Contributed through the Mailing & Fulfillment Service Association
In the world of 3PF,
See a common thread developing here? If, as a small business owner, you are an "easy mark" for external influences (agencies, entrepreneurs, current customers) and internal influences (salespeople), you will constantly be putting out the fires left from disasters rather than enjoying the rewards of building a solid foundation for your business. For our company, disasters loom on the horizon whenever we stray from our mission, our plan or our philosophy.
To us, one clear definition of disaster is to invest a tremendous amount of time and resources to a new program and, because of nothing we have done, it fails and we are left holding the bag. Thankfully, this has been an easy lesson to learn. I am amazed, though, at how many people in our business continually are pulled into these applications. You see this huge opportunity and get blinded by what "might be" and lose sight of what "is." What is, is that you have real cost for performing your fulfillment services and always will. When you invest/gamble your hard-earned corporate dollars on this new company you are serving, understand that it is a gamble and have a clear strategy for (1) covering your costs and (2) exiting the relationship.
We have learned that if the only way your new partner can pay you is from the sales of the project run the other way. Part of the deal must be that you receive at least your projected cost up front and a timeframe in which your "invested/discounted" prices escalate if the performance of the program proves to fall short of projections. If this is not acceptable to your new customer, say "Thanks, but no thanks." Point of advice: Avoid loss of profitable capacity and, potentially, dollars by being willing to walk away from illegitimate business opportunities.
Be smart about what your company does best. Understand that the premium profit you make on what you do best is the bread and butter for your business. Also, understand the premium profit does have a cap of what you are able to glean from your revenue. When you provide services that are outside your core competencies with the justification that "we'll give that service away to get the fulfillment piece," invariably, the entire program becomes unprofitable.
Most of us would consider ourselves entrepreneurs and pride ourselves at the idea of being able to do anything well; but, bluntly, we can't. We probably can do just about anything asked of us just not well enough for it not to become a cash/capacity drain. If your core competency is fulfillment and you want to do call-center work, find a partner to get the work done through so your cost for the project is fixed. If the call-center work can be contracted for a long period of time (three years or more) and you have an interest as well as a passion for the call-center business, find a good, solid call center and negotiate a purchase of the organization or an equity stake in the business. Let the call-center business remain autonomous and you will receive the benefit of the fulfillment piece, the margin and a piece of the profit for the call-center piece.
This applies to all the other peripheral businesses we drool over each day (direct mail, printing, graphics, displays, etc.) but aren't involved in enough or knowledgeable enough to understand all the worms that go with it. The other caveat of attempting to provide the · additional services internally is that you put the fulfillment piece you coveted at risk every day by not knowing what you are doing on the additional service.
Point of advice: Avoid the disaster of non-profitable projects and loss of core customers by sticking to what you do best!
All of us have processes we use to make sure we have all our ducks in a row before we begin a job. Some of us even have processes in place to assure those ducks are lined up before we receive the purchase order for the job. The difficult part of the equation is sticking to those processes 100% of the time. Why, when we have created these processes as a result of being bit by some type of disarray that was painful enough to create processes, do some companies repeat history by then ignoring them?
Salespeople complain that they are bothering the customers by having them sign off on work orders. Customer service people don't take the time to sign off on samples because "we do this kind of work all the time do I really have to sign off on every one?" Yes, REALLY! Processes only work when the integrity of the system is respected and followed. Face it, in a world of who-blames-who, do you really think your customer is going to spring to have a job redone because you weren't "able" to reach him for a sign-off? If you have to rework a job because operations did not know the video was supposed to be face-up, do you think your customer will pay you more? No, of course not. Instill discipline to the processes you have developed. If they aren't worth doing, then change them. The number one disaster-maker is the same in every one of our businesses: lack of communication. Your sales process must yield an attainable expectation for the customer that, when performed, produces profit for your company (i.e., proper communication with the customer). Your CSR/sales team must provide clear, concise, agreed-upon direction to operations so that the specifications of every project is understood by all (i.e., proper communication internally).
For the most part, we all have good people working for our companies with the best interest of our customers in mind; but, the disconnect caused by no, or improper, communication often makes all of us look like we couldn't care less. Measure rework and create incentives for eliminating it. This will draw the necessary focus to your processes and force them to be used, which will cause constant improvement and change in your organization. Buy copies of Philip Crosby's Quality is Free and make it required reading for your entire company. Show that you care about the loss of image, the loss of profit dollars, the loss of customers and the potential loss of employees by selling the right things internally.
Point of advice: Avoid the disaster of lost profit and lost customers by setting clear expectations with the customer and by instilling the discipline of "following procedures" 100% of the time.
Dave Crowder is president/owner of