Customer service is the biggest factor in differentiating your company from competition. The Shamrock Cos. Inc.’s CEO, Robert Troop, has driven growth at the marketing solutions provider by giving customers an experience they can’t get anywhere else.
Shamrock’s mission is to be the premier provider of integrated marketing solutions that help customers build and protect their brands, drive revenue and create efficiency using the right mix of people, services and technology. Led by this mission and powered by the ability to offer fully integrated, progressive solutions for customers, Shamrock has been bringing value beyond the products and services it offers clients.
A big way the company has done this and continues to drive customer service to new levels is through its Raving Fan Feedback System (RFF). Shamrock’s customer service is so distinguished from the competition that the company not only maintains clients as loyal customers, but it inspires them to tell others about Shamrock and the way the company conducts business.
The goal is to make every client a “raving fan.” To make the raving fan system work, Shamrock is certain to make its day-to-day performance stellar, and processes are continuously improved and the envelope in always pushed in terms of quality, turnaround time and customer relations.
Data is collected through what Shamrock calls the Problem Solving Analytical Technique (PSAT), which identifies the problem, all possible reasons, measures occurrences against possible causes, determines real root cause, implements a corrective action and monitors results to ensure the action has been effective. All results are stored in a database for any department or plant to analyze trends, events and process weaknesses.
Since implementing the RFF and PSAT systems, Shamrock has increased manufacturing on-time performance, decreased turnaround time to under seven days, increased distribution performance, decreased delivery time, and decreased customer impacted quality events.
How to reach: The Shamrock Cos. Inc., (440) 250-2186 or www.shamrockcompanies.net
Some accounting firms customarily contact their tax clients only around tax season, an approach that can result in missed opportunities for tax savings. Skoda Minotti, led by Chairman Gregory Skoda, makes it a practice to stay in touch with its clients year-round, whether it is simply preparing a tax return or providing other services to the client.
All of the professionals at Skoda Minotti are instructed to take a proactive approach to client service, which enables Skoda Minotti to identify common needs among clients and, when appropriate, to fill those needs in-house. This was the case with several service offerings the firm began providing in recent years, such as professional staffing, business valuations, technology, telecommunications, litigation, small business services and marketing.
In addition to helping its clients grow via its business and financial services, Skoda Minotti keeps its clients updated on developments in the industries related to their businesses. On a quarterly basis, the firm sends its clients electronic updates with their choices from about 200 different industries.
Skoda Minotti publishes monthly e-newsletters with industry news and business articles for several of its niche service areas, and monthly and quarterly industry-specific newsletters covering information technology, real estate, construction, business valuation, litigation advisory, nonprofit and employee benefit plans. In addition, the firm’s professionals maintain a blog that is updated several times a week with news and analysis.
One of the most important customer service benefits that Skoda Minotti’s clients receive is the knowledge and expertise of the firm’s staff. Skoda Minotti’s partners have owned and operated businesses in the past, so they can provide insight to clients in that area. And the firm keeps its entire staff at a high level of technical expertise, with a commitment to offering 1.5 to two times the industry average of continuing professional education.
HOW TO REACH: Skoda Minotti, (440) 449-6800 or www.skodaminotti.com
“What’s important to you?” That’s the question employees at Today’s Business Products know to ask every time they meet with a client for the first time. Recognizing that every customer has unique and specific needs, the national provider of office supplies and furniture approaches customer service by focusing on the things customers say are important to them. They call it a “roll up your sleeves and get the job done mentality.”
Under the leadership of President Richard Voigt, Today’s Business Products recently celebrated its 27th anniversary, continuing to drive its goal of being the first name that people depend on for their office products. Today, the organization provides more than 50,000 business items for clients and taps its network of 40 regional warehouses to deliver to 98 percent of the population nationwide. Even with such a vast reach, transcending the competition hasn’t been easy. Two words have been critical in helping the company differentiate itself with customers: unsurpassed dependability.
Whether it means coming in early or staying late, the company’s customer service team members are ready to do what it takes to get an order right, meet a client deadline or make life easier for a customer or co-worker. This mentality stems from a culture that engages employees in partnership, customers, the community and the company.
The company rewards employees who embody customer-driven attitudes with programs such as its “Gold Star” awards, which gives team members gold stars to put on the wall to signify a job well done from clients, and the Bravo Award for employees who go above and beyond their job duties for a fellow employee or client. In order to help employees see their role as a partner outside of the company’s products and services, Today’s Business Products also works with many education and nonprofit clients, donating cash and auction items to local charities and organizations.
How to reach: Today’s Business Products, (216) 267-5000 or www.todaysbusinessproducts.com
At Visual Marking Systems Inc., customer service is their competitive advantage. The company’s employees, led by CEO Dolf Kahle, act as consultants in the industry. The company’s staff frequently acts as a friend and shoulder to lean on for clients who are struggling to decide the direction in which they want to take their product identification. VMS provides support by giving advice and solutions that solve the product identification problems faced by customers.
To help facilitate productive solutions for customers, VMS developed an innovation center, which is often the first chance the staff at VMS gets to interact with a new client. The staff meets with the client to brainstorm ideas on everything from the best way to manufacture a product for their requirements, cutting options, shipping options, packaging methods and the best material to use. As a result of those meetings, VMS can often produce pre-production prototypes to allow customers to see and approve the product before placing a full-quantity order. By relentlessly looking for ways to improve products, VMS demonstrates that they have their customers’ best interests at heart.
All of the attention VMS pays to customer service is aimed at allowing their customers to excel at their own businesses. By making the purchase process as easy as possible, VMS allows its customers to focus on serving their own customers. VMS eliminates the burden of selecting complicated adhesives, materials and print options, instead evaluating the overall needs of each customer, and finding innovative solutions that meet their needs. By doing so, VMS allows customers to excel at their own company. By providing the services that build loyal customers, VMS allows their own customer to build loyal customers, strengthening everyone’s business in the process. VMS is a trusted partner for its customers and takes pride when they do well.
How to reach: Visual Marking Systems Inc., (330) 425-7100 or www.vmsinc.com
“Do unto others as they want you to do unto them,” is a rule that has become integrated into the fabric of Zinner & Co. and the way Managing Partner Robin Baum runs the accounting and management consulting firm.
When dealing with clients the firm is always conscious of the fact that not every client is the same and the natural or normal way of doing things may need to be altered to the various styles of different clients. The firm’s focus is to make clients as comfortable as possible in order to ensure they are happy with services and how they are provided.
While Zinner aims to treat every client as a VIP, there are always some that require a greater depth of business relationship in services provided because of their size or the volume of business they do. In addition, the firm understands that when a new client relationship is started there is only one opportunity to make a first impression. Therefore, Zinner strives to provide exemplary service right out of the gate.
The ultimate goal of Zinner & Co. staff is to connect with clients in a more meaningful way by finding out what is most important to them. This is accomplished through reaching out to clients frequently using books, literature, cards, personal communication, and gifts based on their personal interests. Whether it’s a season subscription for regional theater at the Cleveland Play House, a suite at Progressive Field to enjoy a night of baseball with clients, or a table at various not-for-profit events and benefits, Zinner wants to engage with its clients while taking in the best of local culture.
Zinner & Co. staff members also adhere to rigorous standards and undergo on-going training to maintain not only the highest possible level of technical skill, but the most satisfying client service experience possible.
How to Reach: Zinner & Co., (216) 831-0733 or www.zinnerco.com
“That’s so 24 seconds ago,” scoffs the tailgating dude in an advertisement for AT&T mobile phones. With all the focus on technology that lets us deliver news instantly, it’s easy to forget that we have the power to control the flow. Sometimes fast and furious is a great approach, but occasionally, slower is better. It’s crucial that we stop and think about it, because people’s perception of news depends on when they receive it.
To be the master of your company’s news, follow this formula: release bad news quickly and good news slowly.
Rip the Band-Aid
I was channel surfing late-night TV a couple of years ago when my eyes snagged on an especially dour-looking David Letterman. Pausing, I heard him deliver a 10-minute confession that involved adultery, sexual relations with his staff and a blackmail attempt. The news was unsavory, to say the least, and it had the potential to tank his career. The next day the media exploded with Letterman’s confession, and it remained a top story for several weeks. Then it was over. Letterman had dealt with the blackmail attempt by delivering all the bad news himself in a single announcement. He’s still on the air, of course.
There are two main reasons to release bad news quickly. First, no matter how terrible the news is, it is perceived as a lone event. Ten semi-bad stories are much more damaging than one really bad story that includes the same 10 details. If you can get all the details of a bad story out in one day, there’s a good chance it will blow over because there will be nothing for the media (or your competition) to follow up with.
The second reason to release bad news quickly is that it creates trust and may limit the wrath you may face, legal and otherwise, from people who will be affected. Sitting on bad news is perceived as devious.
When you’re dealing with internal bad news, such as layoffs, deliver all of it as quickly as possible. Waiting only leaves more time for anxiety to spread among the staff. Let’s say you have come to the conclusion that this year you’ll have to freeze all salaries, offer no bonuses and make a 10 percent cut in personnel.
This will be an extremely unpleasant announcement to make, and your employees will not be happy. Now imagine how they’d feel if you announced one of those decisions every week for three weeks. The staff would be worse than unhappy; they’d be in a panic wondering what disaster was awaiting them at the next meeting.
The same rules apply if you’re delivering bad news to a superior. Spill the entire story at once, and it’s one bad day. Stretch it over days or weeks, and it looks like you don’t know how to do your job.
Savor the good news
The same psychology holds true for good news, only in reverse.
If there’s a way to release positive client feedback slowly, the effect will be greater and the glow will last longer.
When you’re rewarding team members for their performance, stretch it out. Tell them personally, and also e-mail a general announcement to the staff. To compound it, follow up a few days later with a compliment from a client or supervisor referencing the same project. A day or so after that, give them a gift card to Starbucks or another of their favorite venues as a token of your appreciation.
Release bad news quickly and good news slowly. It’s counterintuitive, because we all have a natural tendency to spread good news the minute we hear it and to minimize bad news. If we can learn to do the opposite, we will have more control over the way the people perceive our business.
Chris St. Hilaire is the author (with Lynette Padwa) of “27 Powers of Persuasion: Simple Strategies to Seduce Audiences and Win Allies” (Prentice Hall Press). He is an award-winning message strategist who has developed communications programs for some of the nation’s most powerful corporations, legal teams and politicians.
Esurance’s advertising was not translating into buying customers, and Gary Tolman needed to know why.
“We could see through the actual purchase process and monitoring what goes on through our website that when we got to the end, and the people had to push the buy button, we weren’t getting the conversion rate,” says Tolman, who’s been president and CEO of Esurance Insurance Services Inc. since 1999.
When Esurance began selling its insurance products on the Internet, the company quickly developed a niche in the under-30 market, a group attracted to the low-cost and convenience of buying online. But as more insurance companies moved online, the company struggled to build the kind of brand recognition that stacked up to entrenched competitors such as Geico, Allstate, State Farm and Progressive, which spend hundreds of millions in advertising dollars each year.
“You’ve got the auto insurance industry spending $5 billion a year on ads,” Tolman says. “You turn the TV on and you’re going to see the [Geico] Gecko or [Progressive’s] Flo or Mayhem from Allstate.”
Tolman knew that rather than try to copy the model of companies with far more money and resources, Esurance needed to reposition itself to better reach the customers it could acquire and retain. That meant “aging up” its marketing to reach older, more mature and multicar drivers with higher lifetime value.
“Companies that are going to be successful over the next four to six years are going to be the companies who have the best marketing efficiency,” Tolman says.
“So you’ve got to be good at that to get to your customer at the right time during the buying process.”
Here’s how Tolman has repositioned the brand to attract this new market of customers.
Get some backup
The company designed its 2004 television advertising campaign, which is based on the concept of an animated, pink-haired secret agent named Erin Esurance, with goal of increasing its brand recognition. While it did just that, a competitive analysis showed that customers still didn’t rank Esurance as high in terms of trustworthiness and credibility, which older, established drivers looked for in an auto insurance company.
“We wanted to position Esurance differently than we had in the past,” Tolman says. “Under Erin, we were kind of looked at as the cartoon company.”
That’s where Allstate came in.
“We want to be known as a smart insurance company, one that’s providing a convenient way of providing the policy, one that’s going to provide a lot of information over time, one that’s going to provide great service,” Tolman says.
“I knew what we needed. We needed support in terms of brand.”
According to Tolman, the most important piece of building a successful brand is having the right parent company. While its parent company at the time — White Mountains Insurance Group —was a wonderful partner, it didn’t supply a strong brand name. So when Allstate inquired about purchasing the company in 2011, Tolman saw the perfect parent to give the 12-year-old Esurance more brand power. As an Allstate company, it gained the marketing advantage of a large, recognizable parent with a track record of creditability and trustworthiness.
“Our brand is recognized,” Tolman says. “We’re considered to be innovative and fun, but unfortunately in terms of trustworthiness, we don’t index that high.
“We needed someone like an Allstate, a Traveler’s or even a State Farm to really provide this halo to the Esurance brand.”
So in October 2011, Tolman sold the company to Allstate for an impressive $1 billion. When he’d sold it to White Mountains in 2000, it was for $9 million in cash.
Instead of spending a lot of money trying to build the brand on your own, Tolman suggests finding a partner with the resources and reputation to help you build it.
“You can spend a lot of money trying to build brand,” he says.
“Allstate brings brand, a brand that has a great deal of trustworthiness and credibility in the market. I think that’s going to be huge for us.”
In addition to the name, look for a parent that has products or expertise that can enhance your own offerings for customers. For example, having access to Allstate’s products and expertise now allows the company to move from a mono-lined insurance company to develop bundled insurance products. For customers who already trust Allstate with their home insurance, this is an opportunity to utilize the parent’s brand power once again to convert new customers.
“You need to have something that differentiates you in the market,” Tolman says. “If you have a bundled product, either auto/homeowner’s or auto/renter’s, that makes a big difference.”
Do something different
As an online insurance company, Esurance caters the do-it-yourself consumer, rather than someone who wants to work with an agent to buy insurance. While young people already tend to fit into this first group, Tolman knew that developing a brand message to reach a more stable, mature driver would take more than a new parent company.
“You look at the lifetime value that we would get from those particular segments, and then we realized that we need to move up age-wise and also in terms of getting more people with more cars and multi-drivers,” Tolman says.
“That requires us to shift our message. We don’t want to be known as the cartoon insurance company.”
It would take a new advertising strategy to get this group thinking about the company differently.
“We knew where we wanted to go over time,” Tolman says. “We wanted to age up with our in-force policy holder base. We wanted to acquire people that had multiple drivers, more cars and were married. So it’s positioning the advertising to get to that target market.”
After the acquisition, Tolman began shopping around for an advertising agency that could position Esurance as a professional insurance company, accounting for its new parent in Allstate. He helped whittle down the choices to three agencies before the company went with Leo Burnett from Chicago.
Early this year, the company rolled out a new national ad campaign centered on the tagline, “Insurance for the modern world,” using a series of television commercials narrated by “The Office” actor John Krasinski. In its first campaign since being acquired by Allstate last year, the company examines real-world problems and solutions for customers in a “modern” world, stressing buying factors such as trust, transparency, tools and mobility in choosing in insurance company. In one commercial the narrator asks, “What makes you trust a company? Wait — scratch that — what makes you trust a car insurance company? A talking animal? A talking celebrity? A talking celebrity animal?”
When you don’t have the resources of larger and longer standing companies in the marketplace, Tolman says your advertising needs to really convince your target customers why it makes sense for them to have your company’s products.
“We just didn’t want to go out and preach savings, savings, savings,” he says. “We wanted to say that there are different things you can do.”
