Defining Customer-Supplier Relationships and Customer Satisfaction
Steve Williams, president of The Right Approach Consulting LLC, and a veteran executive in the PCB and EMS industries, speaks with the I-Connect007 team about customer-supplier relationships, and how you can ensure customer satisfaction.
Stephen Las Marias: From your many years of industry experience, what are some of the challenges that you have seen when it comes to dealing with customers?
Steve Williams: Every company looks at their customers and they rank them, whether they use A, B, C, or the top 10 customers, whatever it is. They rank their customers based on revenue, ease of doing business, a whole bunch of attributes, and they do scale their service levels around where that customer falls in that ranking. The customers don’t know about that. So, a lot of the challenge is keeping those customers satisfied, but still staying within the constraints of your organization and their expectations of how much time and effort you put into the lower tier customers, if you will.
A lot of times, everybody says, “Well, the customer’s always right,” which we know is not true, but sometimes you make business decisions on whether you’re going to keep this long-term customer happy as opposed to doing what’s right for your organization. So, balancing that customer satisfaction versus what’s in the best interest of the company, especially when you’re talking about problems, quality issues, or product that may be suspect. If you’re just watching out for your company, you think, “Well, the product is actually within specification.” But knowing that this is an A customer or a top tier customer, you may treat that situation differently with those customers than you would a C level customer. Balancing that customer satisfaction versus keeping your business profitable is probably one of the biggest challenges.
Barry Matties: I think this analogy also applies to internal customers as well. Does the guy in the drill room realize he’s a customer and is he going to the supplier proactively? And if they’re not nice people in the drill room, the guy sliding the panels may not be as customer-centric as he could be or should be.
Williams: I think there’s an aspect to that, in that scenario of the drill room. They’re drilling panels and they’re feeding the plating department. They’ve only got one customer. They have one internal customer that’s going to get their product when they’re done, but the dynamics between those two departments certainly influences that cooperation. That customer-supplier relationship is the same, whether you’re talking about internal departments, raw material suppliers to your organization or between you and your external customer. I think the rules of engagement are the same with all those levels throughout the supply chain.
Andy Shaughnessy: How far would you go to please a customer?
Williams: It’s interesting. I had that conversation recently with one of my PCB clients. They were talking about all this business they inherited and picked up when one of their competitors went out of business recently. The owner said, “You know, I guess we kind of know why they went out of business now.” All these customers have low-level products, low technology, low quantities, but they’re probably some of the most demanding customers of their entire customer base. The top customer, from a revenue standpoint, I mean they can be as nasty as they want to be and you’re still going to treat them and bend over backwards to satisfy them. It all depends on how good of a fit they are for your organization, and what those rules are going to be in dealing with that customer.
And it all comes down to money, right? Right now, though we’re coming off some decline in the industry, people were filling up their shops with whatever work they could find. Now that they’re starting to get busier, a lot of the people I’ve talked to are starting to purge some of those customers that they needed last year just to keep their head above water. And now that they’ve got some more preferred customers, they’re no longer a good fit. So, I think that all kind of goes under the same bucket.
Matties: Being able to know how to define your customer, I think, is critically important.
Williams: Yes, that’s a good point. Again, for the most part, a lot of companies know what a good fit is, but sometimes they’re forced into taking business that they wouldn’t otherwise take.
Matties: What is your advice to our readers when it comes to customer service?
Williams: To me, if I’m reading something like we’re talking about now, the takeaway I’d be looking for is how I will provide that service level that my customers are demanding. What’s important to them? It’s all about understanding what the customer’s needs are and analyzing if we are currently providing that or not—and how do we adjust if we’re not? Whether that’s an internal department hand-off, dealing with your supplier or your customer, it’s understanding what they expect out of you as a supplier or a customer, and if you are giving it to them. When I talk about customer service, I always use the automotive example. We’ve all gone into a dealership to have some work done, right? And you go to pick your vehicle up, and they tell you, “Hey, someone’s going to call you in a day or so and ask you to take a quick on-the-phone survey.” Then they tell you that, “You know what? It’s going to look really bad for me if you don’t give me a 10 all the way across the board.” That kind of information makes you question all the customer service awards that the dealership has hanging in their lobby, because you know that they’re influencing how customers are reacting. And they do that so they can announce that they’ve got the highest customer satisfaction ratings compared to their competitors, but it’s not really information that’s going to help the company get better. And that’s what people want to know. How do you figure out what your customers really want from you in a meaningful way? That’s what I think is missing from a lot of the customer analysis that we do. People tell you what you want to hear, or it’s skewed by a recent experience and that’s not always helpful to the business.
Matties: How much resource do you allocate to a customer? Is 10% of what a customer spends goes back to servicing that customer? What sorts of rules of thumb are out there?
Williams: I don’t know if they allocate a particular level of service that way. You’ve got certain customers that it doesn’t matter what they’re asking for, or what they’re expecting from you. The customer calls, you drop everything, and it doesn’t matter how many other customers you’ve got waiting on you. That customer gets top priority no matter what the situation. It kind of filters down from there. There’s always a bandwidth issue, and customer service is very segmented into who’s most important and who’s less important. A lot of times, if they’re a big enough customer, they get their own person full-time. It all depends on how you’re structured.
To answer your question, I think 20% of spending is a solid number, where that’s one of the top 10 customers for anybody. If they’re 15 to 20% of your revenue, they are at the top tier. And then, now you’ve got to remember, the customer is going to be reading this too, it’s not just us manufacturers that are going to be reading it. The people that we’re trying to satisfy are going to be reading this, so you’ve got to be sensitive to that as well.
Shaughnessy: What do you think are some of the best methods for measuring customer satisfaction? We asked the board shops, and they said they don’t worry about any customers unless they do one job and never come back. And then they call, “Hey! Why didn’t you come back?” So, what do you think is the best or some of the better methods to measure customer satisfaction?
Williams: Well, right now, it’s a bit unique for me as a consultant. If I get a referral from a customer to another client, that’s a huge customer satisfaction bonus for me. A simple “Job well done” or “Our business is better, we’re glad we hired you.” Those kinds of things. It’s a little different from a manufacturing customer, where they are constantly judged on product quality and response and service. In a past life, obviously, you’re right. Customers, for the most part, don’t put a lot of time and effort into demonstrating their satisfaction for the supplier unless it’s bad. They don’t go out of their way to call you and say, “Hey, great job,” and “Keep up the good work.” They’ll call you in a heartbeat if you make a mistake.
You know, I guess that’s a good point in itself. One of the biggest problems in our industry is getting feedback from customers on how we’re doing.
Matties: If they come back and order a second, third, fourth time, that is demonstrating a level of satisfaction.
Williams: Absolutely. A couple of my clients, we talk about that, and they say ‘You know, if I don’t hear from a customer, that’s good news. If I don’t hear from a customer, and they just keep placing orders then everything’s great, I have no concerns, and it is business as usual.’
Las Marias: Alright! Thank you very much, Steve, for your insights.
Williams: Thank you!