“Mirror, mirror on the wall…”
Reflections on carriers and customer feedback
Few companies today would dare to turn away, even for a moment, from their image in the mirror of customer opinion. It has become unthinkable in a business world where to be “customer-driven” is a presumed prerequisite to success, codified in ISO standards, Six Sigma programs, Total Quality and countless other guides to growth and profitability.
As a result, there are almost as many ways to capture customer feedback as there are carriers to implement them. Feedback in and of itself, however, is just a reflection, and an imperfect one at that — fascinating perhaps, but basically useless unless it triggers action guided by a clear business purpose. Good fleet managers have always known this, of course, and viewed customer input through the lens of common business sense.
“We capture the input we receive from customers every day,” says Clifton Parker, president of G&P Trucking, Inc. and chairman of the Truckload Carriers Association. “It is not a special job anymore, it is just part of how we do business. It adds what I consider to be another level of accountability, reminding us all that we are responsible for every load.
“For example, if a customer calls with a complaint, we have a place on-line for the person taking that call to enter it and we have someone assigned to work the problem. Complaints (and compliments) are recycled back into the business planning process for the next year,” Parker explains. “We also have a feedback function on our website where customers can directly enter their comments.
“As a company, you are always getting better or worse, never staying the same,” he adds, “and so we try to make sure we are listening and responding. Our customers' input constantly feeds into our business planning process for the year ahead. For example, our new document retrieval system came from customer input. Customers told us they did not want to play phone tag to get access to their paperwork.”
For Contract Freighters, Inc. (CFI), collecting customer input is also all in a day's work, according to Herbert Schmidt, president. “A vice president does a telephone survey with every customer after they've moved their first 25 loads with us,” he says. “We also do random customer surveys and have a formal system in place for researching and responding to any other complaints or comments we receive. I was skeptical of the survey process at first because I don't like surveys generally, but this program has been useful for us. We've made changes and added services based upon customer input.”
“At Knight Transportation, we still firmly believe in doing customer research by picking up the phone and giving customers a call,” offers Robin Stitzinger, v.p., customer management for the Phoenix-based fleet. “We work especially hard to keep in close touch with our top 100 customers. If you build good relationships, then it is much easier to talk to the customer when there's a problem,” she adds.
“Customer managers here all begin as driver managers. I began in our container operation managing five trucks. That grew to 70 trucks before I took this job,” Stitzinger says. “Coming up through the ranks also helps to give you a real feel for the business.”
CHANGES ALONG THE WAY
Once upon a simpler time, the purpose of soliciting feedback was to create satisfied and loyal customers by addressing their problems and refining your products and services to keep them happy as a group. Then customer loyalty evolved into customer retention and mere customer satisfaction was supplanted by customer delight. While this made the rationale for collecting customer input rather more scientific and pushed the emotional pitch an octave or two higher, customers were still largely regarded in the aggregate and their feedback used to create programs for all.
To move beyond this high-water mark of generalized customer bliss required a major shift in purpose and in customer feedback methodology to understanding and meeting each customer's unique needs, one customer at a time. “The new model of successful business will be based on understanding specific customers, their requirements and their expectations,” explained Martin E. Hanaka and Bill Hawkins in their 1997 essay, “Organizing for Endless Winning,” (published in The Organization of the Future, edited by Francis Hesselbein, Marshall Goldsmith and Richard Beckhard. San Francisco: Jossey-Bass Publishers, 1997).
ALL CUSTOMERS ARE NOT THE SAME
Hanaka and Hawkins were right, but the focus on understanding and serving customers as individuals has brought with it other unexpected results. For example, as companies began to study their individual customer's needs and expectations, they discovered that all customers (even all loyal customers) were not of equal value to the company. This is the other side of the individualized customer service equation, individualized customer worth. It creates a balanced, reciprocal approach to serving customers in which services and benefits are weighed against the value each customer brings to the company.
“Relationships and loyalty are still extremely important to us and they always will be,” says Patrick Quinn, co-chairman of Tennessee-based U.S. Xpress Enterprises. “Today, however, we also have the ability to cost out everything, from deadhead miles, to time spent waiting, to the time it takes to load or unload. This has allowed us to segment our business well enough to see where we have to make changes or even ask for price increases in order to stay profitable in a particular area of our business. When you have accurate data to share with customers, it also makes it much easier to come to an agreement; you can talk together about real costs and value instead of debating prices.”
“In the past, carriers tended to simply price by the mile and all miles were treated the same,” notes another truckload carrier. “Now, most fleets managers are very aware of the fact that some of their customers take much work than others and, therefore, create much less net revenue. For example, suppose I am doing business with a broker for backhauls who typically asks for lots of information up front, expects cargo-tracking reports every hour and yet is a very low-margin customer.
“Armed with what I know about that particular customer and my costs to handle his business, I can make informed choices,” he continues. “I might share my cost data and try to negotiate a price increase; I might let the customer take his business elsewhere so I can devote my resources to more profitable business, or I might implement an on-line tracking system that will enable him (and other customers) to check his own load status.”