Today, Esurance does business in 30 states, and with its new parent, Tolman expects that to increase that number to 40 over the next few years. But even as a big company with close to $1 billion in revenue, the company continues to think small and move quickly, especially when it comes to planning its brand and marketing strategies.
“We’re constantly tweaking where we’re spending our dollars,” Tolman says.
“We can be in a position where our online marketing is extremely effective for six months and then they’ll be some activity in the market where some companies get more aggressive, so that becomes less effective.”
While he is much more careful about taking risks when it comes to pricing or product design, Tolman says businesses must take risks in areas such as marketing where there is significant pay off. Being data-oriented allows you to see quickly what’s working and what isn’t so that you can take the right risks, which is why Esurance lets metrics drive many of its marketing decisions.
One of the company’s key metrics is customer conversion, so it spends a lot of time updating and tweaking its website to lead customers to the point where they purchase a product.
“You can do some marketing that drives a lot of traffic but has lower conversion rates,” Tolman says. “You can do other marketing that’s more expensive but it’s probably going to have higher conversion rates.
“We’re always looking at how we should change the website in terms of the questions asked. How should the page be displayed and what should be on the page?”
Tolman says in order to stay ahead of customer trends, businesses need to look beyond just what competitors are doing and see what successful businesses outside of their market are doing to build their brands. Also, think two of three years out so that you are continuing to be innovative in the type of marketing you use and the channels that are most effective. This is always changing.
In the case of the Erin Esurance campaign, the advertising met the needs of the brand at the time, but eventually the campaign was right for growth.
“Certainly with Erin, that was very effective in getting brand recognition,” Tolman says. “That was very different back then. Insurance companies were not using cartoon advertising. It was quick and it was flashy and it got to the market that we were targeting, which was more the younger, single insurance.”
The fact that people are now looking for information not just from sites, but through online reviews and social media channels, is what prompted the company to start a bigger dialogue with consumers through Facebook.
“We’ve changed how we’re positioning ourselves in social media,” Tolman says. “Now we certainly are pushing people to make comments about us on Facebook.”
Because the market is not stable, business leaders need to be aware that the things that work today may not work tomorrow. Remain flexible in your marketing just as in other areas of business. To get optimum value with your marketing dollars, Tolman suggests staying attuned to where you are getting most of your leads from — whether it’s in television, radio or online — while also being prepared to readjust spending.
“As a direct-to-consumer company you need to be nimble,” he says. “You need to move quickly as the market changes.
“We take some risks in areas and we launch new features in marketing and IT, but we look very quickly at whether they’re working or not. If they’re not working, we see if we can get them to work or if we just kill them.”
How to reach: Esurance Insurance Services Inc., (800) 378-7262 or www.esurance.com
1. Find parent companies that lend brand power.
2. Develop marketing and advertising that appeals to your audience.
3. Listen to the market to stay ahead of industry trends .
The Tolman File
President and CEO
Esurance Insurance Services, Inc.
Born: Keene, N.H.
Education: University of New Hampshire
What do you like most about your job?
What’s interesting about insurance, particularly auto insurance, is that people need it. It’s a product that people have to have. Certainly it’s a very competitive market, but it’s not something you buy when it’s nice, when you have some extra money around. You’re required in all states to have auto insurance. So even though it’s become more commodity-like over time, it’s something that people need. And you know they’ll be a market there. Also, generally competitors are responsible competitors.
Why Esurance chose online: We launched the company and we tried everything. We tried print ads. We tried TV ads, which I can tell you were terrible early on. We tried direct mail. We were unsuccessful. Then online is where we found our sweet spot.
On the decision to “age up” the company’s marketing: Over time, we could see what was happening in our particular market segment. You could look at the people who were 20 to 30 and see how long they were staying with us, how many people were on their policy, how many cars they had, and then you compare that to the people 30 to 40 and 40 to 50. You need to acquire the customers and then you need to retain them. If you have a lot of younger, single-car drivers, they tend to move quite a bit.
