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| Marketing: Super Sweet |
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| Written by Robert Gordman |
| Saturday, 31 January 2009 23:00 |
 {mosimage} (Core customers are your company’s most loyal customers, the ones who are willing to pay a fair price for your products or services. Must-have customers are companies who could become core customers, but they currently do business with the competition. A growing, profitable company is always seeking out must-have customers and converting them to loyal core customers.) You’ve probably never heard of a super sweet spot, but you see examples in action every day. Think Amazon, eBay, Starbucks, Target, Nordstrom, and Whole Foods. They all do something better than anyone else. These companies started small and became giants in their industries because they were able to identify and capitalize on a super sweet spot. Creating a super sweet spot will enable you to successfully compete—and win—against the strongest competition. In super sweet spot companies, every element of the business is crafted to serve a very specific group of customers in a specific way. That means every decision you make, such as what products or services to sell, which employees to hire, and what advertising to run, supports your customer-relevant super sweet spot. Lincoln Industries embraced this philosophy during the past 16 years to evolve from a mid-sized regional plating business to a company providing its customers with comprehensive services such as product design, engineering, manufacturing, complex metal finishing, and logistics management. This process can be used by businesses from sole proprietor to multi-billion-dollar companies in any industry—even in a market with dozens of competitors. All you need is the desire to build a company with sustained, profitable growth and the discipline to go through the process. What transformed Lincoln Industries into a star performer? • Creation of a super sweet spot as a supplier of integrated solutions for customers • Use of research to identify the core and must-have customers’ rules for doing business with the company • Development of a process to identify must-have customers and the strategies needed to recruit them • Using structured selection interviews to ensure that the right people are hired for each position What sets Lincoln apart from its competitors? • The company is more than 20 times larger than the average company in the plating industry • Sales and profits have increased 1,500% while the number of customers was cut from 500 to 200 • It offers a full range of services from product design to the delivery of the completed parts • It was voted one of America’s top 25 mid-sized companies to work four years in a row • It was rated as a platinum award winner by the Wellness Council of America Unique strengths How did this transformation take place? To begin with, the management team, led by CEO Marc LeBaron and President Hank Orme, asked themselves: What can we do better than anyone else in our industry? What they were looking for was the company’s unique customer-relevant strengths. The answer was large production runs of parts with technically difficult finishes. Next, they asked themselves the following questions: • What is the best possible super sweet spot for our company that capitalizes on this strength? • What are the reasons this super sweet spot will create sustained, profitable growth? • What are the barriers to success for this super sweet spot? The best possible super sweet spot was being a provider of integrated metal finishing, offering product design, engineering, manufacturing, plating, assembling, packaging, and logistics management to customers. This means that company associates could design a part so it can be cost-effectively manufactured, efficiently plated, and delivered in the quantities the manufacturer needs exactly when the manufacturer needs it. The reasons this super sweet spot would create sustained, profitable growth were time and money savings for customers. They would only have to work with one supplier, and parts would not have to be shipped from supplier to supplier for various phases of the manufacturing process. The barriers to success were hiring enough qualified people to do the necessary jobs and acquiring enough must-have customers who valued the integrated metal finishing that Lincoln could provide. As the company expanded its premium services, customers that tended to use low-cost finishes or were too small were eliminated. The team at Lincoln concentrated on developing relationships with companies that have the potential to be great long-term customers—those that are financially stable, will make large purchases, and value the premium services the company offers. This integration of services has made Lincoln the number one supplier to Harley-Davidson. Scores of other companies such as Pella Windows and PACCAR (Kenworth and Peterbuilt trucks) rely on Lincoln for high-quality manufactured and plated parts. Every element of Lincoln has been developed to reinforce its super sweet spot and its position as the premier company in the finishing industry. This includes hiring only the right people for each job, creating a culture to maximize the contributions of every person, focusing every communication on topics that are important to core and must-have customers, developing steadfast relationships with loyal customers, and conducting ongoing audits of the company’s progress. A feedback study is conducted annually with core customers, and employees are interviewed in a semiannual feedback study to measure the strength of the culture and each manager’s focus on the company’s principles and drivers. Finders keepers Part of the super sweet spot process was finding more must-have customers who could be converted into loyal core customers. To do this, the company needed an in-depth understanding of who its core customers were and why they used Lincoln Industries services. The company had only a handful of core customers, so all of them were called. Below are the questions they were asked. Obviously, these questions work well for a manufacturing company, so they’ll need to be adjusted for different business. What you’re looking for is as much detail as possible about what keeps your core customers coming back. • Why do you buy from us? • What was it about your previous suppliers that made you switch to Lincoln? • What is it about Lincoln that keeps you from taking your business elsewhere? • What other products or services could we offer that would make it easier to do business with us? • On a scale of 1 to 5, with one being most important and five being least important, rate the following attributes: quality of finishing, price, turnaround time, responsiveness to your needs, information on the status of your order. Once the company had a clear picture of its core customers and understood what was driving their loyalty, management knew that the must-haves would need to look similar. Using the Internet, the Lincoln team compiled a preliminary list of 200 companies that seemed to fit the profile. The list included information on the products the company made, the kind of plating it used, the size of the company, its financial health, its plant locations, and, in many cases, its business philosophy. Each company was called to find the best qualified person to survey, which varied from company to company. They were asked basic questions, including types of metal finishes used, amount spent on metal finishing services, and how supplier selection decisions are made. Based on these interviews, the original list of 200 was narrowed down to 60 that had the potential to be great long-term customers: companies that were financially stable, would make large consistent purchases, and seemed to value the attributes that Lincoln offered. Companies that didn’t use processes Lincoln offered, tended to use low-cost finishes, were too small, or were not financially strong were eliminated from the list. A research company was hired to conduct in-depth interviews with the 60 companies. The questions they asked were similar to the ones the core customers had been asked, but with a twist. • Why are you buying from your current supplier? • What do you like best and least about your current supplier? • If you weren’t using your current supplier, what company would you use instead? • If you’ve heard of Lincoln, why aren’t you doing business with them? • What products or services would make a new supplier more attractive to you? • If a new supplier was able to satisfy your needs, would you switch? At this point, you may be wondering why any company would willingly take the time to answer a bunch of questions from someone who was going to try to sell them something. Good question. The interviewer explained exactly what Lincoln was doing and offered each prospect a copy of the completed study, which would give them some unique insights into their industry. Naturally, not everyone found that a compelling offer. Some companies indicated that they’d never switch suppliers, and some gave answers that knocked them out of the must-have category. But two-thirds of the prospective must-haves opted in, and, in the end, Lincoln Industries was able to position its services in a way that was specifically tailored to appeal to each prospect’s hot-button issues. The results have been remarkable. Three of the newly identified must-haves have already become customers. One of them has the potential to become one of Lincoln Industries’ biggest customers. In today’s rapidly changing world, competing on commodity services or products is expensive, unproductive, and in many cases, unprofitable. Sustained, profitable growth can only be achieved when a company is able to create a super sweet spot and eliminate direct competition. Robert Gordman is the best-selling author of Secrets of the $uper $weet $pot: Building Sustained, Profitable Growth and The Must-Have Customer: 7 Steps to Winning the Customer You Haven’t Got. He is president of The Gordman Group, a consulting practice that shows companies how to achieve sustained, profitable growth. The Must-Have Customer was named one of the 10 books you should have read in 2006 by Ad Age. |