • Find your passion in selling and serving customers.
  • Decide what you really want while you are employed by the store.
  • Develop a workable improvement plan (suited to your personality).
  • Build relationships with those (customers, suppliers, supervisors and colleagues) whom you can create synergy.
  • Make an emotional commitment to yourself and your plan.
  • Learn to say NO to that which does not serve your plan.

In selling, there are so many elements over which you do not have control. It is crucial that you do your best to master the areas where you do have control. It’s true that occasionally you can have a customer without making all three emotional sales but those are the exception and not the rule. If you earnestly work daily on your Success Triad, a sales increase is assured.

Finally, for you to move on with your life and have substantive improvement you must have more than an intellectual knowledge of how to improve. You must have an emotional ownership in improvement. As you read this article, do more than say to yourself, “Sounds good, I’ll work on it when I have time.”  That my friend is intellectual—get past the intellectual to the emotional. Better, say to yourself, “He’s right, I commit to action today to build my Selling Success Triad.”

Retail Niche, Finding Yours

retail niche

Where is your target market?

Where’s your retail niche, whom do you serve? Think a bit before you answer. Determining what makes you special as a retailer is not always easy. Finding customers who value what you offer is difficult at best. Enjoying your place in the sun, known as customer approval, is especially demanding in these uncertain times. It takes cultivation on several fronts. Every community across the fruited plain is overwhelmed with retail shopping locations and merchants offering everything from soup to nuts. What makes your business emerge from the masses as distinctive? Developing a niche and working it could be the long lost answer.

Answer the following six questions, they are crucial to your success. Record your answers and you’re sure to hit pay dirt. The questions are about who your customers happen to be and more importantly, who they should be:

  1. How is my store special and unique? Unique alludes to being one-of-a-kind. If you are a “me too” kind of business, this could be the core of your challenges. Wal-Mart’s early uniqueness was their discounting strategy, which holds true today.
  2. What groups of people would most benefit by what I offer? You must keep in mind age, sex, income, geography, and special interests. This is where you’ll create an umbrella (marketing position) under which all your advertising, promotion, and merchandising efforts will be executed—a united front.
  3. How have I physically set up my store to be user-friendly in a concerted effort to serve this group of people I seek? As example, there is a crystal shop in Vail, Colorado I’ve shopped at for years, but when they took out the sofa I could no longer sit and relax while my family was selecting their treasures so I don’t shop there any longer. There are countless things you can do to make your store user-friendly for your targeted customers.
  4. Is my advertising targeted to the customers I desire to serve or am I wasting my money trying to reach those less likely to buy from me or use my services? It’s difficult to dispatch an aunt with a 12-gauge shotgun! Low cost per thousand means nothing if the thousand are not potential customers. Target your advertising to the publications your customers are most likely to read and the broadcasts they are most listen to or watch.
  5. How can I change my business to attract more of my target market? The million-dollar question. This is where you might need professional help from a retail consultant. If hiring a professional is something that you can’t or won’t do, another suggestion is to pick the collective brains of your suppliers. Many suppliers are ready and willing to partner with you by offering services to assist. An excellent strategy is to invite all your sales and manufacturer representatives to a mastermind meeting that you host. You can rent a local hotel boardroom and have the dinner catered or do it at your home. Ultimately what you want to have happen is to have a brain storming session where you have experts on your industry and competitors. Also, ask your current customers and friends this question: “If this were your business, whom would you target as your primary market?” Then ask them to explain to you why they made that suggestion. You will be amazed, if you listen, at the helpful answers; good answers come from good questions. Whatever you do, don’t be enchanted by the Ego Trap—pretending that you have all the answers.
  6. What turns me on? You must be excited about what you do for the enthusiasm to come through. If you’re in a rut, you’re in fact in a coffin with the ends kicked out. People who succeed in business are usually very excited about what they do. Survey what you like about being a merchant and concentrate on the positive. Let your exhilaration shine continually—it’s contagious!

Once you’ve determined what groups of people are most likely to be served by the services and products your store has to offer, start to target all your efforts towards these people. Today it is impossible to be all things to all people, the better strategy is to serve a specific group and give them the value-added service they want.

In your efforts to add value, a pitfall you’ll want to avoid is that of adding the value you desire, rather the value your niche customers want. Become market driven rather than product driven by listening to your target customers needs, wants, and desires. Do this and they’ll reward you with greater profitability than you have heretofore enjoyed.

Effective Community Based Cross-Promotions (830 Words)

Kinds of Cross-Promotions

Cross-Promotion Strategies for Retail Success

Local cross-promotion activities generally serve small, independent, and franchise businesses. This strategy is low cost yet high return, if implemented correctly.

Cross-Promotion Strategies & Kinds of Cross-Promotions

  • Geographic & In-House
  • Industry Specific
  • Buying Group
  • General Category
  • Companion Products
  • Related Tie-Ins
  • Similar Customer

Cross-promotion strategies can range from highly sophisticated with formalized contracts like with the major airlines and certain telephone long distance carriers, to promotions as casual as stuffing your bags with flyers or coupons from another merchant in your community and having them do the same for you. Or, perhaps putting promotional messages on one another’s register receipts?

An insurance agent in my community cross-promoted with a local restaurateur. The owner of the restaurant paid for the printing of the insurance agent’s business cards. The cards doubled as a 20% discount coupon for the restaurant and also had a map to the restaurant on the reverse. The insurance agent gave out several of his cards at every business upon which he cold called. The cards ended up sitting around in many of the businesses for a long time. This was because the cards were seen as a valuable discount coupon rather than another salesman’s business card.

