A spot of pampering is all it takes to win a client’s heart and ensure it never wants to let you go. Building reports on how one contractor plans to cash in by supplying that little bit extra
Here’s a challenge. Imagine you are the business development director of a medium-sized contractor. You do most of your work for a few big clients, and although there’s no shortage of orders, there’s no sign of them increasing much, either. How, then, are you to increase your turnover and profit?
The industry’s standard response is quantitative: to gamble resources on bidding for more work from more clients. You might have to squeeze your margins a notch or two tighter, but you also stand a chance of increasing gross profit. Sounds like a good idea? Well, Mike Turner, who is the business development director of a medium-sized contractor, has a smarter solution, and it involves installing his own staff in B&Q …
Turner works for Ian Williams, a property maintenance company with a turnover of about £80m. One of its main clients is Norwich Union. When one of the insurer’s policyholders suffers property damage, Ian Williams repairs it. So, one way that Turner can boost his company’s performance is by making sure that it gets the maximum amount of work from this client. And to do that, it has to offer something that nobody else is – namely, gold standard customer service. Hence the man in B&Q, guiding Norwich Union’s customers to the right spot in the miles of bewildering products, arranging delivery and making sure things go as well as possible – and thereby, of course, casting a flattering light on the Norwich.
This approach is made financially logical by the rigorous way the insurance firm procures its construction services. This is based on three key performance indicators, or KPIs: customer satisfaction, cost performance and contract compliance. Contractors are graded on these criteria, and only those with the highest scores win work.
Even though the firm has yet to install that man in B&Q, Ian Williams has twice been at the top of the Norwich Union’s league, and this success has convinced Turner the future lies in liaising between client and supplier. If his approach to B&Q bears fruit,
not only will Ian Williams be the customer’s friend and adviser, but it will also go so far as to offer them designated car parking spaces and even special opening times.
Cutting both ways
This customer services ethos has been extended to Ian William’s own supply chain. The company realised it could improve its performance if it applied the Norwich approach to its own suppliers. It therefore approached companies such as Symphony Group and Permadoor with partnering agreements.
Together, the contractor and its suppliers established two sets of KPIs so that each side could judge the other and build up long-term relationships. Ian Williams judges its suppliers on a scale of one to six on quality of documentation, delivery performance, problem solving, attitude to partner, technical support and knowledge. Suppliers use the same scale to rate Ian Williams on quality of documentation, how much notice it provides of a cancellation, problem solving, attitude and site conditions.
Turner says the scoring system acts as an early warning system for potential problems for both parties. Suppliers have been pulled up for poor quality documentation and Ian Williams has worked on its dispute management techniques.
Once the partnering agreements are bedded in, the client can start to look for savings. The company uses the KPIs to create its own league tables and only chooses those at the top. A good example is the company’s relationship with hire equipment companies. Ian Williams previously worked with between 30 and 35 of these, but has now cut this to two, HSS and Speedy Hire.
Turner denies that this system has been used to push out smaller suppliers without the resources to provide the same level of service as larger companies. “At first there was a fear that the agreements would be used to rationalise our supplier base,” he says. “We make sure that new companies are constantly being added to the list, but if they don’t make the grade, they will be relegated.”
A model approach
The benefits of this cannot be underestimated, says Turner. Both sides have to perform and, with the scoring system, standards – including the crucial customer service level – have soared.
Turner says this model works for Ian Williams because it directly employs its own workers – it has more than 1100 staff – meaning there are no subcontractors or specialists on partnering agreements. This is crucial for the company’s shift into the services sector, as it can handpick the teams that it offers to clients.
Future plans for Ian Williams are focused on this customer services approach. The company is continuing to develop its supply-chain partnering agreements, with an emphasis on how suppliers can learn from each other. Not only will this increase competition between its suppliers, and bring prices down, it will also ensure the company offers the best non-cost-based package.
Furthermore, Ian Williams is embarking on a customer-opinion exercise. It has devised a feedback leaflet that will be sent to all residents of Raglan Housing Association to establish a set of satisfaction criteria. If all goes to plan and these criteria are extended to other clients’ customers as well, the maintenance company will have set in motion changes that could affect the culture of the whole industry in years to come.
“It’s quite logical, really,” says Turner. “If we ensure that the customers are provided with the best service possible, then our clients will be happy and will continue to use our services. It may not be the traditional role of a maintenance company, but it’s where I believe the future lies and it seems to be working for us.”