Surviving Change Part 2: How to Create a Culture of Excellence in Your Company

In his book, In Search Of Excellence, Tom Peters talks about customer service and quality. But if you read it carefully, it also spells out something else excellent companies have in common: They always pay attention to their daily business fundamentals, without fail, day in and day out. They never get lazy about the small stuff.

Last month, I discussed the need for vending operators to change their operating procedures, given the more competitive environment and the fact that the industry has moved beyond its maturity phase and is actually in a decline phase. Last month's article reviewed ways to control costs, but did so within the context of developing a strategic plan that encompasses a culture of excellence.

This month, I more clearly define what a culture of excellence is in a vending operation and offer some ways to achieve it.

The culture of excellence begins with leadership

In vending, the culture has to be about managing customers for loyalty and for profits, simultaneously. No one should ever confuse the concept of managing customers for loyalty with the concept of managing them for profits. The only way to strengthen the link between loyalty and profits is to manage both at the same time; this is a very complex task indeed.

Eyeball to eyeball contact with customers, at all levels, is needed to build relationships. The vending business is a relationship business. People buy from people they like, and people can be very fickle.

In reality, the perception of quality and price/value relationships by the economic buyers of vending services is hugely influenced by personal relationships between the buyer group and the seller group.

But will the real customer please stand up? A chart on page 73 summarizes the different customer groups that vending operators need to be cognizant of, what motivates them, and how to meet that customer group's specific needs.

To add even more of a challenge, I have always believed there is a built-in bias against food sold in the at-work market. A customer making a purchase where he works has a higher expectation for the price/value ratio at the work place due to his perceived connection between the product and his employer.

If a worker dislikes his job or resents his employer, he probably dislikes you automatically, just because you're in his work place. I am sure you have noticed that at locations where the employees have low morale and are warring with the company, damage to the vending machines is always the heaviest.

Customer loyalty is nebulous

Most of the common wisdom about customer loyalty is bunk. Among the weakest measurements being used by companies are measurements for customer loyalty.

Frequently, satisfaction surveys and fancy customer relationship management software enable companies to disappoint their customers faster and more efficiently.

The dreaded registered letter canceling your contract all too often comes as a complete surprise. High levels of reported customer satisfaction are often contradicted by falling per-capita sales.

Data can be skewed when survey questions are asked of only the location management and not the end consumer. Or, the right questions are not asked. But here is where the real trouble starts.

When questions are asked by any provider about price, quality, service and variety, it creates an expectation on the part of the respondent that better things are on the way; your intention to improve satisfaction levels is implied.

The back end of the survey system often fails when no consensus of the survey results is communicated to the respondents.

Further damage is done when the areas of dissatisfaction noted by the respondents are not corrected to the full satisfaction of the respondents.

I am not saying surveys are not worthwhile. I am just offering a word of caution; make sure you have a complete plan and carry it out fully. If you're not willing to address all the perceived issues that may be surfaced, don't even start.

Give some thought to perceived problems that may surface which you have no ability to solve: "You have machines where my buddy works and soda is only 50 cents a can over there, and we have to pay 65 cents a can here. You're ripping us off."

Don't even think about trying to explain that the suites in his company's front office insist on 25 percent commission and his buddy's more benevolent company opted for zero percent commission and low prices.

I am referring to satisfaction surveys at locations you already have. However, a different type of satisfaction survey can be used as an offensive tool at locations you're trying to get as well. This approach, when shrewdly applied, can have a devastating effect on the incumbent vending operator.

Customer fatigue: Can you measure it?

How much contact is enough? Customer fatigue is becoming an issue; they are sick and tired of all the cuddling and patronizing. The only cure for customer fatigue is to get to the point and provide that "perceived" value, as elusive or as distasteful as it may be. It starts with being a good listener.

It's not what you say to them that's important; it's what they say to you. People love to buy, but they hate to be sold; go light on the B.S.

Also hard to quantify: intangible assets

Some assets are not on the balance sheet. They include brand capital, knowledge capital, company culture, long-term relationships with clients, but there is one intangible asset that stands apart from all others.

Far and away the most valuable asset, intangible or otherwise, any business can have is management and front line employees who are happy, but never satisfied that the business is as efficient or as profitable as it could be. This happens to be another common characteristic of highly successful service companies.

Take a meticulous inventory of your intangible assets and safeguard them well. They are truly gold.

Compensation plays a big role

It is increasingly becoming recognized that there are direct linkages between employee satisfaction and customer satisfaction, customer retention and employee turnover. Is the importance of these relationships reflected in rewards and incentives offered to front line employees?

Hard physical work, for 50 to 60 hours a week, with no overtime pay, a paycheck of $500 before taxes and heavy medical co-pay deductions, is nobody's idea of a dream job. Most people will do this kind of work only until they can find something better, unless, of course, they appoint themselves as your unofficial partners.

The right compensation formula

You get what you reward. Straight commission compensation plans reward only dumping cash boxes, no time for customer chitchat or cleaning, while straight salary plans yield complacency. I advocate a base salary guarantee, plus commission on sales and a quarterly discretionary bonus based on profits.

It is no coincidence that in most communities, the vending operator offering the best compensation package has most of the good accounts. Take a serious look at this area; it could be that an additional investment in your people would be a more beneficial use of capital than other expenditures.