Some carriers today don't actively seek customer feedback, and they don't have to, shippers and consignees voluntarily provide it themselves in the form of regular performance reports that rank all their carriers in order of value. “We've been through a whole series of customer feedback programs over the years,” says Dean England, COO for C.R. England, Inc., a Utah-based company more than 80 years old. “We gathered a lot of good information, but decided that what our customers really want is to have their freight delivered on time and to be notified of problems in advance whenever possible. Now we are devoting all our own resources to doing that instead of conducting more customer satisfaction surveys, and it has been a very good approach for us.
“That said, about 20 of our shippers give us regular reports on how we are doing. It brings our level of consciousness up and helps to keep us focused,” England continues. “We also provide feedback to our own vendors and suppliers about their performance. For example, we survey our drivers about their experiences at various truck stops and share that information with the truck stop operators.”
It is perhaps ironic that, in this customer-focused era, giving not gathering feedback may represent the next big opportunity for truck fleets to improve their productivity and their profitability. “Sure the trucking industry has been focused on the customer, but we've used the information to make changes to our own businesses, not to change our customers' businesses or the nature of the industry,” observes one carrier.
“Maybe it is time to trade collecting customer input for initiating dialogue and looking together at how we can create process improvements and efficiencies,” he continues. “After all, many of a fleet's biggest problems are outside their immediate control, factors like hours spent waiting to load or unload, docks that are difficult to access, traffic congestion, well-intended but burdensome regulations, the list is long.”
He has a point. For starters, perhaps it is time to begin providing more feedback, not just soliciting it. “People respect what you inspect,” says Clifton Parker. Maybe one way to increase respect for trucking is to start doing a better and more routine job of reporting to customers and others on the impact their actions have on freight movement from the trucking industry's well-informed and vital perspective. Think about how customer input has changed the trucking business over the past decade. How might input from truck fleets change the shipping business over time? There is only one way to find out.
Down in the data mines
“You load 16 tons and what do you get? Another day older and deeper in data,” the COO sings under his breath as he scans the latest customer satisfaction survey reports. “With all the data that pours through this organization, you'd think it would be easy to spot the problems and opportunities out there,” he mutters. “Well it's not easy at all.” Plenty of other fleet executives all over the country would certainly agree. Spotting trends and other valuable indicators buried in the mass of customer feedback and fleet performance data can seem as much a matter of luck as skill, but it's a critical prerequisite to actually using this information as a strategic planning and business development tool. It's no wonder some companies are turning to technology to help them with the job.
Data mining, the computerized, high-capacity version of good old-fashioned statistical analysis, is one such tool. It utilizes sophisticated algorithms, computer-based models and even artificial intelligence to help identify significant trends and potentially useful information hidden in today's heavily populated databases. Data mining technology has long been used in medical research, for instance, to help analyze information about thousands of patients or countless lab tests in the hope of finding patterns that may reveal a cause or a cure. A carrier, on the other hand, might use data mining techniques for any number of business reasons, from controlling loss to identifying opportunities for improving the profitability of marginal accounts.
Suppose our COO begins to wonder if the fleet's least-profitable accounts have any characteristics in common. The IT department is put on the task and decides to utilize data mining techniques to look at three databases at once: customers by net profitability, by cargo type and by lane. For good measure, they even throw those customer satisfaction surveys into the model.
“Bingo!” says the IT manager when he sees the results: many of their fleet's marginally profitable accounts do indeed fit a pattern no one had spotted. They are more likely than other customers to have freight that requires hand-loading, routine problems with reconciling paperwork and/or deadhead miles. Knowing this, the COO can now make some better-informed choices about pricing, routing and service for loads that fit this profile.
Recognizing patterns, as it turns out, is an invaluable skill when it comes to trying to make sense of customer feedback and other data. “To thrive in an information-rich world, executives need to be adept at pattern recognition,” notes the Harvard Business Review (“Spotting Patterns on the Fly,” November 2002). “While most executives rely on their intuition for spotting and analyzing patterns, a few business thinkers are starting to approach the problem scientifically.”
Data mining technologies can help executives zero in on meaningful patterns, but there are some basic techniques that may help improve the accuracy of so-called intuition. Here are some pointers derived from the article cited above and other sources:
Develop the habit of grouping information you already know into various “patterns” or sets of characteristics. For example, your best customers probably fit a basic pattern.
Compare new information against these basic patterns to check for fit. Then look for the aberrant characteristics. What really just doesn't match up? Why?
Rearrange information into new sets to see if new patterns emerge. For example, if you look at the database of your most loyal customers and the database of your most profitable customers, it may shed new insights on the value certain loyal customers do or do not bring to your business.
Don't be afraid to throw out old patterns as you learn more. Loads along a particular lane may have always been highly profitable, for instance, until the five-year freeway redesign project got under way.
Identifying patterns is actually a very methodical process, according to many experts, even if it seems like a flash of sudden insight. This encouraging perspective suggests that those who do not consider themselves to have good “intuition” still have the potential to cultivate it through practice.
The TLA Journal
The Truckload Academy Journal is a publication of the Truckload Carriers Assn. (TCA) designed to help fleets create vibrant and profitable knowledge-based organizations through a strengthened commitment to ongoing learning. The Journal appears quarterly in FLEET OWNER magazine and is also mailed to members of the TCA. It is made possible through the sponsorship of TMW Systems Inc. and the production support of FLEET OWNER.