Rick O’Dell wants quality at Saia Inc.
It’s not a revolutionary desire as president and CEO of the trucking company [Nasdaq: SAIA], and it’s probably not something that would get his shareholders overly excited in that simplest of phrasing. But, when you define quality as meeting customers’ needs and working to solve their problems, then it becomes far more important in anyone’s mind.
“Some people would tell you that quality costs more, and to some extent, that’s right, but sometimes you can be more efficient when you can do it right the first time,” O’Dell says.
A lot goes into a freight shipment, and one small mistake along the line can cost you money. If freight is damaged, it could require a reship. If it’s late, that may result in a fine from the shipper. A mistake in the warehouse might result in a missed shipment or one that’s not as streamlined as it could be.
It’s all part of the reality in running a $849 million trucking company.
“To the extent that you can take those defects out, not only can you make the customer happy but you’re also more efficient,” he says. “When our on-time service is at high levels and the phone doesn’t ring in customer service and I don’t have to spend time explaining why their freight is not already delivered — there’s a price for having quality, and there’s a price for poor quality too — it’s called rework.”
To be as efficient as possible to maximize revenue, O’Dell focuses on knowing what customers think, adapting his business to meet their needs and working to resolve their problems when they come up.
Know what customers think
The only way you’re going to be able to meet customers’ expectations is to know what’s going on inside their head. O’Dell uses both customer satisfaction surveys, where he gauges his own customers, and competitive surveys, where he gauges how Saia ranks compared to the competition in the eyes of both his customers and potential customers.
“One benefit you have from survey data is not only have we used the surveys to figure out how to improve our own performance, but sometimes, through a survey, you may find out that there is a competitor that has a perceived weakness amongst their customer base, so sometimes we use that for tactical selling against the competitor,” he says. “You do the research to figure out your benchmarking, where you stand, what you need to do, but sometimes you find opportunities to utilize it for different purposes.”
For example, if you do a competitive survey and find out that XYZ Co. has a problem with cargo claims, you can then ask a potential customer who identifies its carrier as XYZ Co. if it has problems with this area. You can segue into how you can address that issue better.
When forming a survey, be strategic.
“You have to make sure you’re getting the critical information but the survey can’t be too burdensome,” O’Dell says. “You have to really look through and say what are you trying to get to and how quickly can you make the survey.”
Don’t slant the participant toward the answer you want. For example, if O’Dell is doing a competitive survey, he may not mention his company as the one conducting it or even ask about Saia specifically.
“Like in this area, who’s the best carrier; you leave it open-ended and see how many times your carrier and the competitors show up,” he says.
He also uses focus groups to find out what customers think. Sometimes he invites customers in based on feedback from sales reps, but he also does blind focus groups.
“We don’t even tell them who the company is, and a lot of times, we’ll pay a small fee to get them to come, and sometimes you get a third-party to facilitate the focus meeting, and you either tape it or sit behind the glass wall,” he says.
Having participants not know who’s sponsoring the group helps achieve honest feedback.
For example, when Saia expanded into the Northwest a few years ago, there were smaller competitors that he discounted as true competition.
“Even some of the salespeople had told us before, ‘We have to consider those people competitors,’ and we would just kind of say, ‘No, that’s not the case,’” O’Dell says. “We were looking more at FedEx and Con-way and some of the largest people out there are our competitors, and [customers] said, ‘No, you have to consider these other people, too.’ The customers set us straight.”
After he’s done initial surveys and focus groups, he can use that data to drill deeper in other surveys.
“You try to focus your questions around those items they’ve already told you are most important,” O’Dell says.
The more you do these surveys, the more you’ll learn about your reputation in the market.
“You can see if your brand is strengthening, and you can see, too, if a competitor’s brand is strengthening,” he says. “Why might that be happening? Your research drives if you need to do some additional work or not. If it’s trending pretty well, maybe you don’t need to make a lot of changes. But if you see something that looks out of order or unusual, you need to figure out why that is and what you might need to do differently.”
Adjust to meet customer needs
Once he knows what customers are really looking for and thinking, then O’Dell makes changes to better meet their needs and expectations.
For example, in the situation of Saia’s Northwest expansion, the feedback caused him to re-evaluate his coverage area because, for some customers, it was important for him to go into the remote areas and not give that freight away to another company.
“Sometimes you have to accept that they’re a specialist and maybe they want to be the one that goes up the mountain and delivers that freight. There are certain markets that there are only a handful of smaller players that go up there, but you also have to look at it and say, ‘Well, they go there, does Con-way go there direct? Does FedEx go there direct?’
“You have to look at the marketplace itself and see if you’re putting yourself at a competitive disadvantage by not providing that particular service.”
But you also have to be careful in listening to clients.
“Sometimes the handful of customers may lead you in the wrong direction, too,” he says. “You have to go through a validation.”
For example, sometimes customers may tell him that they don’t care if it’s not Saia going up the mountain to make that tough delivery, and everything is rosy until something goes wrong.
“It all sounds good that it doesn’t really matter, but part of your product offering and your service is really exception management and problem resolution, and when there’s a handoff, you don’t really control it anymore,” O’Dell says. “You don’t have the access to the same type of information to handle a customer’s inquiry or question. When people tell you something, you have to validate it through your experience or some other method.”
That’s where the surveys and focus groups can come into play again. Typically, once a year, O&#
x2019;Dell polls salespeople to see what they can do better and get that kind of feedback.
“Sometimes when you look at rolling out a new product or pricing offering, we’ll pull a group of people together from operations and sales that have different experiences and backgrounds or things from different companies and run it by that group to see what kind of feedback they have or if they have experience from a different company to say what they think the customers will feel about it,” he says.
Sometimes you have to change regardless of whether you want to or not, but O’Dell says to look at it as an opportunity.
For example, one of his major customers, Wal-Mart, instituted a new policy: Before, Saia was able to deliver things early and Wal-Mart would store it, but now, everyone gets a window — if it arrives early or late, then the carrier would get fined. He now has to hold those shipments for longer periods of time.
“Sometimes you get an event that will impact a large portion of your customers and can enhance your product offering, and then you can take that and go offer it to others,” he says. “When you see things like that, it’s how you adapt to that. We may not necessarily get paid more for doing that, but we can get more business and, over time, you may get paid more. … Things like that, if you’re monitoring what’s going on in the marketplace and how you need to adapt to that, can provide some opportunities.”
Know how to solve problems
Despite his best service attempts, O’Dell knows that sometimes his team will mess up. He starts with establishing a defect management system — metrics that will help determine when this happens — but he breaks it down to small details.
For example, instead of simply looking at whether a shipment was on time or not, he breaks it down further, such as, was it not loaded, was it loaded but not moved on time, did it arrive on time but not moved across the dock, etc.
“You really have to look at your customers and say, ‘What are they looking for?’ and then make sure you build the metrics in there and take your defect management system down to as little details as possible so you have accountability and can improve those key drivers,” he says. “Periodically, that has to be re-evaluated to see if there are ways to improve it or if there are better processes or if our priorities change. You have to be adaptable to that.”
With metrics in place, it’s easier to communicate with both customers and employees about the problems that come up.
So if O’Dell looks at his defect management report and sees four shipments that failed on someone’s shift, he can address that with the employee to help him or her improve.
“You deal with that, and you tell them why, and you review it with them and what other tools they could have used to make a better decision,” he says. “That’s ongoing.”
But he also has to address the problem with the customer.
“First of all, obviously, you have to be open and honest with them and acknowledge what the issue is,” he says.
Then he has a team create a corrective action plan that outlines what the company will do in the future to eliminate more problems.
One of the keys to resolving customer problems is to know what they are and how to handle them. At one company, the person making the shipping decisions may be the vice president, while at another, it could be a warehouse worker. Know who you’re dealing with and what perspective that person is coming from. You also have to handle the situation how you would handle it — not how someone else would.
“Part of it is you have to be yourself,” O’Dell says. “People see through that if you’re not being sincere. You have to get to know the person and figure out how to read them. You have to know yourself, too, and what your strengths are. If you’re like me, you’re a finance person and you’re not the best jokester probably and you have to be a straight man and know that other people may have a way to make fun of the situation and come out of it that way. But you have to figure out what your set of weapons are.”
And while you want to listen and work to resolve their issue, sometimes you also have to point out the facts — if he handles 1,400 shipments a year for them and only three are wrong, that’s a good track record.
“It doesn’t help that one person that one day, but just because you made a mistake on one shipment or had a breakdown or whatever the case may be, it doesn’t mean you’re a bad service provider,” he says. “Sometimes you have to stand up for yourself and show people the data that reminds people of that because they get caught up on the problem they have with one shipment. So while you want to be sympathetic and understanding, sometimes you have to stand up for yourself, as well.”
Knowing when to do this, though, comes back to knowing your customers and their needs.
“Part of it, too, you have to know that some customers will take that, and other customers are going to be offended,” O’Dell says. “Some people probably just want you to be quiet and listen to them, and come back the next day. That’s one thing about salespeople and customer service people: You have to be a bit of a chameleon and figure out what’s the way to handle this situation for this person or customer.”
HOW TO REACH: Saia Inc., (800) 765-7242 or www.saia.com