Work smarter; create a thinking culture

One of the best ways to create a thinking culture is to "invest" time (I hate the term "spend time") in brainstorming sessions with the entire team. Ideally, this type of exercise should be done with all employees present, in a fear-free zone and with vigorous group participation. As an example, if today's topic is dissatisfied customers, the objective of the exercise is for the group to collectively identify all of the root causes of customer dissatisfaction; the more the better.

The owner or senior manager facilitating the exercise is not to give the answers; he only asks probing questions: "What is the difference between the way it is now and the way we would like to have it?" This is critical because the benefit of the group brainstorming exercise is not just identification of causes.

Winning employee support isn't easy

More importantly, it is to achieve the "buy in" from the group needed to go forward with identifying and implementing solutions.

This is often attempted through formation of performance improvement teams which drag on and on for six months or a year, causing even the best people to lose their enthusiasm. I prefer the use of ad hoc, rapid response teams with a well defined charter and each project lasting no more than four to six weeks.

Meeting time should be held to four hours per week, which of course, must be compensable. Because you're in the vending business, you probably don't have a bunch of folks just standing around with nothing to do; this work has to be done by people who already have a full plate.

Manage by information

Management by walking around (MBWA) will do little more than wear out your shoes. In today's world, to maintain peak effectiveness, you have to manage by information, preferably by information you already have.

All kinds of ratios can be extracted on employee performance. Factors that can be measured include hours worked, inventory, sales by machine, stales, product lines, units sold, repair calls, just to name a few.

Select four of five key indices and set quantifiable upper and lower control limits for each. This will bring a sharper focus on the things that matter and allow you to save precious time by managing by exception.

Data must be timely

Information has a short shelf life, a short time cycle between events and measurement is imperative. Data on events that happened 90 days ago has little value for the kind of nitty gritty, day-to-day, management needed to keep out in front of the business.

It may be tempting to some individuals, when they are in dire straits, to consider paying the client the commission dollars they think they deserve instead of what was agreed to in the proposal when the business was won. Anything can be rationalized.

This practice used to be a dirty little secret, but it is a secret no more. The "R factor" is well known in the market place now.

Sadly, a few dishonest people soil the image of the vast majority of the great people in the vending business who are honest business men and women. Those that resort to this fraudulent tactic have given the entire industry a black eye and hopefully, when they are caught at it, they will be forced out of business.

Always be upfront with customers

When you run out of profits at an account, go to your client forthrightly, tell him the truth, be as convincing as possible, bring documentation, open up your books, and ask for financial relief. There is an excellent chance if you have consistently done a good job, and if you make a creditable presentation, that your client will work with you. Be professional; do it the right way.

The demise of any business is an insidious process; it may seem you're just in a slump, just having a streak of temporary bad luck. Unfortunately, when this condition continues unchecked, it robs the organization of not only capital, it drains its people emotionally and they lose the will to fight. Soon, you may find yourself in a tailspin you can't pull out of.

Last month, I noted that there are two broad "must haves": a good plan and excellent controls. Creating a culture of excellence is part of both of these.

A good strategic plan also includes a marketing plan, which I plan to cover in another article.

In the meantime, every vending operator has plenty of resources available to them to start working on creating both excellent controls, discussed in last month's article, and developing a culture of excellence.

Don't sit back; get going now, get a plan. "Who needs a plan? It's a very simple business." I often hear this from the same guy who says, "Who needs a budget?" You absolutely do need a plan. A sustainable strategic position is key. If you can only do it for a little while, don't even start. (No-profit, carry-in food specials are prime examples.)

Move forward at the right speed

Many companies are stymied on how to confront the painful gap between their strategy and the reality of their capabilities and their markets. Take it in small bites.

Your plan doesn't have to be fancy, just basic goals and required actions with a reasonable time table thrown in. Of course, all of your planning will be a total waste of time if, after you create the plan, you put it on the shelf to gather dust. I am always amazed at how often this happens.

If you make the time to develop a sound strategy and make a rock solid commitment to live by it, you will probably be one of the few in your market place who do.

By doing what others think is unnecessary; too much work or they just don't have the time for, you will have differentiated yourself from most of your competitors. You will have earned an indisputable, competitive advantage.

Time doesn't change, it goes in circles. Beyond any shadow of a doubt, the strong will survive and the weak will perish. This is nothing new; it's always been that way.

View the manifestations of today's vending customer.

Intangible assets

  • Brand equity
  • Knowledge capital
  • Strong company culture
  • Long-term customer relationships
  • Employees

Performance improvement teams: some suggestions

  • Use only volunteers; this ensures the correct attitude and willingness to work.
  • Don't punish the team members by disregarding the fact that while they are in meetings their other work is piling up. Plan for their absence and provide support.
  • Reward even the smallest successes with celebrations. Don't be afraid to spend a little money; it's chump change compared to what the loss of a major account will cost you
  • Involve your supplilers. Bottlers, manufacturers, brokers and distributors are excellent knowledge sources. Take full advantage of the vast market intelligence available through these sources.
  • Have subscriptions of trade publications sent to every employee's home.

Tom Britten is president of Britten Managment Services, based in Lutz, Fla. He is a longtime vending industry veteran. He can be reached at 813-792-9719; e-mail: