Business — Banking — Management — Marketing & Sales

1. Customer satisfaction

Recent trends stress the importance of customer satisfaction for a company’s  long—term success. Loyal customers contribute most to a company’s profits. They buy more and more often — they have a higher «re-purchasing factor», and they are less price-sensitive, than new customers. Moreover, it costs up to nine times as much to win new clients than to hold the ones that already do business with a company. Loyal customers build profit and growth like nothing else does. Creating and retaining customer loyality is one of the most important issues concerning the long-term profitability of any business.

This requires a holistic view of the business, which is often called Total Quality Management, or TQM. Management has to take into consideration every single stage in its business processes. A business process  starts with an order that is placed by a customer, and ends when the fulfilled order is delivered to the customer to his highest satisfaction (or, better yet, it surpasses his expectations). This implies that quality is defined by the customer, and by nobody else. Many excellent companies do regular customer surveys to find out what their customers really want, and how the company’s  products and services measure up to this demand. To ensure that only top quality products are delivered to the customers, who are entitled to receive flawless products, workers consider their co-workers as «internal customers», who have the same right to get flawless intermediate products. Thus, quality control is not the final stage at the very end of the production process, where faults can only be repaired in a costly manner. Quality control nowadays means the prevention of faults, beginning with the very first step in the production process. This requires well-trained staff, who continuously improve their work. They must be empowered to solve their problems on their own, which — in turn — calls on management to provide strong leadership in total quality matters.

Until a couple of years ago, such TQM-concepts have been almost unheard-of in Western businesses, especially in Western Europe. Experts believe that much of Japans business successes can be attributed to a decade-long practice of Total Quality Management as the normal, everyday way of doing one’s work. The rest of the world is now catching up.

Bankers should know if their corporate clients implement quality management to find out about the management team’s attitude towards the importance of customers, staff, work processes, continuous improvement and so on. Companies which do not give appropriate care to quality management are destined to be left behind by tomorrow’s markets.

2. Case study: Rotagraphics Inc. turns near failure into success by total customer orientation

The following case shows that strategic thinking is more important for a company than equity, power or relations.

By 1992, «Rotagraphics Inc.», a printing plant company, had almost gone bust. «Rotagraphics» accepted almost every order and, at the same time, tried hard to deliver very good quality. The company was supported by an extremely energetic field service with sales offices and sales representatives in all neighbouring big cities. The marketing department did market research and carried out all the usual sales and administrative activities. Despite all these efforts and in spite of the enormous volume of orders, the company was virtually bankrupt. The accumulated losses were almost equivalent to its equity of DM 500.000. The company’s  house bank cancelled all credit lines.

The bottleneck of the company:

How had such a desperate situation arisen in spite of a cushion of existing orders for six months?

Both marketing department and the management, both, had always seen the reason for their problems in insufficient sales. Therefore, «Rotagraphics» had printed all orders that had been canvassed by its marketing department. Due to the constant retooling -which was necessary because of the totally different orders — and the necessary machine down time, it was impossible for the company to generate adequate profits while selling their products at rockbottom prices.

Eventually, it began to dawn on the chief executive officer that the company’s problems did not lie where it had always been assumed, that is in the lack of sales, but in constantly accepting the wrong orders. The more orders placed, the bigger became the losses. Consequently, solving this problem became the most effective starting point for a new strategy. The solution had be to identify the «right» orders and to secure them.

Analysis of the company’s  strengths:

As a first step, the analysis of the company’s strengths was started by first taking a close look at the company’s few special successes. Projects that had been particulary profitable were not reckoned among the «successes», but only those which had been specially commended by the customers. The findings of the analysis brought to light the following strengths:

—          The company had technical competence for high-quality colour printing orders and a good after-sales service.

—          Confidence in the managing directors integrity.

—          The employees were trying hard to execute on-time deliveries.

—          The printing machine was able to run at high speed and, therefore, predominantly suited for large-scale orders.

—          The printing plant was able to imprint serial numbers on the printed matters.

—          The printing plant was able to send its products to many different addresses.

Until now, the special strengths of the company had been totally neglected, since, the company had spent most of its time producing small numbers of copies only.

The most promising business area:

A second step towards improvement was trying to secure new orders that would in theory fit excellently with the company’s  strengths. These were continuous or periodic printing orders in large numbers of copies with exact numbering that had to be sent to different addresses, like e.g.:

—          Securities, bonds and shares,

—          bills of exchange, cheques,

—          lottery tickets,

—          labels.

The next step was to choose from this list those orders which had to be printed in large numbers and which were continuously required. Then, the order with the highest profit contribution during a given period of time was determined. In the end, three orders were left: lottery tickets, cheques and shares.

The reasons for lottery tickets were that the demand for them was bigger than the supply because lotteries for advertising purposes had become more and more fashionable. The numbering of the lottery tickets had to be absolutely flawless, and the tickets had to be distributed to different marketing outlets.

The reasons for cheques were the rising demand for them, the requirement of a high printing quality as well as the prospect of excellent business contacts abroad.

The printing of foreign shares was of interest for «Rotagraphics Inc.» because they were able to guarantee security against forgeries. Besides, «Rotagraphics» could ensure the required smooth colour gradation as well as a continuous numbering and the distribution to different places. As it happened, a new issue of a big corporation was to be expected. Therefore, to begin with, the third option, the printing of shares was set about.