The Mass Customisation Challenge

Imagine a company that sells a commodity product and then dispatches trained teams to its customers' factories worldwide to teach them how to use less of it.

Counterintuitive? Absolutely. Worth it?

By focusing on customer performance as its real product, GE Plastics has become an industry leader and claims an expanding market share. The Pittsfield, Massachusetts-based division of giant General Electric Company assembles industry-specific teams that help customers develop new products and process technologies, and design manufacturing processes, that keep costs low and performance high. They also send follow-up teams to uncover problems in customers' plants. Too much scrap? Trouble with yield or inventory turns? The GE Plastics performance team works side by side with its customers to design solutions, and put them into practice.

Results? GE Plastics' productivity programme saved its customers more than $68 million in 1995 alone while GE Plastics experienced an 11 per cent increase in revenue.

Just how intimate can you get?

Imagine a company that sends its executives into its customers' basement workshops to watch over their shoulders and then to trail them to the hardware stores.

Expensive? Very. Productive?

By learning what its customers really want for their projects, toolmaker Black & Decker recaptured its flagging do-it-yourself market, fighting back strong challenges from Makita and Sears. Like anthropologists, B&D marketing executives studied 50 male home-owners ages 25 to 54 as they used power tools to work on projects. The executives aimed to discover exactly why users favoured certain tools over others. Dissatisfaction was high. Do-it-yourselfers wanted a cordless drill with enough power to complete a good-sized job. They wanted sanders and circular saws that didn't kick up clouds of sawdust; safety mechanisms that would instantly stop saw blades from spinning when they switched off power; a hotline for questions about home-repair problems. Never before had customers so clearly voiced their concerns.

Results? Do-it-yourselfers got equipment that matched their wants: B&D introduced its Quantum line of saws, drills, and small power tools, priced from $50 to $120. The market responded quickly: Introduced late in 1993, by the end of 1994, Quantum surpassed its sales goal and was already upgrading its tools to QuantumPro.

Just how intimate can you get?

Imagine a small company - with hundreds of customers that fires all but the toughest of them.

Risky?

Absolutely.

Rewarding?

By focusing on a few stretch customers, Nypro, Inc, a Clinton, Massachusetts-based plastics-injection molder, transformed itself from an undistinguished also-ran to an internationally heralded leader in zero-defect production. Nypro searched out sophisticated customers, initially targeting cutting-edge manufacturers of health-care products whose needs for product safety demanded far higher specifications than any existing injection process could deliver. Nypro designed new injection processes for each customer, sharing insights with the customers' own engineering and marketing teams to solve their specific problems. They worked together: partners in the search for innovation. Nypro situated its new plants next door to its customers and integrated its new process with theirs.

Results? Nypro's customers go more sophisticated products produced at lower cost with a faster cycle time and fewer defects. For its part, Nypro saw annual net income rise from less than $1 million on sales of $50 million to nearly $13 million on sales of $197 million, in less than a decade.

The commitment of intimacy

The core of customer intimacy lies in a simple but radical commitment: to deliver results. Not satisfaction, not delight, but the best possible solution to an individual customer's needs. Customer-intimate companies can sell virtually anything: plastics, insurance, auto seats, tools, flowers, fitness gear, trucking services, custom-crafted electronic components, or outsourced data management. But whatever they're selling, their commitment to their customers' best results remains the same.

Simple logic lies behind that commitment. Customer-intimate companies know their customers don't buy a product or a service. They buy its benefits. The bigger the benefits, the more product or service they'll buy a result that pays off for buyer and seller alike.

What's radical about this is the depth of commitment its execution requires. To deliver best results takes all the imagination, initiative, empathy, and dedication a company can muster to stretch its understanding of its mission, its organisation, its culture, and its customers.

Listen to how customer-intimate managers sell. Whatever specific benefit they offer a potential customer, they always invoke the same eloquent commitment, which they can express simply and directly enough to pass the elevator test.