Every customer is different.
As a service provider to the insurance industry, NCCI has learned from extensive experience that we need to be able to move as quickly as our most nimble customers while still accommodating customers who tend to move more slowly.
It can be a tough balancing act, but it’s one that has caused us to examine all of our systems and electronic communication efforts so that we can adopt techniques that leverage technology to improve services and education.
We have not found, for example, that the best way for us to communicate with our customers is through social media programs like Facebook or Twitter. And while we use videoconferencing and instant messaging for internal communications, we do not employ it for external communications. Instead, we continue to lean toward using e-mail, the phone, and yes, personal visits for most of our customer interactions. Those revelations will surely leave some shaking their heads at our archaic communications practices.
To which we say “not so fast.”
We use the above techniques for direct customer interactions and to answer inquiries. But we are also fully engaged in a broader electronic communications effort that we think others can learn from when it comes to offering customers valuable information in a form that is most useful to them.
As might be expected, our main avenue for electronic communications is our website, ncci.com. The site serves a dual function: We have a public side to our website and a subscriber/member side. The member side is for customers who subscribe to NCCI services. It is open only to our data partners and provides them with a menu of support services and tools. But our members —and the press and public — are also very engaged in our public site. That is why we integrate our public and private services on our site.
As a promulgator of some of the most important rules and procedures for the workers compensation system, we are constantly trying to find the best methods for educating our customers in a manner that is understandable, accessible and available to them on their schedule.
How do we do that? Webinars.
In the past three years, NCCI has produced more than 100 informational webinars, which are available at no charge on NCCI’s public website. Designed to be viewed in 30 minutes or less and categorized by interest for ease of use, these webinars can be accessed conveniently over the Internet. Whether you're an underwriter, actuary, data reporter, product or claims manager, agent/broker, or just interested in workers compensation, you can benefit from an extensive library of online educational modules.
Webinars give viewers something very close to a live presentation, but make it available on demand. This saves on travel time and expenses as well as other training costs.
The customer response to our webinars has also been very positive. In fact, many of our customers have already incorporated NCCI educational modules into their own training programs.
It’s a program that works for us — and more importantly, works for our customers.
Every employee knows that at the end of the day we are only as good as our last customer interaction. So NCCI’s continuing challenge is to leverage the latest technologies to increase our communications abilities, while being mindful that some of our customers tend to move more slowly when it comes to adopting the latest electronic tools. Our task is to find the best and most workable tools to make each and every such interaction a success — whatever the form it takes.
Stephen J. Klingel has served as president and CEO of NCCI Holdings Inc. since 2002. Before joining NCCI, Klingel was a leader with the St. Paul Cos. for more than 25 years. You can reach him at Steve_Klingel@ncci.com .
Eric Lofquist and Magnus International Group Inc., go about business in a rather nontraditional manner. The 50-employee manufacturer of organic components for eco-friendly products does business through a very collaborative process where customers often agree to buy products before they are even made.
Magnus, which has annual revenue just shy of $100 million, is primarily a company that takes materials that are traditionally made out of petroleum and designs a replacement product based on renewable, sustainable materials.
“What it was in the beginning was we had an idea and you’d have to take it to the customers,” says Lofquist, co-founder, president and CEO. “Now it’s to a point where the companies we do this for think about it and they call us and ask, ‘Can you make this or make that, or have you ever thought about this?’ So now the information is traveling both directions.”
Smart Business spoke to Lofquist about how he has grown Magnus International through trust, collaboration, and planning.
Collaborate. It takes a little bit longer to grow when you’re developing new products and you’re looking to get those products approved and into production. One way we have found to reduce the time to get those out to market is to already have them presold. If we can make this for you, if it’s going to be around this price point, if it’s going to have these characteristics, are you a buyer?
What you end up doing there is you end up having a partnership. You’re an extension of theirs because you’re getting an agreement ahead of time and you’re telling them all your secrets, so you need to have someone you can trust and they need to be able to trust you too. They’re saying, ‘If you make that, yeah I’ll buy it.’ It’s really collaboration between two companies without there being a formal joint venture. It can be a little tricky at first, but once you get established and you do it a couple of times, then you build that reputation and that ability to move pretty quickly through the supply chain.
