What is Good Business?

What is Good Business?
Monday, September 10th, 2012 Scott Bossart

                I recently have had an experience with a small business owner that left me scratching my head.  As a business consultant, I probably tend to mentally scrutinize actions of those small business owners of which I am the customer.  Understand though, the level of standard is established based solely on the circumstance and situation surrounding the goods or service I am seeking.  In this particular case, we secured one vendor for a service and was dictated only one specific subsequent vendor could be used for an additional service in connection to what we were seeking.  This is where the term “Exclusivity” comes in.  Consider your own business dealings and how your connections have been established.  Do you have “Exclusivity” relationships established with your business?  Exclusivity from a perspective of you providing a service or product as the result of another’s contracts is one form.  Exclusivity from the perspective of you securing a sub company or contracted service as the only entity a customer must use, is the other form.  It solely depends on which side of the table you are sitting on.  The bottom line in either case is the combined end result will dictate customer satisfaction and define both businesses’ ability to provide a level of service to the market that keeps both businesses competitive.

                The provider is typically expected to bring in the customer base with the delivery of a product or service.  The supplier is expected to interact with those customers with a sub-service or product which is either directly linked or compliments what the provider is offering.  The nice thing about having an exclusive contract from a supplier perspective is the obvious position of job security.  As long as the provider markets and extends a value added service or product and is securing the customer base, the supplier business has and benefits from that customer base as well.  The most obvious pro for an exclusivity contract from a provider perspective, is a consistent known entity in dealing with nature of how you want to conduct business from day to day.  In either case, the level of expectation from your customer, is and should be, automatically elevated to a higher level.  Why, because of the absence of market competition for choice and forced continuous improvement to drive customer service.  If you are on the provider side of the exclusivity environment, your contract must have performance clauses built in for your supplier to drive continuous improvement.  If you are on the supplier side, you need to fully understand the level of expectation required to fulfill the performance expectations from your provider.

                This established situation requires self-driven continuous improvement and an urgency to deliver the best in customer service.  It requires even more attention to detail to ensure successful extension for the next contract review as well as the customer service is at or above the market competition even though little or no competition is present.  If either business does not hold up to the expected bargain, both businesses are impacted negatively.  Elevating this issue is the length of customer base that currently exists.  That is, how much product or service commitment exists out and into the future.  Adding risk to this type of situation is the lead of a secured customer base in the queue.  There is an understanding one of the best marketing opportunities is by word of mouth and customer references.  If there is a long lead of customers, and either the provider or the supplier does not operate at an elevated level of service, a negative word will get spread around which will negatively impact both businesses regardless if only one is not performing.  By the time the ripple effect occurs, the damage is already done and it takes far longer for recovery if a recovery is possible.

Customer service is paramount between both the provider and the supplier regarding exclusivity between two businesses when dealing with a common customer base.  Monthly communication should be established between both to include a review of each other’s performance to provide continuous improvement.  Quarterly reviews should be established by the provider side to ensure the supplier is performing at the contractual expected level.  Performance standards need to be established by the provider and fully understood by the supplier.  Without this type of business relationship, the providing business will ultimately be directly affected by the performance of the supplying business.  In both cases, the customer will lose in the immediate future and the business will lose in the long range forecast.  The relationship must be treated as two separate businesses and kept on a pure business relationship.  If personalities or personal feelings get involved, all three parties get negatively affected, the provider, the supplier, and the customer.  With any business, and a given market segment, there are multiple suppliers which would jump at an opportunity to become the next exclusive supplier.  Review and pick yours diligently, objectively, and thoroughly.

Stay Well

Scott B.


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