You know what I mean. You get on the elevator and head for a meeting with your prospect on the 27th floor but when the elevator stops on 3, the prospect walks in, looking harried. He's got to cancel, he says, but he'll be glad to listen to your pitch on the way up to his floor. This gives you may be 30 seconds to make a distinctive impression to get your value proposition across.

Customer-intimate managers know what to say. They'll talk results, hard and tangible. No generalisations. No partial solutions. They focus on the individual across from them, not a group or demographic construct. They understand that each customer's needs are unique and present an opportunity to deliver a unique solution. They don't say, That's too difficult or We don't do things that way. Instead they say, Let's explore what we can do for you.

Promises, when you get right down to it, are the souls of all businesses. But the promising soul of a customer-intimate company is special. Its soul is alive with the knowledge and experience that the customer's results drive its own results; the customer's wins are its wins; the customer's productivity increases are its productivity increases. Those convictions charge commitments with energy. Back in the elevator, your every word carries the electrifying subtext: You pay us upon performance. Performing for you is all that matters to us.

Of course, your promise must deliver more than electricity. Results promised must be results you will deliver: ambitiously conceived, carefully crafted, and relentlessly improved. That's where customer intimacy gets intricate.

An offer you cant refuse

How's this for a value proposition? We'll handle your personnel worries better than you can. And we'll set you free to concentrate on your strengths.

Or this? We'll give you a no-surprises new-product rollout. And we'll take complete responsibility for design and manufacturing whenever you ask, whatever you need."

Those are the kinds of promises that grab customers' attention and that push customer-intimate suppliers to industry leadership.

Ceridian Corporation is an information services company whose Ceridian Employer Services business looks for corporate clients with complex payroll, tax, or human resource problems, and solves them comprehensively, one customer at a time. It can, for example, handle all aspects of its customers' payrolls: Ceridian's software-which gives it remote access to the payroll database on any of a customer's personal computers - allows it to prepare the customer's payroll, print the checks, and deliver them to employees on time. Ceridian's total human resource solution packages include its unique employee-assistance programme, which helps the workforce solve such puzzles of daily life as eldercare, childcare, financial concerns, and workplace issues.

For the customer, the result is a happier workforce and the freedom to concentrate on a core competency. For Ceridian, the result has been a growing reputation as an industry leader, and, in only three years, sales and profits have grown dramatically.

Johnson Controls didn't simply design a seat for the new Chrysler Neon. The company took responsibility for an entire system, from product planning and styling to design engineering, source control, and assembly. Johnson's engineers worked day by day in partnership with the automaker's engineers to make sure product and process delivered what the market demanded. Johnson took responsibility for coordinating all the subcontractors, and, to ensure just-in-time integrated manufacturing, it built its new plant next door to Chrysler's.

Results for Chrysler? A better seat for a better car, thanks to collaboration.

Results for Johnson Controls? An enviable customer list that includes Ford, General Motors, Chrysler, Toyota, Honda, Nissan, Mercedes, Volkswagen, Rover, and Renault.

What does it take to deliver such mutually rewarding results? How does a company move from the concept and promise of customer intimacy to its practice and profit? How do promises made become promises delivered?

There are three principles to follow - the three imperatives, if you will, of intimacy:

Number one: Flex your commecial imagination.Search ambitiously for ever-better solutions to your customers' needs. It's never enough to see the world as your customers do. You have to see it more clearly. Probe their markets and their operations, their habits and their hopes. Imagination stretches your cusotmer's expectations and your own.

Number two: Cultivate your human connections. Intimacy is not a transaction, a one-shot exchange you forget once you book the revenue. It's a dynamic relationship of trust and openness that grows as you deliver results, dependably, time after time. Choose relationships carefully and nourish them to protect their promise of mutually improving productivity.

Number three: commit, commit, commit. Intimacy breaks ground with new demands and new realtionships. Meeting those demands and cultivating those relationships day by day, one customer at a time - takes agility and flexibility, with a culture, systems, measurements, and economics to match.

