Credibility – the essential factor of successful business

Confidence?

The past few years have been particularly difficult for those responsible for developing and maintaining levels of corporate income. In most markets, demand is down, and although there are signs that economies are beginning to grow, albeit very slowly, most businesses are likely to find that progress is slow, except perhaps in some of the Asian and South American markets where growth rates are higher.

It is natural that in such circumstances, businesses will concentrate on making sales to produce the necessary income. However, although sales may produce cash-flow, what is actually required is profitable income. Income which is not profitable is not worth having in the long run. In these economic circumstances it is very easy for the executive who is Head of Corporate Income (HCI), to concentrate on increasing the volume of sales in order to maintain a level of income and perhaps to ignore other relevant and important indicators of performance.

The objective of HCIs is to maximize profitable income while minimizing costs and the use of assets, thus their performance will be judged on the amount of income produced and the efficiency of its production.

Performance measurement across all the activities which directly or indirectly produce income is essential for effective management.  The credibility of HCIs within their respective companies will depend on their ability to provide quantifiable evidence to show how they minimize costs and the use of assets, while maximizing profitable income. Thus it is in their own interest for HCIs to produce regular management reports on all agreed performance indicators.

However, maintaining sales and income is also dependent on the trust of customers and the continuing confidence they have in the product and its supplier. The internationally famous management consultant, Tom Peters said that the secret of business success was to make the customer “delighted” with the product or service. But it may also be said that what customers really want, is to have confidence in the reliability in the supply of a product which meets their requirements, delivered in the way promised, at a satisfactory price.

Sales transactions should be considered to be that of two equals. The customer expects to receive what he has been told to expect in terms of the product, its performance, the administration of its delivery and payment. The seller expects his customer to adhere to the agreed terms and conditions of sale and to pay the agreed price in the required manner.

Customer relationship is important to establish mutual trust and respect, in order that the seller can maintain repeat sales and the customer can maintain a reliable and continued source of supply. The customer can always go elsewhere, but most customers maintain a loyalty to suppliers provided the supplier remains reliable. Finding evaluating and changing to a new supplier is time consuming potentially expensive, and until established, has the risk of “the unknown.”  There is a fundamental truth in business in that “you only get what you pay for”; while you can always “buy it cheaper,” the result may not be the same.

The development of Customer Relationship Management (CRM) has helped businesses concentrate on trying to understand their customer’s current and future requirements
Customers generally look for reliability in their suppliers, and to be able to trust their word. Customers want to trust their suppliers. There is nothing worse for a customer than being let down by a supplier on whom they relied.

Free offers and special offers may attract customers, but it is reliability of quality, product and especially the service that keeps them. Regardless of whether a customer is a corporate customer or a private individual, customers want reliability more than anything else. Reliability in the product to perform as expected and for the supplier to act as they claim.

If you cannot deliver as promised, tell the customer before they find out the hard way.
The product may “do what it says on the tin”, but if the supplier does not deliver on their promises, the customer will lose faith and go elsewhere. “My word is my bond,” should be the statement on which all customers can rely, and on which they will regularly return.

HCIs should ensure that:

* All enquires receive full and prompt responses.
* Terms and conditions are clearly understood by both customer and supplier.
* All promises of delivery and communication are met.
* The sales process cannot be accused of miss-selling.
* All mistakes are identified and rectified promptly
* Customer feed-back is regularly sought
* Rate of order return and cancellations are constantly monitored.
* The number and type of customer compliant are monitored to detect changes and trends.

Successful businesses are based on sales that require the mutual trust of customer and supplier. Customers must have confidence in their suppliers regarding the quality of the product, service, delivery and credit control. Similarly, suppliers must have confidence in their customer’s order requirements, their payment and credit worthiness. Thus HCIs should be continually aware of the level of late payments, bad debts and the identities of customers that feature in these areas.

By demonstrating their effectiveness with performance measurements, HCIs can develop and maintain the confidence of their companies, but they also need to develop and maintain the confidence of their customers, by the reliability of their words and actions.

© N.C.Watkis, Contract Marketing Service 05 Nov 12

November 7, 2012  Tags: , , , , , , , , , , , ,   Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, Uncategorized

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