They call themselves the Sonoma County Fine Furniture Association (SCFFA). This is an example of both a Geographic and an Industry Specific Cross Promotion. Eight Northern California fine furniture retailers, all competitors, banded together to survive through cross-promotion and buying strength. They developed combined events where customers would visit several of the stores to be eligible to win prizes. They promoted each other to their customers within the store, especially if the specific retailer did not have exactly what the customer was seeking. They even printed a combined brochure, including the address and map locations of each member. The front of the brochure said, “People you can trust.” They bought advertising together on the local radio and in the local newspaper. They even dictated to the local newspaper on which pages their advertising would be located. They received impact and results.

One Step at a Time

Taking the cross promotion idea one-step at a time, consider using the below listed basic publicity tactics by collaborating with another merchant in your community to cross-promote through publicity.

  • Distribute free booklets or reports.
  • Author a book.
  • Publish a newsletter.
  • Submit news releases.
  • Write a regular newspaper or magazine column.
  • Do your own radio show.
  • Get on popular radio & TV talk shows.
  • Become an expert resource for reporters.
  • Welcome new people to your town.
  • Congratulate people in writing when you read about their accomplishments.
  • Give public speeches.
  • Sponsor public seminars.
  • Host power breakfasts.
  • Sponsor local charity or service club events.

To achieve successful cross promotions, you’ll need to develop your process or road map. I suggest these steps:

  • Be clear on what you want to create for yourself.
  • Discover the “What’s In It For Me” for your promotion partner(s).
  • Develop a plan for who does what, especially in the areas of costs and contributions.
  • Explain to your promotion partner(s) the value they will receive. Help them to also have emotional ownership (commitment) in the promotion.
  • Develop a method to measure results.
  • Execute the cross-promotion.
  • Debrief on the value all the participants received.
  • Plan your next promotion.

Cross-Promotion Check List

I suggest you also use this simple cross-promotion checklist:

  • Who does what?
  • Develop a theme.
  • Explore print advertising.
  • Explore radio advertising.
  • Explore cable TV advertising.
  • Explore direct mail advertising.
  • Explore E-mail advertising
  • Divide the work equitably.
  • Is everybody going to receive similar value?

The owner of several local Dominos pizzerias suggested this to me. “When you cross-promote with non-profit groups, keep the following in mind:

  • They always tell you what they want.
  • They generally have their hand out without offering much in return.
  • Be sure you tell them what you need.
  • Ask them to do more for you than simply take your money.
  • Always use coupons to assist in measuring results.”

Customer list based cross-promotions are usually quite successful and inexpensive. Generally each merchant expands the reach of their targeted customers two-fold, at a cost of approximately 40% to 60% less than is usually spent on a similar promotion conducted solo. Additionally, each enjoys the credibility of the other. Common direct mail strategies include flyers, postcards, coupons and calendars. Flyers can be printed on both sides for a two-party promotion or several flyers can be mailed in the same envelope.

Cross-promotion is simply common denominator marketing. You find another merchant or business that has similar or overlapping markets and customers. Then you discover a way to work together to do what you already do more efficiently and effectively or cooperatively do something promotional that neither of you could not pull off solo.

eCommerce Is Still In Your Future (1128 Words)

“Unbelievable, only one California distributor had a link!” In my recent opening keynote presentation for a group of industrial distributors, I mentioned that I was alarmed. Upon visiting a major manufacturer’s web site, I conducted a distributor search for California. When the list appeared on my screen, only one distributor listed had a link to their site from the manufacture’s site. It’s unfortunate that so many distributors are slow to partner with their principal suppliers. For some distributors it is because they do not yet have a web site, hard as that is to believe. And for others it is a trust issue. Some distributors still believe that by sharing information, they will loose customers. How wrong they are.

Your customers might not be getting any younger, but their purchasing staff most certainly is. With this youth, also comes new ways of doing business. Younger people are quite comfortable with the Internet and many prefer e-commerce to “bothersome” visits from your reps. Just the other day upon leaving for school, my nine-year-old son asked my wife to find him some pictures of jellyfish for a school project. He proceeded to explain to her how to go to www.Yahoo.com and so forth to find the pictures he needed. She thought it was so cute. For technophobes, it’s a wake up call!

E-commerce is taking on several forms from the straightforward Amazon.com style of giving your credit card number, selecting the items you want and receiving your purchase a couple days later via a delivery company to more sophisticated arrangements similar to what the automotive industry is putting together. I personally find CheapTickets.com both a convenience and a time saver, giving me a wonderful choice on my air travel needs. I might not have ever considered that as a possibility. But, a while back my travel agent started tacking on a $10 per ticket booking fee. Their new business strategy did not add value to our relationship in my eyes. Needless to say, I am no longer their client.

Back to the younger purchasing agent trying to work their way up the corporate latter. They are putting in extra hours, working late. Since it is late and manufacturers are closed, they go to ThomasRegister.com looking for a particular product supplier and find what they need. The manufacturer is a real partner in distribution and has distributor search capability at their web site. As with the earlier mentioned example, if there is only one distributor with a link that is where the purchaser goes. Will that be you?

Ford Motor Company is unleashing the power of the Internet for their employees around the world. It’s taking a step forward to reach its vision of being on the leading edge of technology and connect more closely with its customers. In support of this vision, the company announced on February 3, 2000 that eligible employees worldwide would be provided a computer, printer and Internet usage at home for a nominal fee ($5 a month).