Those three principles - imagination, connection, and commitment - are intertwined and interdependent. As demanding as each one is, you must pursue those principles simultaneously or you will fail.

Flex your imagination

When a customer tells me I should treat him like a king,

I know to watch my wallet, one business executive told me. He could cost me a fotune.

His point was well taken. Kowtowing to your customer's every wish or guideline guarantees trouble. Partnerships founded on radical inequality just can't last. But that executive had another, more subtle, point to make. It's equally true that most customers don't have the foggiest notion of what the best result might be. So the first imperative of intimacy is to exercise your commercial ima-gination: Find that single best res-ult, and direct your customer to it.

Direct doesn't mean that the customer must knowtow to you; it means simply that you must lead the way forward. Understand your customer's needs, their identity, and potential. Take responsibility for their success.

There's truth in the old saying that when customers ask for a drill, what they really want is holes. Delivering the right drills means asking what kind of holes they need.

But that's only your first question. Intimacy demands that you understand the customer's business better than they themselves do. Why do they need holes? What do they hope to accomplish? How do they hope to accomplish it? Do they need help with the drills?

Do their people need training? Do they need help purchasing related equipment and supplies?

I'm not referring to such initiatives as offering a broader range of products or services or imaginative responses to service mishaps. As we have seen, those are reactive activities: They respond to what customers ask for or expect. Flexing commercial imagination is proactive: You must get to the heart of customers requirements, shape their behaviour, and steer them to new, ever richer solutions. It means exploring tomorrow's possibilities rather than yesterday's solutions. There is always a better way. Gather information and apply your understanding: The more solid intelligence you get to nourish your company's creative faculty, the brighter and sharper it inventions. Encourage openness: Information hoarded is information squandered.

How deep will a customer intimate enterprise probe? As deep as it takes to discover its customers'real needs. For Black & Decker, it meant taking an anthropologist's approach. For Microsoft's Eric LeVine, it meant a month of shuttling from law firm to law firm, watching customers use their word-processing software, keystroke by keystroke. For industrial cutting-tool manufacturer Kennametal, it meant sending 300 employees from its factory to its customer's factory, so they could all see firsthand the job Kennametal's tools had to accomplish.

Customers, unfortunately, often don't know or can't express what they want; more often still they don't know what they need. So customer-intimate suppliers will educate them, define their expectations, and teach them how to get the greatest benefit from their purchases.

Calyx & Corolla, the San Francisco-based mail-order flower company, solves those problems by making it easy to purchase flowers-by mail, fax, or phone. Furthermore, C&C steps in to help customers select just the right flowers for special occasions and to find new ways to use flowers as part of their everyday decor. Customers know they can consult C&C's plant doctor by dialing an 800 number for coaching on how to care for their flowers and plants.

Wisconsin-based Quad/ Graphics does much the same for the commercial customers who buy its printing services. Catalogue and magazine-production (CAMP) customers flock to CAMP/Quad for two or three days of fun and instructive seminars on the details of innovative printing. The better its customers understand printing, Quad believes, the better their printing will be.

The mass-market retail customers of Bollinger Industries, a leading distributor and marketer of such exercise accessories as jump ropes, dumbbells, and exercise mats, have come to expect Bollinger's distinctive marketing presentations and displays, customer service and support, inventory management, and cooperative advertising.But those customers' customers? For example: Joggers suffer shin splints and weight lifters pull muscles. But the sporting goods aiseles stocked no remedies. Bolinger responded by developing more than 40 kinds of sports medicine and health and safety products.

The results were astonishing. Bollinger's retail customers' stores attracted more shoppers whose individual tabs were larger than ever before. Bollinger's new products contibuted handsomely to its top line. And consumers were happier, too: They took Bollinger sports accessories to the gym, and when aches and pains overcame them, they treated themselves with other Bollinger products.