Have a plan. We have a good platform in place right now and 2012 is going to be all about new products and new brands all setting the stage for the next big growth spurt for us. Our current brands are going great, so it’s how do we leverage that and how do we do more of what we’re doing and how do we do more of that with the people in Northeast Ohio?
Anyone out there that’s been successful has to start with understanding what their customers want long-term. The deeper you get into their long-term plan, then the deeper you can get into your long-term plan. If your long-term plan doesn’t match up with what your customer’s long-term plans are, then you’re not going to meet your final objectives. We spend a lot of time understanding what the long-term objectives are and they change, so you need to be on top of them. At least on a quarterly basis you have to check if you’re still on the same path. It’s a constant check and balance on what they’re doing and what you’re doing and making sure that there’s no gaps and you’re working on what they’re working on.
We have a plan and we share that with them and they have a plan and they share that with us. That goes back to trust because the information that we are passing back and forth is very confidential information and it takes years to build that report up. Once you have it and you show that it can be trusted and sustain the deeper you can get into what they’re plans are and how you fit into them.
Trust your employees. We do things differently than the way most people do them when it comes to our business. We have to have people that are willing to look at the business not in the traditional way that new brands are developed and taken to market. Your employees have to believe and have that same trust. The door swings both ways on the trust because we’re asking for information and we’re provided information and it has to flow evenly both ways.
Over the years the key employees have really understood that and have looked at things differently than a traditional development market and it takes time. You can tell them all you want, but they have to see it and they have to feel it and they have to be part of it in order to buy-in and understand it. Then they can move it forward because you can’t do it all on your own. You have to have people that believe and have the same focus on the strategy.
HOW TO REACH: Magnus International Group Inc., (216) 592-8355 or www.magnusig.com
If you ask Travis Mlakar what the problem is with being in the paper industry today, he would joke that it’s people asking him if he is Dunder Mifflin from the TV show, “The Office.” While Mlakar hopes his company wasn’t the model for the show, he does want to strive to do something the show has accomplished, which is to make paper more appealing.
Mlakar will be the first to admit that he is in charge of a product that is both boring and bland. However, that boring product is a necessary one and although it lacks the rock star product status, paper has been the lifeblood of Mlakar’s family business, The Millcraft Paper Co., for 92 years.
“It’s white paper,” says Mlakar, president. “It’s about as boring and bland as you could possibly get, so we’ve had to find other ways of differentiating the product.”
That product differentiation, among other initiatives, would come in handy when the recession hit home for Millcraft Paper, a $150 million independent distributor and converter of commercial printing paper. The company went from experiencing record performances one month to a 15 percent drop in revenue the next. The business of paper was no longer boring or bland.
“In October 2008, we had the single largest month in company history, and in November 2008, we literally lost about 15 percent of our business overnight,” Mlakar says. “The world just came to a screeching halt. We’ve had to redefine who we are and the value that we bring and how we run our businesses after 2008 and 2009. Coming out of that, we realized internally we had to find a way as a business to take corporate responsibility and corporate sustainability to the next level.”
Millcraft’s footprint of operation is the Midwest in cities like Cleveland, Detroit, Buffalo, Pittsburgh and Indianapolis. The company realized it had to find way to become more efficient and stronger while also finding ways of giving back to the communities it works in to help those economies grow.
“It’s not the booming metropolises of the world,” Mlakar says. “We have spent a lot of time over the last few years really focusing on the communities in which we work. What we are trying to do is make better decisions ourselves as well as educate our customers about the impact their buying decisions have beyond price, because there is a lot more to it.”
Evaluate the business
When your business experiences a change from month to month as Millcraft did, it wakes you up. Mlakar and his team had to begin to identify ways to deal with the new economic and business environments.