Ford Chief Executive Officer and President Jac Nasser said, “This program keeps Ford Motor Company and our worldwide team at the leading edge of e-business technology and skills. We’re committed to serving consumers better by understanding how they think and act. Having a computer and Internet access in the home will accelerate the development of these skills, provide information across our business and offer opportunities to streamline our processes.”

Ford Chairman Bill Ford added, “It is clear that individuals and companies that want to be successful in the 21st century will need to be leaders in using the Internet and related technology. That’s what this program is all about.”

Michael Dell, Chairman and CEO at Dell Computer weighed in telling business leaders attending the Windows 2000 Deployment Conference in San Francisco (February 15, 2000) for the new computer operating system by Microsoft Corp. He said, “The Internet will become as fundamental to your business as electricity. Businesses will need an information technology infrastructure that possesses the same attributes of systems that provide electricity whenever and wherever needed, at the click of a switch, to power anything from a small store to an entire city.”

Dell mentioned that industry researchers forecast that 38 percent of U.S. households will have two or more personal computers by the end of this year and that by the year 2003, high-speed broadband Internet connections will be used in 33 percent of U.S. households. “In a world where every business is an e-business, Internet systems technology will no longer be just the concern of the information technology department. It will be critical to your customers’ satisfaction and ultimately to your bottom line,” said Dell.

To put Michael Dell’s comments in perspective, Dell Computer Corporation is the world’s leading direct computer systems company. This is based on revenues of $25.3 billion for the past four quarters (as of 2/15/00). Dell ranks No. 78 on the Fortune 500, No. 210 on the Fortune Global 500 and No. 3 on the Fortune “most admired” lists of companies.

This is just in from WALLY BOCK’S MONDAY MEMO — 1 May 2000 (weekly e-newsletter). Bock states, “There were lots of studies and surveys out last week that give us some insight into how we’re moving along the adoption curve of digital technology. Here is a couple. Net Portrait found that almost 60% of US households have a computer and that 47% of households have Internet access.  Some of the others just stay late at work, where Greenfield Online found that 10% of workers stay late so they can access the Internet.”

I recently listened to Tim Underhill explain to a group of distributors how their customers frequently pay three times for the same shipping and handling services in a discussion on the value of integrated supply. I sure do not want to pay thrice for a product or service, nor do your customers. In distribution today the game is adding value and streamlining costs in the distribution chain, not simply adding cost. While we are still at the early stage of e-commerce, sooner than you think, your customers will be demanding the capability of you. Will you be left in the cold?

When I started my career in outside sales in the mid 1970s, my boss, Ray Kahn told me that if I lost a major customer while paying attention and doing everything I could to keep them happy, that he could live with it. But, if I lost a major customer because of not paying attention, that he’d fire me. Was he serious? Absolutely—Mike, one of my colleagues, got the axe for just that reason. If you lose customers because you are asleep at the wheel in regards to the Internet and e-commerce, should your suppliers fire you?

Trust, the Essential Element in Building Outrageously Successful Relationships (597 words)

trust is earned

Trust is the Glue that Binds Relationships

Trust is defined as confidence, reliance or resting of the mind on the integrity, veracity, justice, friendship, or other sound principle of another person or thing. It’s also the glue that binds an organization together. Just think what you could accomplish with your spouse, business partner, alliance partner, supplier, customer or employee if you absolutely trusted one another.

In the mid-1970s, when I worked in Yosemite National Park, I took up rock climbing. This is a sport in which one quickly builds trust with their climbing buddy. In the hands of my buddy resided my lifeline, a rope that came from around his waist, threaded through a carabineer that was attached to the rock face and tied at the other end to me. While climbing, when I slipped off a rock face and started to plunge, it was my climbing buddy that locked the safety rope tight around his waist, keeping me alive. He determined if I went crashing several hundred or thousand feet onto the granite below or if I were to just dangle in the air a few feet from where I fell. In outrageously successful alliance relationships, you must be able to trust your partner with your business lifeline.

In any Partnering alliance, trust is necessary to move from inertia to action. Trust is that wonderful, mystical and cherished virtue hoped for and shared among practitioners of the Partnering Paradigm. In trust, you’re continually putting yourself at risk. While most would prefer to drink from an emptied wine rather than hemlock bottle, it is the process of taking risks that is necessary to build outrageously successful relationships. At times you are certain to be disappointed, but hopefully these disappointments will be few, compared to the availability of beneficial experiences.

Trust is fragile and not to be mistreated. Jamie Clarke and Alan Hobson are adventurers. On their third attempt (1998), they conquered the summit of Mt. Everest. Prior that trip, they authored a book, The Power of Passion: Achieve Your Own Everests, about their earlier expeditions. A relationship-devastating situation occurred around fundamental expedition leadership and goal decisions that were overlooked before embarking on their 1994 odyssey. Each was dug in, and Jamie made a decision to fill a leadership void that Alan was unwilling to fill. About this Alan later wrote, “the most important element in any relationship—trust. Once trust is lost in any relationship, it is like a mirror struck by a stone. The glass shatters. Although all the tiny pieces can be glued back into position, the mirror always shows the cracks. They run deep and numerous.”

Trust building is a journey rather than a destination. Foster the following behaviors in yourself and look for them in your potential partner(s).

