Vending operators are confronting three major issues in the current recession: 1) how and what costs to cut; 2) which, if any, investments should be made in technology to improve productivity; and 3) how to maintain and increase sales at current accounts.
In response to this situation, most operators have concentrated on reducing costs. This makes sense, as a company must survive. Reducing costs, however, does not set the stage for improved service, increased productivity, retaining accounts and increasing sales.
Many articles and proposals are currently circulating regarding how item-level data, remote machine monitoring and cashless payments can improve the service and productivity of a vending company.
These technology solutions involve substantial investments, not only in hardware and software, but also, and more importantly, in changes in vending operations and personnel. Determining the return for such an investment is complicated and the implementation time consuming.
However, operators should take the time to review how they maintain and increase the sales at existing accounts.
Connect to your base
Recently, in an article in The Wall Street Journal, Rick Braddock, the chief executive officer of FreshDirect, the online delivery grocer and vending operator, described his company’s policy of improving relationships with its existing customers rather than targeting new customers during the current downturn. Creative approaches in this area can bring immediate results with investments that can be carefully controlled and measured.
Most operators consider customer outreach as a cost to be minimized.
In companies seeking to cut costs, customer relations is one of the first areas they consider. One reason is that operators do not see this as an area that has a measurable return on sales.
I have known many companies that at one time in the past sent out a customer newsletter. In time, they lost interest in doing it. They see the recurring cost, and they question if the newsletter is really helping them in any way.
Another reason most vending operators fail to invest in customer relations is they are in the habit of focusing on obtaining new customers, not improving their sales and relationships with their current customers.
The reason that customer relations is not seen as generating a good return is that it is not given enough attention in the first place. That newsletter that I referenced is not doing much good because it was assigned to someone who did not have the motivation or the skills to keep it interesting.
Be proactive, not reactive
Generally speaking, customer service in vending is reactive, not proactive. Operators wait to hear a customer complaint before taking corrective action.
Most operators do not compensate personnel for being proactive. Moreover, since many operators have automatic renewal clauses in their contracts, there is not even a contractual reason to contact existing accounts.
The time has come for a change in thinking. Innovative changes in communications with an operator’s current accounts can result in increased sales.
Given the current situation in our industry, operators should be investing more in customer service and less in new account acquisition. They need to revise their sales, customer service, compensation and procedures.
Industry consultant Jerry McVety pointed out in a feature article in this magazine in January of 2008 that Federal Express has a client retention goal of 99.9 percent.
Elliot Maras, editor of Automatic Merchandiser, noted in his Oct. 13 blog, “Staying Under the Radar? It’s a Dated Approach to Customer Service,” that most operators hold a long-held belief that “the best vending service is when the customer doesn’t have to be involved in any way.”
Operators should concentrate on developing an account retention and development program. First and foremost, in this day and age, each operator should have the contact person, phone number, and, most importantly, the email address of every account. Depending on the size of the account, email and personal contacts should be made on a regular basis.