It is January 2008–a new year with new issues and challenges in our industry. One challenge we don't need is losing business because of a lack of focus or by reacting to market pressures the wrong way.
Let me explain: during a recent process improvement/strategic-planning meeting with one of my clients, I interviewed company employees to prepare a training agenda. I normally tape these interviews so that I don't miss important details of their responses. The comments of one longtime employee really struck home. I fear too many of us are following this model because of the downturn in our industry.
This employee said that, to save money, the company cut back on floor sales staff. The result was that many customers would leave without buying anything simply because they couldn't find a salesperson to help them. The available salespeople were buried by lines of customers waiting to get their attention next.
"I mentioned this to one of our managers, emphasizing the sales lost," this employee said. "I was assured that we must be leaner and meaner to make ends meet. I am sure that the numbers turned in each month made some bean counter proud, but to me and lot of my fellow employees?it seemed like you couldn't save much money if you weren't making any."
Has profit become our most important measure of progress? I am sure that ol' Bob Nardelli, who left The Home Depot a while back with several millions in his severance package, probably is a firm believer in that. However, I suggest that in a market downturn, customer service needs to be our first priority.
The longtime employee I interviewed is a dedicated member of this organization's extended family. He has more than 20 years invested in the company and has seen his share of market fluctuations. Unfortunately, there is a new owner (third generation, hasn't seen the bad times) who came aboard during the boom of the 1990s and has taken the reins of the company. His chosen methods of dealing with a declining market: park some delivery trucks, cut back on yard and store staff, don't replace an outside sales rep, and wait until times get better.
On the surface, this may be a sound approach, and some of you may be doing just this. But it has this owner's competitor hiring his ex-employees, picking up some customers who felt neglected, and capturing additional market share. So, who's actually the winner here? To what degree are these changes helping the business weather the storm?
The major competitor in this market is another independent with three locations; my client has two locations. The client and competitor are in a major metro market and aren't dependent on national production builders for their revenue. Instead, both dealers focus on regional builders, custom home builders, and a large population of design/build remodeling contractors.
By the way, the competitor is a new client. It's focusing on staff education and training, increasing operational capacity, and insuring that its efficiencies are on target.
Two companies, same geography and customer group, different approaches to the market. Which do you think is going to come out the winner? Even in a market downturn–or especially in a market downturn–taking care of the customer is still what it is all about.
Mike Butts is president of LBM Solutions, a DeWitt, Mich.-based LBM supply consulting and training firm.