No More Holiday Bonus

What does 99.6% accuracy mean in distribution centers? To the casual observer, it would mean that on average, 1 of 250 orders have errors. In market research, however, we have to look at the sample frame, or the source of the data compared with the total census of all instances. In this case, the sample frame is often customers (or other ship locations downstream of the DC) who complained or otherwise adjusted the order when it arrived.

Customers who did not complain could have been of three types: 1) customers who did not notice or otherwise care about the error; 2) customers who got the right amount of product, or 3) customers who got too much product and kept the overshipment for themselves. There might be lots of reasons for customers to keep over-shipments, including the cost of sending them back, the desire to make up for lost profits elsewhere, or even good old-fashioned five-finger discount (aka shrink). Nevertheless, the fact that these customers don't complain means that actual error rates are likely upwards of 1 in 250.

Hence the story my lead generation guy tells about a checking in on a customer who implemented Vocollect(R) Voice: his DC's downstream customers were very pleased with the improved accuracy, but they asked the DC manager, "What happened to all the extra stuff you used to send us?" The answer: the DC didn't mean to send it in the first place.

Improving accuracy means decreasing largesse for the downstream parts of the supply chain. In this case, that's a holiday bonus that isn't good for business.

Steve Jobs Revisited

Okay, I might have to take back some my earlier post on Steve Jobs. Although he is still reportedly a poor people manager, this story about Apple's legendary customer service does change my view. Look in particular at the very end of the article.  Are you listening, Andrew Mason?

Global Accounts

One of the first things I promised my new boss that I would do at Vocollect would be to try to increase our "share of wallet." Even for B2B customers, share of wallet is a critical concept: how much of the total potential spend do you have? We sell primarily to the distribution center (DC), so if we have a customer with four DCs and we have Vocollect(R) Voice in one DC, we have 25% market share.

Ask yourself which is easier: expanding from one happy DC into the other three or introducing a completely new customers to the concept of the voice-directed distribution center? Based on the obvious answer to this question, we have started to look for places that we have business in one geography and get referrals to other parts of that company in another geography. It's a lot easier to say to an American distribution center manager, "We work with your DC in France" than it is to say, "Let me explain a technology you may have never heard of before or don't understand and try to convince you why it applies to you."

The concept of improving share of wallet by looking beyond your region can apply to many B2B companies. Do you sell only in one country but have a customer with overseas branches? Do you do business with a customer who is trying to expand in a new region? Does your product or service work with only minor adjustments (including minor channel changes) in a market with the same language? Each of these situations present opportunities to expand your business that may cost you a lot less than finding new customers.

By the way, expanding share of wallet also makes it a lot harder for your competitors... a fact that many companies ought to consider in this age of value-conscious business shoppers.