December 2008 | Commentary | Checking In

Macro? No, Micro Economics

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"The economy is bad so we'd better make cuts that hurt customer service." OK, no business would set out with this goal, but often the results are the same. And the consequences of poor service in today's economic climate are irrevocable. While the macro economic news is bad, customer service is all about managing micro economics—the relationship you have with your customers. Defensive tactics—eliminating resources, cutting personnel, using less-effective solutions—have a discernible and negative impact on operations, morale, and profitability. While good products pull consumers in droves, poor customer service ensures an equally swift exit.

In our Top 10 3PL Excellence Awards survey (July 2008), 80 percent of shipper respondents reported they value customer service above price—and most else—when assessing logistics partnerships. Comparatively, only 45 percent of surveyed logistics providers identified customer service as top priority for their customers. Put two and two together and that adds up to a problem. Customers want price reductions, but they assume good service will accompany them.

A demand-sensitive attitude is gradually manifesting itself in the way businesses embrace customer service within their corporate folds—not simply as a way to keep customers and attract new ones, but also to identify change and grow services and value propositions more intuitively than competitors. It's not enough to invest in technologies that gather and communicate information. Engaging customers in a more personal way sparks trust, kindles relationships, stokes innovation, and fuels gain sharing.

It's why GENCO Supply Chain Solutions' CEO Herb Shear helped a customer by correcting a snafu in a competitor's warehouse.

It's why Evans Distribution Systems insists on face-to-face meetings with prospective customers to understand their unique service requirements before even bidding on the business.

It's also why Inbound Logistics has added a "customer service" issue to our editorial lineup. Turn to page 26 to learn why companies such as Unilever, Hitachi Data Systems, Technicolor, and others appreciate service providers that boost customer service when most everything else is falling.

No matter what falls around you, focus on your customers. "Yes, you should wake up every morning terrified with your sheets drenched in sweat, but not because you're afraid of competitors," says Amazon CEO Jeff Bezos. "Be afraid of customers; they are the folks with the money."

Think of good customer service as a demand-driven requirement. When you enlist your customers in that realignment process, you are better equipped to liberate silo thinking, speed and streamline inventory, and reduce overall costs. Most of us don't have the power to improve the economy in a macro way. So stay focused on what you can improve—your relationship with your customers.

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