Steve Goodburn, a Director at mdj2, observes that those who maintain a customer-centric approach to productivity effectively walk their trade customers to the till, ensuring that every step of their experience aligns with their needs and expectations.
As Spring appears on the horizon and daffodils start to bloom, builders merchant yards are bustling with activity, yet the real impact of impending payroll cost challenges looms large. It raises the question, how many merchants will be full of the joys of Spring, and how many will still be left feeling a chill?
We’ve seen too many businesses fail by cutting costs without considering the customer impact. The key to not weakening your proposition while taking costs out is to only make reductions that the customer doesn’t notice.
While cost reduction is the intended outcome, adopting a customer-centric approach to productivity involves getting the right balance between both efficiency and effectiveness.
Efficiency means streamlining to find the simplest, most cost-effective methods. Although this often results in labour-savings, it’s not about indiscriminate cuts. Changes might involve reducing or redefining roles, reorganising reporting structures, or evolving systems and processes.
These actions are strategic, not merely blanket cost-cutting measures. The effectiveness component ensures that any changes continue to meet customer needs. Both aspects must work in tandem to ensure that efforts to cut costs do not compromise service and sales.
The pitfalls of narrow cost-cutting
Every change needs to benefit your customer – and ideally, your colleagues as well. Maintaining this focus is crucial, but you can lose sight of it, especially when under pressure to cut costs. We all know time is money for the trades so you can’t keep them waiting.
Indiscriminate cost-cutting can erode an organisation’s value proposition
Without understanding customer reactions, reducing costs can initiate a ‘doom loop’. Ultimately, you can cut away at the very heart of your offer, until you go out of business.
Putting efficiency and effectiveness at the heart of productivity
‘Will my trade customers notice this change, and if they do, will it be a good or bad thing?’
This question is invaluable because it reflects the fundamental LEAN principle that customers identify what’s valuable. If it isn’t valuable to them, it’s waste.
Efficiency and effectiveness are about waging a relentless focus on waste, which means eliminating expenses that do not add value and refining methods to achieve more with less. Identifying the most effective changes requires a deep understanding of operational realities.
An outside-in perspective can be helpful in this context, enabling decision-makers to see which changes will genuinely benefit their operation and enhance customer value.
Grounding your decision-making in your reality
A big chunk of effective management hinges on making informed choices that drive up standards and sales. The learning from many projects that often the most insightful productivity answers come from those in more junior ranks - those who are closest to the customer and the day-to-day work.
Builders' merchants need large teams to operate effectively, which means the impending rise in NI and Minimum Wage will hit hard - so it’s about looking at each piece of the puzzle including trade counter, telesales, picking, yard teams and the delivery fleet to identify changes that can improve productivity.
Significant savings from consistent experience
The resulting savings can be significant, with seven figures secured for our most recent hospitality client. This project initially aimed to boost field team effectiveness, rather than focusing on cost reduction”.
The organisation faced a customer experience challenge. Operating multiple consumer brands, each with its own identity, the goal was to enhance consistency in customer experience across these brands without compromising their unique personalities or standards.
This required distinguishing which operational elements were universally mandatory and which were discretionary, allowing brands the flexibility to adapt to local customer needs.
Our analysis uncovered several areas for improvement, including excessive communications and travel, confused accountabilities, and inconsistencies in compliance, audit, and IT.
By implementing these recommendations, the business will not only improve operational effectiveness and deliver better, more consistent customer outcomes but also achieve a seven-figure cost saving.
The heart of productivity in consumer-centric sectors
Getting to the heart of productivity in builders merchants where they are reliant on their people to deliver and differentiate their customer offering is indeed a labour of love. It requires a commitment to place customer satisfaction at the core of every leadership decision. But, as anyone who has ever nurtured a strong personal relationship knows, the more attention you pay to the things that truly matter, the more rewarding the relationship becomes. As businesses finesse their preparations for Spring, the most astute will recognise an opportunity. They will reinforce that showing true passion in business means continuously putting their customers at the centre of every decision.
mdj2 is a consultancy specialising in solving critical challenges in the trade, retail and hospitality sectors.