Twenty Trust Building Behaviors

  1. Tell the truth.

  2. Deliver on your promises and expectations of others.

  3. Walk your talk and act with credibility.

  4. Exhibit authenticity and sincerity.

  5. Be a positive roll model.

  6. Welcome responsibility.

  7. Avoid offering excuses.

  8. Present an ethical image.

  9. No Bull!

  10. Avoid gossiping.

  11. Use duct tape on your mouth when necessary.

  12. Be open; inform ahead if you cannot meet deadlines.

  13. Help others to look good.

  14. Treat everybody with respect and dignity.

  15. Be consistent in how you treat others.

  16. Recognize and reinforce performance on others.

  17. Communicate clearly, say what you mean and mean what you say.

  18. Break down barriers by giving everybody a voice.

  19. Be respectful of time, yours and others’.

  20. Follow up regularly and offer helpful recommendations through relationship value updates.

Developing Strategic Alliances–What’s In It for Me? (2513 words)

Reasons for Developing Strategic Alliances for Business Success are Plenty

Developing Strategic Alliances by Ed Rigsbee

(Chapter 1: Developing Strategic Alliances, featuring strategic alliance examples)

“Almost all of our relationships begin and most of them continue as forms of mutual exploitation, a mental or physical barter, to be terminated when one or both parties run out of goods.”  -W.H. Auden

Reasons and Benefits of Developing Strategic Alliances

The reasons for developing strategic alliances become apparent when you understand the benefits. This applies to businesses and organizations of all sizes. Your reason for developing an alliance could be for research, production, marketing, distribution, or management. Your increased capability for success through alliance relationships will encourage your continued embracing of the practice. The same holds true, regardless of whether you enter strategic alliances as an individual or organization. Many of the benefits create high value for different segments of the distribution chain rather than all the segments.

I’m not going to specifically tell you which benefits from developing strategic alliances relate to manufacturers, wholesale distributors, retailers and service organizations. The reason is that I do not want you to limit yourself.  As I regularly share in my seminars, innovation can be creating a new wheel or adapting another’s idea to your situation. What’s in it for you? Maybe everything listed below or maybe only a few benefits. How much benefit you receive will be a function of your self-imposed limits, or hopefully a lack them.

In developing strategic alliances, you are only limited to the quality of your alliance relationships and your imagination—be limitless!  There are seven general areas in which you can profit from building alliances.  They are as follows:

  1. Products
  2. Access
  3. Operations
  4. Technology
  5. Strategic Growth
  6. Organization
  7. Finance

Your core strengths may lend you to develop alliances in only a few areas, and that is just fine. Or, you may desire to develop alliances in many areas over time. Work hard to develop Outrageously Successful Relationships (OSRs) in all your alliances. Following, you will discover what’s in it for you, if you develop the right alliance, with the right people. You will also discover quite a number of strategic alliance examples.

Developing Strategic Alliances for Technological Sophistication

  • An exchange of technology to compliment your core strengths shores up your core weakness and improves production capabilities to better serve customers. An example of this type of alliance is the alliance of Kinko’s Service Corp. of Ventura (now FedEx copy centers) and Xerox Engineering Systems to establish a nationwide network for faxing large-format documents. This service is especially valuable to architects, contractors and advertising agencies. Kinko’s gets a revenue boost and Xerox gets additional placement and unit sales.
  • Technical hotlines and on-site technical support are regularly available from suppliers with whom you’ve developed alliances.
  • To receive a technological contribution or possibly a technological edge in your industry like the alliance between IBM and Apple to develop a new computer operating system that allows both hardware formats to communicate, or like Nynex Corp. and Philips Electronics who joined to develop screen telephones for residential use.

Developing Strategic Alliances for Training

  • Learning curve commitment. Cost savings are passed along as experience is gained in producing a new product, and discounts are available on start-up products to encourage early sales.
  • Better sales and technical training for your employees is an important benefit in partnering with your suppliers. More manufacturers and distributors are developing training programs for dealers. Guggenheim Dental, a dental supply distributor inHawthorne , CA is now regularly offering training programs for their top customers. Recently, at a seminar I delivered for the National Nutritional Foods Association, I suggested to the retailers that they only buy their nutritional supplements from suppliers that offer training videos. This is an added benefit in the seller/buyer relationship.

Developing Strategic Alliances to Increase Market Share

  • Co-branding such as snack manufacturers who are now mixing two nationally known names and logos on a single product. Examples of this are Betty Crockers’ Soda-Licious, soda pop fruit snacks, made with 7UP and 7UP Cherry.  Also, is the popular milk chocolate-covered Pretzel Flipz by Nestlé featuring Rold Gold pretzels.
  • Access to new markets both domestic and international. Copeland Corporation joined with the largest compressor manufacturer inIndia , Kirloskar, to bring air conditioning to a growing middle class.
  • You will find that partnering can provide the benefit of positioning for future needs not yet known to you or your industry. An example, a lead-user firm is one whose present needs will reflect its segment’s needs in future months or years. Through partnering, one company can assist another in leapfrogging current industry leaders. Cooperating with newer firms more willing to pursue a riskier development strategy to gain market shares does this. This strategy can aid companies, large and small, in more rapidly and efficiently reaching their collective goals.
  • Additional business to justify operating a production facility. In developing strategic alliances with competitors, you might do the production for both.  This is similar to retailers that have a store brand developed by the recognized national brand manufacturer.
  • Opportunity to develop a private labeling or branding identity. American Dental Cooperative in Nashville has been successful in this area as has Power Heavy Duty in the heavy-duty truck repair industry.
  • Sales lead and help in procuring new business. Brian Potts, a VP at 3M recently made this offer to his strategic building service contractor customers at their CEO retreat in Mexico . He detailed how other 3M divisions are most likely are selling the customers that the contractors seek and how they could take advantage of those already established relationships.
  • Opportunity to expand business with new or related product innovations and service offerings. Later in the book I’ll tell you about how Helen Chavez at La Tapatia Tortilleria did this.
  • Preferred supplier status as Steelcase in Grand Rapids , MI , awards to suppliers that have proven their performance abilities.
  • Reduce direct competition as the Sun/IBM alliance has attempted in creating the Java operating system to keep Microsoft at bay.
  • To gain market share, Lexus and Coach, the New York-headquartered manufacturer of fine leather products teamed up in an exclusive partnership to produce the Limited Lexus ES 300 Coach Edition.
  • Geographic expansion is what happened to Ronald Fink’s West Palm Beach , FL company, RGF Environmental Group, following a trip to Asia with other local CEOs and Ray Reddish, a senior management analyst at Florida ’s commerce department. Within 18 months of his trip he had hired 14 new employees just to handle his Pacific Rim business. Some states aggressively partner with local manufacturers to expand exporting there by increasing state revenue.
  • Create marketing synergism to the consumer through cross promotion like Blockbuster and Dominos did. Blockbuster held a promotion that required a customer to rent three movies and in return receive a $10 savings book for Dominos Pizza. Both partners received increased traffic through the joint promotion. This can easily be done at the local level between, as an example, the drug store and the dry cleaners.
  • Barriers to market entry by a new player. This protects the current players as with GTE and Pacific Bell in Los Angeles . They partnered to serve UCLA in a method that closed an opportunity to a new provider attempting to enter their market.
  • Marketing assistance to support order volume for products as when a small company develops an alliance with a large company.

