From Customer to Partner
As you get closer to your profitable customers, the relationship may take one more step: collaboration. By helping those customers increase their profitability — working on long-term planning, say, or winnowing the supply chain — you can become about as close to indispensable as possible. “Companies exist within four walls,” says Byrnes. “What a company should do is create a bigger box around the business by moving the boundaries.” Perhaps in a variation of that spirit, Google and Procter & Gamble began swapping employees last year, with two detergent-brand managers working inside the Googleplex and a pair of Google employees shifting to Cincinnati. Presumably, P&G wanted to know more about online marketing, while Google soaked up smarts about customer research.
The flow of information between companies can lead not only to increased business between them, but also to wholly new opportunities. Until recently, Corporate Transportation Group (CTG), a “black” car service based in Brooklyn, counted among its customers both Bear Stearns and Lehman Brothers. Last year, the company began selling its proprietary software to similar services, which “gets us inside some interesting places,” says CFO Vadim Zilberman. “We realize things that are done differently.” As for his own customers, “they love to be visited as much as possible, not just during negotiating season,” he adds.
Last year, while visiting a bank customer, a CTG account manager picked up word of a new building going up in midtown Manhattan. CTG became the exclusive supplier to the building’s eventual tenants by creating a customized dispatcher-free platform.
The ultimate alliance is what Byrnes calls “customer operating partnerships,” which can easily boost business by at least 25 percent. In these pacts, vendors and their valued customers braid the separate strands of their supply chains together. The customer isn’t just strategically positioned to pick up additional business; operating deep inside the business, it has now built a barrier to entry for potential rivals. “It makes it very hard to displace,” says Byrnes. The companies naturally broaden their contact with one another. So, for instance, instead of dealing exclusively with a price-driven purchasing agent, the supplier’s management team will interact with higher-level executives, who tend to be oriented more toward value. They are likely to be more receptive when you pitch them on the idea of crowning you “a master supplier” and offer to manage their inventory. By streamlining the inbound product flow and consolidating their billing, you’ll save them money. Your own profits will fatten as you find opportunities to make the supply chain more efficient, cutting out any redundant or disjointed steps.
The idea may take some time to gain traction. One pasta maker wanted to take over a supermarket chain’s ordering process. Sensing reluctance, the pasta company came up with a plan designed to reassure them: We’ll park a truck full of pasta in your lot, the supplier said, and anytime we don’t deliver you can take what you need — for free. The truck wasn’t there for long. Says Byrnes: “You want to find a way to extend your business far into their operations for your mutual benefit. You’ll grow together.”