The vending industry is facing its most challenging time today. Operators are finding profitability more difficult to maintain than ever. Now is a good time to review some fundamentals about profitability.
How we obtain profitability seems fundamental. Revenue minus operating cost and taxes equals profit; there you have it, simple as that.
Most operators know how to cut costs. In fact, operators have gotten all too good at cutting cost. So, let’s focus on building a partnership that grows your business.
Seven years ago, Xerox was facing possible bankruptcy. Revenue and profits had declined and debt was increasing. The company faced angry customers and defecting employees.
On the day Anne M. Mulcahy was named president and chief operating officer of Xerox, the company lost half its share value. Looking back today, how Xerox changed its fortunes under Mulcahy’s leadership carries lessons for virtually any industry – including the vending industry.
LISTEN TO THE CUSTOMER
Strategy 1: Listen to your customers and determine their wants, interests and needs. This may seem obvious, but I want to focus on the importance of operators, supervisors and route people being in touch with customers and clients. Operators and supervisors who make it their business to ride with route people and visit clients regularly know the pulse of their business.
This helps them understand things from the customer and client’s perspective and equips them to make informed decisions that serve customers more effectively. Operators and supervisors can find ways to “stop in” on clients and informally talk with customers on a regular basis. Route people can demonstrate interest in customers as they go about their daily routine, asking questions related to customers wants, interests and needs.
INVEST IN TECHNOLOGY
Strategy 2: Invest in innovation.
Incorporating new technology in your business will result in improved efficiency and profitability. Vending operators that have incorporated technology in their businesses have seen a significant improvement in the running of their business as well as increased profits and retention of their client and customer base.
Strategy 3: Make it every employee’s job to add value. Xerox achieved its dramatic turnaround largely because it made sure that every customer interaction with employees – from top to bottom – was made positive by having meaningful person-to-person interaction and a genuine desire to help. This cannot occur without buy-in and support of value-based customer service and retention efforts at all levels of the organization.
Strategy 4: Deliver value! How do we add value? Sell solutions. Don’t sell quarter-inch drill bits. Sell quarter-inch holes. If you go to the hardware store to buy a quarter-inch drill bit, the assumption is that ultimately you want a quarter-inch hole.
What is it that your customers and clients value? It’s not what you value, it is what they value.
Strategy 5: Serve the customer. A Harvard Business Review study shows that customers must not just be satisfied but very satisfied at the conclusion of every customer service contact to build loyalty and stability.
According to the study, a customer who is merely satisfied resides in a “zone of indifference” where he or she has neither positive nor negative feelings toward the organization. By contrast, a very satisfied customer resides in a “zone of affection” where he or she remains loyal to the organization and promotes it to others.
Value sells better than discounts and other gimmicks. The only way to truly serve our customers and clients is to discover what they value (their wants, interests, and needs), maintain the relationship, and serve them at the highest level.
Price increases are a natural course of events in doing business. In order for you to continue to serve your clients, profit is a necessity. It’s one of the main reasons you’re in business.