Developing Strategic Alliances for Improved Customer Service

  • Improved attitude toward customer service. This starts from top management on down the chain of command. Many manufacturers are partnering with their dealers and retailers. When the dealer makes a long-term buying commitment to the manufacturer, the manufacturer helps the dealer in customer service tools and training.
  • Improved customer loyalty was developed by United Airlines through their alliance with Starbucks. United now serves Starbucks gourmet coffee to their passengers at 30, 000 feet. And they do it in cups bearing the logos of both companies.
  • Improved product offering becomes possible through alliance buying cooperatives. Additional product lines become available to the members because of the cooperative’s buying strength.
  • Barnett Gershen, CEO of Associated Building Services in Houston builds alliances with his customers through his quarterly review method.  Once a quarter he sits down with his customers and asks for a grade or score as to the quality of service his company delivered. He then looks for tactics and strategies to improve his service.
  • Through alliance relationships, many businesses have found strategies to provide better and quicker customer service while keeping their costs manageable. Look for companies that have a similar customer base to yours and enter into a discussion about how to work together.

Developing Strategic Alliances for Innovation

  • The computer and electronics industries have profited greatly from alliance relationships. Innovation has become commonplace for firms that have chosen to work together. The University of Toronto ’s Innovations Foundation signed an agreement with Northway Explorations Ltd. and Polyphalt, a private Ontario , Canada company, to deliver polymer-modified asphalt materials technology for longer lasting roads to the commercial market.
  • To differentiate oneself from the competition. Steelcase’s alliance with Peerless Lighting, located in Berkeley , California , offers state-of-the-art office lighting. The relationship has brought Steelcase an additional $15 to $35 million in annual furniture sales. Also, they received additional dollars from the light fixture billings.

Developing Strategic Alliances for Cost Savings

  • In manufacturing elements of your product or entire product that could be built in plants (owned by others or in joint venture) with up to date technology, cost savings can be great.  Sharing resources, or outsourcing, rather than owning and operating a manufacturing plant, will allow a synergistic partnering agreement allows you concentrate on your core strengths. This is the idea behind the Donnelly Corporation and their venture with Applied Films Laboratory, Inc. for manufacturing and supplying the world market in display coated glass for liquid crystal displays (LCDs).
  • In distribution, access to orders that can be economically and efficiently produced also that generates reasonable profit through alliance relationships.
  • Shared locations such as Bank of America and many other banks across the country are that are locating branch offices in suburban supermarkets. They are saving resources while simplifying the lives of their consumers by reducing the amount of their consumers— daily running around.
  • Wal-Mart has a partnering alliance with Ronald McDonald, in their recently completed Wal-Mart store in Oxnard , California . Proudly displayed, are signs on the store’s entrance doors announcing, McDonald’s inside and a life-size plastic Ronald, who sits inside on a bench to greet customers.  Stores within stores have become commonplace through alliance relationships.

Developing Strategic Alliances for Financial Stability

  • Partnering in a poor economy or recession makes good sense especially, when sales are flat and prices are deflating.  Continental Airlines accessed optical industry consumers by partnering with Swan Optical, Inc., an industry supplier, to increase business through an air travel discount certificate program for purchasers of optical frames supplied by Swan.
  • Access to capital is a primary reason for smaller organizations developing alliances with larger ones.  An example on a huge scale was when Chrysler went to the U.S. Government seeking loan guarantees. On a smaller scale, Bruce Bendoff, CEO of Craftsman Custom Fabricators, Inc., Schiller Park, IL, a 275-employee sheet-metal bending company learned how to grow through trusting a corporate behemoth—Motorola.
  • Achieving economies of scale is possible in alliance relationships when partners share facilities, equipment and employees.
  • Prompt payment per agreed terms is a standard in customer/supplier alliance relationships.
  • More potential profit is generally the outcropping of shared resources.
  • Alliance relationships allow partners to share the financial risks associated with developing new products and entering into new markets.

Developing Strategic Alliances for Buying Parity with Giants

  • Working together, American Dental Cooperative members, dental distributors are successfully purchasing goods in parity with the two giants in their industry.
  • Additional discounts and services for in depth marketing and technical expertise.  Win/win pricing becomes possible in long-term buyer/seller alliance relationships.