Cultivate your connections

Too many business managers think traditionally when it comes to company-to company relationships. They think compete, or they think merge and acquire. Anything in between is discomforting, if not unintelligible. They, therefore, keep their suppliers at arm's length, pitting vendor against vendor in search of the temporary advantage. They don't allow themselves to discover what cooperation could do for all of them.

Intimacy, however, demands the better way. Intimacy demands connection, a working relationship grounded in trust and built over time. The daily give and take between customer and supplier, searching together for mutually beneficial results, form the foundation of genuine intimacy.

Trust doesn't develop on its own. It takes honesty and openness, an eagerness to understand one another's strengths and weaknesses, and willingness to share information and intelligence. And trust doesn't develop overnight. Supplier and customer alike must believe that each is upholding its end of the deal. They must define expectations clearly, explicitly, and mutually. And both must meet those expectations. Call it the no-surprises imperative: the confidence that the other side will come through, time and time again.

You must custom-craft each connection, like every best result, based on the free exchange of specific intelligence concerning needs, attitudes, habits, and behaviours. But not every prospect has the potential for intimacy. You must choose your customers and your connections carefully. Are they open to collaboration, or are they caught in the traditional web of suspicion? Do their values and their economics fit yours? Many customer-intimate companies look for stretch customers customers whose needs test their abilities and, as a result, promise the greatest potential for dramatic results.

Launching a relationship is hard work. Making it work is harder still. How can you instill confidence? Can your solution expand to cover other aspects of your customer's needs? Are there ways to improve communications? Can you assume greater responsibility for your customer's results? You must cultivate and enrich every customer connection. Discard the old styles of communication and mistrust. Destroy the us-versus-them barriers and distinctions between supplier and customer.

For Ohio-based Caliber Logistics, Inc formerly known as Roadway Logistics Systems (ROLS), it means tackling a customer's toughest problem. By 1991, the shipping department of Libbey-Owens-Ford (LOF), one of the nation's largest producers of automotive-safety and architectural glass, was in chaos: to many vendors, too many unnecessary expenses, and administrative costs that were way too high. There was neither a central database available to track its purchases nor a way to leverage its volume.

ROLS viewed the LOF situation as a challenge. It shouldered the task of simplifying and streamlining the connections between LOF's 12,000 vendors and its 105 plants. It designed efficient inbound and outbound tracking systems and replaced the annual deluge of 83,000 freight bills with 52 electronic transmissions-one each week.

Results? In the first year alone, ROLS cut LOF's total logistics costs by more than $800,000.

But Caliber Logistics knows that it must continue to nourish the LOF connection. To keep their connection flourishing, the two companies must continue to work together to uncover sources of savings. Some companies strengthen productive ties with their customers by broadening their connections. They parlay their customer's hard-won confidence into searches for new ways to further productivity.

Most innovative customer connections illustrate an interesting transition. As suppliers and customers learn to work together, building confidence as they grow, the lines of distinction between them grow blurry, as if the two were different aspects of a single organisation, jointly pursuing mutual success.

Look, for example, at the relationship between Marshall Industries the giant electronics distributor, and contract manufacturers Diagnostic Instrument, one of Marshall's larger accounts. An outsider would be hard-pressed to tell where one company ends and the other begins. The two companies sell together. They forecast together. They've abolished separate purchase orders, bills, invoices, and accounting. They use software that links the two of them, allowing them to run their consigned material system jointly. The Marshall's account rep even sits in on Diagnostic's purchasing meetings. We kid him all the time that we're going to give him a Diagnostic Instrument time card, Diagnostic's CEO James Hashem says. Weve already given him a desk, a chair, and a telephone, and he's on our E-mail as well as Marshall's. It certainly cuts communications time, and time is money for both of us.n

Customer Intimacy

Fred Wiersema

Published by Knowledge Exchange

Distributed by IBD, New Delhi

Pages : 214; Price : $20.