Tom O’Connoris the author of NAW Institute for Distribution Excellence bestseller “Strategic Planning for Distributors: Execution Isn’t Everything – It’s the Only Thing!” TJ O’Connor leads FCG’s market research practice and is an expert growth strategist in the distribution channel.
Tom will conduct a 90-minute session titled: “Strategic Planning for ASA Distributors & Manufacturers: Execution Isn’t Everything – It’s the Only Thing!” on Wednesday, Oct. 2, 2013, during ASA’s annual convention in Washington, D.C. Visit www.asa.net for more NetworkASA 2013 details, including online registration and hotel reservation information.
Consolidated Supply is a 15-year FCG client and one of 12 wholesaler-distributors referenced in O’Connor’s book for their best practices.
Consolidated Supply is a family-run plumbing, heating and waterworks distributor covering 85 years and four generations. It employs 300 people at 18 locations covering three states (Oregon, Washington and Idaho).
Consolidated Supply has a simple but vibrant mission statement: “We take pride in doing ordinary things extraordinarily well.” Whichever Consolidated Supply branch location you visit, every employee exudes a sense of pride in their work. We have conducted annual customer satisfaction surveys for Consolidated Supply each of the last 15 years and visited them recently to see firsthand how they are able to achieve “best practice” customer satisfaction index ratings higher than 48 other wholesaler distributors we survey year after year.
Extraordinary Customer Service Culture
Building a culture of customer service began 42 years ago with former president Karl E. Neupert. Neupert believed the only way for a distribution company to survive and ultimately thrive would be to sell “extraordinary service” as a competitive edge. When Neupert died in 2002, his wife, Karolyn Neupert, became chairman and took over what she calls “the Consolidated family.”
Putting people first is a critical component of Consolidated Supply’s core values. By “family,” Karolyn Neupert means the entire company. “We’re a family that happens to be in business,” she explains during our visit. One of Karolyn Neupert’s goals is to make employees feel safe and respected. “The more you put your arms around people, the more successful they’ll be,” she says. Karolyn Neupert signs her emails “MH,” for “Mother Hen.” “If you are taking care of your people, they are going to take care of the business. That type of caring rolls out the door to the customers,” she says.
Consolidated Supply’s culture thrives on serving the customer. It serves two customer groups: internal (employees) and external customers. In addition to its annual customer satisfaction survey, Consolidated Supply also conducts annual internal employee satisfaction surveys.
After its first customer satisfaction survey 15 years ago, Consolidated Supply organized a cross-functional “Deliver on the Promise (DELPRO)” team to respond to the survey results. Today the company has DELPRO specialists at each of its 17 locations. Andrinna Leask has served as corporate DELPRO coordinator since 2007, helping to keep DELPRO momentum strong so the company can exceed customer-service expectations.
“We root cause and track our mistakes, which infuse an attitude of pride,” says Karla Neupert Hockley, Karl and Karolyn’s daughter and company president. “We provide our customers with a $25 service guarantee if we fall short on any of our customer-service promises.”
Consolidated Supply offers all customers the following five service guarantees:
1, Never out of stock products. We will never be out of stock on our published service guarantee products.
2. Will-call orders. Will-call orders are ready for pickup at the mutually agreed upon time.
3. Returned goods instant credit. When you return re-sellable stock products purchased from us, your account will be credited by the close of the next day business.
4. Order accuracy. You get exactly what you order.
5. Timeliness of delivery. We will deliver your order to you at the mutually agreed upon time.
If Consolidated Supply fails to deliver on any of these five promises, its customers receive a $25 service guarantee credit. Our consulting firm has helped many other distributor clients implement customer-service guarantee programs, but after 15 years Consolidated Supply remains atop all others in proactively and cheerfully giving out service guarantees when it falls short of any of its extraordinary service promises.
Most every other distributor looks at handing out service guarantees as a cost and therefore reluctantly hands them out. According to Senior Vice President and CFO Bob Bruce: “The key to success is issuing the service guarantee when there is a service shortfall. We work real hard to give every employee a sense of security and pride in proactively issuing them when we have an error. We never want a customer to ask for a service guarantee.”
The Consolidated Supply family doesn’t look at the external customer as “the dollar,” it looks at them as people. According to Neupert Hockley: “Our customers trust us because of how we treat them. They are not revenue; they are people we care about. We have the ability to deal person-to-person with our customers, not just as a business.”
Karolyn Neupert adds: “Our customers love that Consolidated can act wholeheartedly and fix their errors. There’s no passing of blame. We stand up and say that we goofed. It’s the human element that we continue to try to drive. It builds trust.”
Neupert Hockley likens the company’s customer-service guarantees to insurance. “It allows us to not do on Wednesday what we did on Tuesday,” she says. “It allows us to stop the same un-quality event from happening in the future.” Bruce adds: “We believe our DELPRO culture leads to increased profitability. I know we have more market share because of this program. I know we have more of a margin because of this program. DELPRO is an arrow in our quiver that no one else has.
Karolyn Neupert adds, “DELPRO sets us apart. We keep feeding it, so it keeps living.”
Rewarding Employees for Extraordinary Service
Consolidated Supply realizes that improving customer satisfaction is a race that is never over. Tying a portion of every employee’s annual incentive bonus plan to every branch location achieving CSI goals drives the right behavior and business results.
Bruce says: “One of the keys to our success is we tie a reward system to achieving customer satisfaction improvement goals. Every branch employee and manager in our company can earn what we call an annual DELPRO bonus. We started this bonus in 2002 and pay out based on achieving CSI goals on six attributes (three customer-service categories: order accuracy rate, order fill rate and timeliness of delivery; and three people categories: knowledgeable, immediate response and thankful). CSI goals are set to improve or maintain scores depending on survey results from the previous year. Our annual DELPRO bonus helps align employee behaviors with CSCO initiatives.”
Keeping Extraordinary Service Energy Flowing
After reviewing the results of each annual customer satisfaction survey, Neupert Hockley challenges every manager by asking them, “Are you committed to DELPRO?” After Neupert Hockley signs their five customer- service guarantee promises, she has each manager sign a poster which she keeps visible in her office as daily reminder of every manager’s commitment to extraordinary service.
Consolidated Supply has “DELPRO T-shirt Friday” where everybody in the company wears a DELPRO T-shirt one Friday every month. Every new employee gets a DELPRO vest.
“We recruit people where pride is a currency,” Neupert Hockley says. Bruce adds: “We hire responsible people, but they need to know what we stand for. We have to instill our culture and do our best to hire prideful people. Our service guarantees and mission statement come up in the recruiting process. New employees know what they are getting into.
“Delivering extraordinary customer service are the first words out of our mouths,” Neupert Hockley says.
Customer satisfaction is every distributor’s largest source of sales growth, profit and sustainable competitive advantage. As Consolidated Supply has so successfully done, infusing and keeping an extraordinary customer service culture is the backbone of every successful distributor.