Developing Strategic Alliances for Supply Chain Improvements

  • Just-in-time inventory purchasing and supplying as exemplified by the famous relationship between Wal-Mart and Procter & Gamble.  Home Depot and Dell Computers have also built powerful alliances with their suppliers for cost saving just-in-time inventory.

Additional supply chain improvement areas available through strategic alliance relationships:

  • Management of supply channel conflict
  • On-time product delivery
  • Prompt response to complaints
  • Greater consistency in parts, supplies, semi-assembled, and completed products
  • Detailed agreement as to handling of product problems and customer complaints
  • Improved supply chain productivity
  • Specific (quarterly, yearly, etc.) volume commitments
  • Key contacts that are dedicated to your account
  • Improved supplier loyalty
  • Prompt response to quote requests and price problems
  • Confidentiality of shared business strategy

Developing Strategic Alliances for Productivity Increases

  • Productivity increases are also achieved through partnering alliances.  In a three-year study of Brown & Root/Braun’s alliance with Union Carbide Corp., Danbury , Conn. , B&R/B concluded from 18 projects that productivity on partnering jobs was about 16% to 17% better than previous levels.
  • The Arizona and California Departments of Transportation have so successfully discovered that the partnering approach benefits many industries’ experience, especially, the construction industry, by eliminating the tangle of claims, litigation, and adversarial relationships through a concept of cooperation throughout the life of a project. Identifying potential relationship hazards early was another benefit. Bench marking (companies sharing information on what they do best), especially in the aerospace industry, has shown increased productivity and decreased costs across the board.
  • Putting some pleasure and fun back into business. Jim Eisenhart, president of Ventura Consulting Group, Inc., Ventura , California, says that the big benefit of partnering is it puts pleasure and fun back into the construction business.  He says people are now open to partnering because they recognize the limits of old adversarial paradigms.

Some additional productivity increases that are available through strategic alliance relationships:

  • Market intelligence relating to new products, processes, and competitive technologies and markets.
  • Market forecasts for large orders to allow intelligent production schedules
  • Improved product quality
  • Improved working relationships
  • Improved communications through structure to promote operating efficiencies
  • Improvement of products/services
  • Sharing of information
  • Improved culture and business philosophy
  • Recognition, award and/or reward system for meeting and/or exceeding established goals
  • Reduced Paperwork

Ultimately the benefit to developing strategic alliances with others is for solutions through mutually beneficial efforts.  Together you can solve your problems, those of your customers’ suppliers’ and employees’.  Be sure you know what it is that you are want to get out of each of your alliance efforts!  It’s rare that a company can be all things to all people.  Working in cooperation with others is the solution.  Adopting the paradigm of strategic alliances will get you much closer to your goals than without these valuable relationships.  Finally, and decisively important, when a company embraces the philosophy of strategic alliances, the result will be improvement in quality, productivity and profitability.  And yes, this is done through cooperation and collaboration.

“Togetherness, for me, means teamwork. It makes us reflect how completely dependent we are upon one another in our social and commercial life. The more diversified our labors and interests have become in the modern world, the more surely need to integrate our efforts to justify our individual selves and our civilization.”    -Walt Disney

ABCs Of Buyer/Seller Relationships (1474 words)

Buyer/Seller

Buyer-Seller Relationships

There are basically three levels of buyer/seller relationships. The first and most common relationship level is Adversarial. This is the traditional win-relinquish relationship where you, the buyer, squeeze your supplier for the very last bit of a discount. You are determined to get the last drop! You are not focused on the cost of doing business with one another, just what you believe to be the lowest cost. This is a transactional only relationship.

Next is the Barometric relationship. In a Barometric buyer/seller relationship you are always checking the atmospheric pressure. This relationship is still being monitored and measured closely. Generally you have not yet developed a high level of trust with one another. It could be a single source relationship, but with a short length contract. While this relationship can grow and flourish, it can also sour quickly. Few people thrive with others constantly peaking over their shoulder. In this type of relationship, each side must still engage in CYA (cover your assets).

The highest-level buyer/seller relationship is Complementary. This level is where true integral Partnering takes place. At this level the visions and values of each overlap with one another. There is a true alignment of values in place. Each understands the needs of their alliance partner and works hard to help their partner get what they need while likewise serving their own organization.

  • Value-based purchasing,
  • Sole-source relationships,
  • Vendor Managed Inventorying (VMI),
  • Just-in-time (JIT) shipments are made successful through trust and
  • Electronic Data Interchange (EDI) at this relationship level.
  • Complementary Contractor/Distributor Relationship

An example of Complementary buyer/seller Partnering is the relationship Universal Systems developed with Graybar through Graybar’s local branch. Universal is an electrical contracting company and Graybar is a distributor of electrical supplies.

In 1996, Gene Dennis, President at Universal Systems realized his company had a problem. His supply inventory was out of control. Through the assistance of Parviz (Perry) Daneshgari, Dennis set out to make a change. Daneshgari is president at MCA, (an implementation company in Michigan), an adjunct professor of automotive engineering science at the University of Michigan-Dearborn and Oakland University’s School of Management and the author of The Chase, (1998, Black Forest Press, San Diego, CA) a business novel about process implementation. Dennis decided he wanted to be a construction company without owning and handling any material. This was a lofty goal as traditionally the stocking of electrical supplies was a cornerstone of the business.

