How do you become an overpowering force in distribution?
The following is an excerpt from a new essay from Dirk’s “The Innovation Imperative Essay Series.” Essay details can be found at www.innovationimperative.com.
How do you become an overpowering force in distribution? Let me share with you the story of Berlin Packaging.
I’ve worked with Berlin Packaging over the past 25 years and, although they’re one of my clients, I know I’ve learned a tremendous amount from Berlin’s Chairman and CEO Andrew Berlin and the entire organization.
When Berlin bought the company back in January 1988, it was valued at about $11.5 million. Fast forward to its $2.3 billion valuation as of August 2016 — an impressive increase of 200 times more value.
While toward the end there have been some strategic acquisitions, the majority of Berlin’s growth and value creation has been generated organically. While its competitors have grown by an average of 2% or 3% per year, Berlin has consistently had double-digit growth — surpassing packaging industry averages every year for 20 years.
In my one of my four new essays, “The Unstoppable Distributor: How to Become a Juggernaut Through Business Model Innovation,” I share five obsessions I noticed at Berlin Packaging that have led to the company’s financial success and it becoming an overpowering force — a true juggernaut in distribution.
I also dive into the three standards of customer satisfaction, ranging from adequacy and satisfied to the pinnacle of more-than-satisfied. That third standard is where Berlin Packaging knocks it out of the park.
The more-than-satisfied customer standard involves the attitude of not merely wanting to satisfy the customer, but to also wow them. It’s about going that one step beyond to surprise and delight customers. For companies with this standard, under-promising and over-delivering isn’t just a cliché.
What I’ve seen at Berlin Packaging is it is obsessed with having more-than-satisfied customers. The distributor has taken this idea to another level by branding this obsession, both internally and externally, into a term called “Thrill,” which it uses as a rallying point. Berlin holds its processes up against that standard and only implements them if it meets it.
This obsession also has led to Berlin mapping out the entire customer journey. The distributor has identified 30 or so different touch points, from when a customer first learns about Berlin before they even enter the sales funnel all the way to when the customer pays the invoice. Berlin Packaging is committed to examining ways it can improve every touch point with the “Customer Thrill” being the standard.
Because Berlin knows it can’t attack all 30 of these touch points at once, the company strategically looks for which parts of the customer journey aren’t at its Thrill standard and then makes them a priority for focus and improvement.
If you want to drive your version of Thrill, there are two things you need to do. First, you need to do the expected extraordinarily well. In distribution, that might be summed up as delivering the right product at the right place at the right time and doing so much better than the norm.
Berlin Packaging accomplishes this by researching what its customers want from their suppliers. It uses this information to define the five criteria that its customers want at a minimum. Berlin then developed the acronym P.O.K.E.R. (Proactivity, On-Time, Knowledgeable, Easy and Responsive) around the criteria.
What Berlin learned is its customers want proactivity from suppliers. They want the product on time. They want the individuals they interact with to be knowledgeable. They want to work with somebody who is easy to do business with and they want the organization to be very responsive. Berlin saw these five basics and committed itself to executing them extraordinarily well.
This led Berlin to put in place systems to drive that operational excellence even further. If customers wanted things to be on time and for the company to be responsive, Berlin couldn’t afford to reinvent the wheel each day. It resolved to drive operational excellence throughout its entire operation and the results speak for themselves: Over the last 12 years, Berlin Packaging hasn’t missed a single quarter of 99% on-time delivery.
The second thing you must do to maintain that highest level of satisfaction is to find a way to create that wow factor. Berlin packaging is obsessed with finding unexpected ways to delight, thrill and surprise its customers.
One of the ways it surprises customers involves credit reports. Think about the sales process and how, to open up a new account, you have to ask for a credit report. Sure, it’s a necessary process and the first thing you have to do, but it’s also an internal process which means it is being done for your own benefit. Basically before you do anything for your customer, you’re asking them to do something for you.
Berlin decided it would reward and acknowledge customers for providing a credit report. So any time a customer completes a credit application, it sends a nice thank-you note — which acknowledges this is being done for Berlin’s benefit — along with a digital Starbuck’s gift card.
Berlin Packaging also goes out of its way to wow customers from a marketing perspective. The company has more than 300 industry reports, so if it’s going to call on a mustard manufacturer for instance, it can use the reports to demonstrate to the customer that it knows deep information about the mustard industry — in most cases even more than the customer — and provide insights that could help the customer improve his business. It’s just one more way that Berlin is able to Thrill customers and has helped to make the distributor a juggernaut.
If you want to transform your organization into a juggernaut, take a page out of Berlin’s playbook and hold your processes to a higher standard. Encourage excellence within your own organization by putting the right processes in place.
Next time, we’ll dig even deeper into Berlin’s playbook.
This article was originally titled “You can become an overpowering force” in the October 2017 print edition of Supply House Times.