He needed a supply partner. His choices were a local supplier and Graybar, a national supplier with a branch in his community. He leaned toward the local supplier until he showed up at their place of business unannounced. “We were held hostage,” said Dennis (Electrical Contractor Magazine, July 1998). The problem was that the president was not in and the employees didn’t know what to do so they put Dennis and his team in a conference room. In contract, when he showed up at Graybar unannounced and the branch manager was out, all the employees knew about Universal looking for a supply partner. The staff at Graybar showed him and his team around at once. Upon closer inspection, Dennis learned that Graybar’s on-time deliveries had been 29 percent higher than their competitor. Graybar was selected for the sole-source arrangement.

Graybar agreed to take ownership of Universal’s existing in-site inventory. An on-site inventory was maintained and orders were placed via Graybar’s EDI system and invoices were generated from Graybar’s St Louis headquarters monthly. Universal realized approximately $60,000 the first year through eliminating delivery trucks, inventorying and other personnel savings. Graybar offered additional benefits as the relationship progressed. Before the partnership, Universal had to pay extra for shipping their frequent emergency orders. In the partnership Graybar maintains a standard list of commodity items at the local branch and if they don’t have it, Graybar pays the shipping.

What’s in it for Graybar? “Instead of wondering how to get the order, now we sit in on job meetings, try to find ways we can help, and look for cost and process savings,” says Jim Estis, a local Graybar account representative (Electrical Contractor Magazine, July 1998). Chatting with Dennis late October 1999, he said, “Partnership is covering the backside of each other—each looks out for one another.”

The following are Daneshgari’s steps to form a vendor partnership and criteria for selection, which Universal Systems used. Dennis and Daneshgari outlined these when they presented their success story at the 97th Annual National Electrical Contractors Convention in Las Vegas, Nevada, October 1998.

Steps to form a partnership:

  1. Develop a scope of work.
  2. Send out requests for proposal and interview potential vendors.
  3. Review proposals.
  4. Create a short list.
  5. Make unannounced tour of vendors’ facilities.
  6. Evaluate finalists.
  7. Selection.
  8. Negotiate an agreement with your selected vendor.

Criteria for Vendor Selection:

  1. Purchase existing stock at retail value.
  2. Establish a branch at Universal Systems.
  3. Have an inventory management system.
  4. Work toward continuous improvement process.
  5. Use EDI for billing.
  6. Have a delivery process.
  7. Use periodic evaluation process.
  8. Contract termination clause.
  9. Product warranty and liability.
  10. Maintain property damage insurance.
  11. Aggressive pricing strategy.
  12. Maintain stocking inventory.
  13. Maintain workers’ comprehensive insurance.
  14. Offer single point of contact.

(Used with permission of Parviz (Perry) Daneshgari)

Complementary Distributor/Manufacturer Relationship-Fuji Factor

Fuji Photo Film U.S.A, Industrial Imaging Group has the right idea. They are true partners with their distributors. Fuji Photo Film is a manufacturer that supplies the graphic arts industry, supplies for printers. Among the major suppliers to the industry, Fuji is by far the most advanced in building quality relationships with their dealers. Much of the success is attributed to Stan Freimuth, president at Fuji.

The Fuji factor is a model that more manufacturers should embrace and more purchasers should demand of their suppliers. If you were a distributor, wouldn’t you rather have a supplier relationship that could grow and improve over time? This is only possible with the right kind of supplier. The key elements to Fuji’s success are as follows:

  • Limited number of dealers offering their products to their market. While approached by virtually every non-Fuji dealer (distributor) in 1997 due to industry manufacturer consolidation and pressured to add their preferred dealers by national accounts, Freimuth had to make some hard decisions about his dealer network. He responded, “The net result of all this has been minimal changes to our dealer network. As most of you know, we have pretty tough standards that must be met before we will sign on a dealer. We only want strong, well-run companies who are willing to do business the way that we want to do it, and be complementary to our existing dealers.” (Access Fujifilm Graphic Systems Division newsletter, Fall 1997)
  • Manufacturing products of the highest quality with zero defects as the norm.
  • Builds tight relationships with their limited dealer network. In his letter to distributors, Freimuth states, “Last month the Graphic Systems Division hosted the Partnership 98 Conference in Greenville/Greenwood, SC. As many of you already know, this is a meeting where key dealer personnel (whether they be field sales reps, branch managers, electronic imaging reps, etc.) meet and interact with members of the GSD [Graphic Systems Division] management staff. It’s a chance for all of us to listen to each others concerns, get to know each other better and tour our state-of-the-art manufacturing facility in Greenwood.

We have been doing Partnership meetings in one form or another since 1992 and I am still impressed each time by the interaction between our two groups. At that first meeting in 1992 I remember the overriding sense among the attendees that we were all helping to shape something that was completely different in our industry. The concept of a manufacturer/dealer meeting with a free and open exchange of ideas (let alone mutual respect for each other) was unheard of at the time.” (Access Fujifilm Graphic Systems Division newsletter, Spring 1998)

  • Seeks constructive feedback from their dealers and acts on the ideas shared.
  • Consistency of leadership; Freimuth has been the president since 1983 when Fuji opened shop in the United States. Other companies in their industry have had numerous changes in leadership during that same time period.
  • Accessibility; several dealers attested to the fact that they could pick up the telephone and easily reach Freimuth.
  • Trust; when I asked about building quality relationships with his dealers (Spring 1999), Freimuth said, “It doesn’t come easy, it’s hard work.”

Regardless of the scope of your relationships, work with your suppliers to build Outrageously Successful Relationships. The Complementary relationship level may take longer to develop than you may hope, but the close relationship delivers value. This foundation will allow you to PartnerShift throughout your organization and benefit from your effort.

What Suppliers Say About Buyers (850 words)

What Suppliers Say About Buyers

What are they saying about your company?

I recently delivered a “What Suppliers Say About Buyers” partnering presentation to the National Association of Chemical Distributors at their annual meeting. A couple months before the meeting, I visited the convention chair, Pat Marantette, at his Southern California business, E.T. Horn Company, to learn more about the industry. One of the things he told me was that he was more concerned with the relationships with his suppliers than the relationships with his customers. He went on to explain to me that without his suppliers, he was out of business.

In thinking back on the visit, asking how important are suppliers to your business success is an important question. The following is excerpted from my latest book, PartnerShiftHow To Profit from the Partnering Trend. I believe you’ll be asking yourself questions in reference to the relationships you enjoy, or do not enjoy, with your suppliers.

At the Building Service Contractors Association International’s 1997 Chief Executive Officer Seminar in Los Cabos, Mexico, one of the suppliers to the industry was assigned to present a presentation based on what the suppliers in general said they did not like about the contractors, their customers, actions. While Rob Kohlhagen, senior market development manager at SC Johnson Professional delivered an exceptional presentation, I’m not sure he ever forgave me for assigning him the task. Admitting the comments came from only one industry, I believe they are universal, as they have applied to most of the industries that I have counseled or studied.

Power manifests through knowledge. It is important to know what your suppliers have to say about you. Completing Relationship Value Updates are important, as they will help you to avoid some of the following problems and open a conduit for communication. Remember, you can learn from another industry’s problems. Below are listed the three general areas of complaint from the contractors’ suppliers. Also there are some of the specific comments offered about the contractors. Their comments point out universal issues that suppliers have with their buyers. Most will apply to your industry. If you explore issues you might have with your own customers, there is a good chance your suppliers could have similar issues with you.

       Fear of commitment

“They are not willing to single source but still want our total bundle of value-added resources at no additional cost.”

“They focus on reducing price rather than reducing cost.”

“They like to shop around regularly to satisfy curiosity . . . they are afraid that we will abuse the relationship.”

         “They want direct prices but local service.”

         Operations level support

“We get commitment from top management but the program gets derailed at the operations level.”

“Top management is reluctant to mandate changes to operations . . . they try to build consensus but it doesn’t happen.”

        “Operations people have their ‘personal favorites’, old recipes they swear by that they will do anything
to hold onto (including sabotaging the partnership initiative).”

“The partnership is conceived at the executive level but the lower level departments are never convinced that it is in their best interests too.”

        Communication breakdown

“Everyone is so busy we only communicate when there is a need for fire fighting . . . hence the relationship takes on a negative tone over time.”

“We never discuss mutual opportunities . . . it’s always, “How do we fix what isn’t working?’”

“We talked about the importance of communicating at all levels: executive, operations, purchasing, training, risk management and quality assurance but there is no structure established to make it happen . . . so it doesn’t.”

“The chemical supplier cannot partner independently with the building service contractor. There is an interdependence between the chemical and equipment and supply manufacturers but there is no communication link established between us.”

Interdependence is an idea that carries much power. From the Harvard Business Review, July/August 1994, “Active collaboration takes place when companies develop mechanisms, structures, processes, and skills for bridging organizational and interpersonal differences and achieving real value from the partnership. Multiple ties at multiple levels ensure communication, coordination, and control . . . more communication than anyone anticipated is necessary.”

Thomas Gale, editor at Modern Distribution Management, has his opinion about the integrity of some customers. From the November 10, 1994 issue, “And while many customers are talking about integrated supply partnerships, there are (and will always be) customers that are ultimately seeking price reductions, playing one distributor off another, without a willingness to explore how a true partnership can save money for the customer while providing a fair profit for the distributor.”

Developing a conduit for communication is not difficult but frequently overlooked in many industries. The Internet makes this even easier. Some industry associations are providing this service through members’ only sections on their web site. More trade and professional associations are helping to create this type of multi-function participant forum, but not enough. This area is a tremendous opportunity for associations to add a very high-level of value for their members. Continue the dialogue with all stakeholders in your business.

Receiving Value (324 Words)

Receiving Value

Receiving Value

“What’s in it for me?” This is the old receiving value tape that continually runs in your mind when another person suggests you accept their proposition—both in business and your personal life. While their offer could be any one of an array of possibilities, your tape still plays. Allowing this freewheeling mind tape to control you is weak positioning on your part. You are abdicating your control. Why give others the power to determine the value you need is a particular situation?

The key to receiving usable value from others is to achieve clarity on what creates value for you and/or your enterprise. A good method to determine this is to take inventory of your core or perceived weaknesses. Then decide what products, supplies, tactics, capabilities and services can help you to shore up your limitations. These can be buy/sell transactions, value-added situations and/or alliance relationships.

Armed with clarity in understanding what value is to you, you can filter every offered proposition through your needs window. Look at the total value package being offered. This includes the cost of acquisition, cost of ownership or usage and the value-added services. If services are added or bundled into a package that do not create value for you, do not be fooled into believing the value-added is free. If you are offered something you do not need, do not accept, regardless of how good the deal seems.

Areas in which your enterprise could receive value:

  • Strategic alliances with competitors
  • Supplier alliances
  • Customer alliances

Keep the power to determine what you consider to be value. Rather than say, “What’s in it for me?” a better approach is to know what you want or need and ask for it up front. Asking for what you want on the outset can lead to getting what you want. Getting what you want is much more powerful and valuable than taking what others offer.