“We obviously have had to drive efficiencies through our organizations,” Mlakar says. “Unfortunately, we went through massive headcount reductions, which are never fun. We also looked at how our organizations can do a better job of supporting each other. While we have 13 locations, the real question was what were we doing that was redundant in those 13 locations and how could we do a better job of all collaborating with each other to better support each other and do more with less?”
While the recession caused businesses a great deal of pain, it did provide a window of opportunity to those willing to put in the effort to truly improve their companies.
“The benefit of 2008 and 2009 was it blew everything up and you finally had a backdrop to question everything and you could get people to understand why you were attacking some of the sacred cows in your industry or in your business,” he says. “Necessity is the mother of all invention and I think that the necessity of changing your business and finding a way to be more efficient after the Great Recession really afforded people the opportunity to look at things differently.”
For Millcraft, one of the areas of business that had always been done one way was inventory management. There were old paradigms and it was time the company took a second look at those operations.
“When the downturn happened, we brought a new group of people together who were able to bring a fresh perspective to how we managed inventory and we were able to take our turns on our inventory from six times a year to 10 to 12 times a year,” Mlakar says. “They’ve done a fantastic job of just breaking the old paradigms that were there and really asking questions, ‘Why do we do this? Why do we do it this way? Why can’t we do it this way?”
Millcraft asked those same kinds of questions in customer service across its 13 locations. That effort has had a monumental impact and has allowed those locations to act as one rather than 13.
“We have competitors who have chosen to drive efficiencies by centralizing things and literally going to a centralized customer service department that they may have moved out of the area to another location,” Mlakar says. “What we’ve done is we’ve used technology to bring our organization closer together so that we are coordinating everything versus centralizing it. Right now our customers can pick up the phone in Cincinnati and if all of our customer service reps are on the phone, instead of going on hold, somebody in Columbus will answer the call or somebody in Cleveland or somebody in Detroit, to make sure that we’re not dropping the ball. That’s what we have focused on and we really looked at every aspect of our business to say, ‘How can we do a better job of utilizing what we have more effectively and efficiently?’”
Taking a step back and evaluating your entire business, seeing things differently and also questioning old processes and procedures is a great way to find better ways of doing things. However, the solutions don’t have to be up to you alone.
“You don’t have to have all the answers,” he says. “We have a wonderful group of people and what we’ve found to be most effective is to sit people down and ask them to describe their day and walk through all the different roles and responsibilities that they have. What do they feel is efficient or inefficient? If you can do it in a venue where you’re listening to what they’re saying, you’re bringing people together so that they can hear what they’re doing versus somebody else versus somebody else and then they start to draw parallels and say, ‘Wait a minute, I can do that and this person can do that, or what happens if we were all able to work together this way or that way?’ I find that some of the best business ideas that we’ve had certainly weren’t mine, they came from the people within our organization. I think if you can listen and facilitate you can get a lot further along than if you try and craft the answer.”
Communicate the changes
When you are asking employees for their feedback and input to identify areas of the business that can be improved, you have to make sure you communicate your decisions and actions based on that input.
“You have to be honest with people and say, ‘Here’s what you said, here’s what I heard, here’s what we took away from it or here are the decisions that we’ve made as a result,’” Mlakar says. “Sometimes you have to be honest with people and say, ‘Listen, I heard you say this, but I don’t agree and here are my reasons why.’ I think the key is you’ve got to educate people about the decisions that you’re making and more importantly, why are you making them. People may not like the decision, they may not agree with it, but the key is do they understand why we’re making it.”
During times of uncertainty and change, communication is the No. 1 tool for a business leader. When the recession first hit in 2008, it was unclear why business was declining and Mlakar had to communicate to understand why changes were happening.
“In November when we first saw the fall off in business, we didn’t understand why,” he says. “November was bad, December was bad and it wasn’t until January that other people in our industry began talking about the fall-off that had happened. So for 60 to 90 days, we were feeling a little lonely and it wasn’t until everyone started coming out saying, ‘Oh yeah, we’ve seen the same decline. We’ve seen this and we’ve seen that.’ Misery loves company and that certainly helped to understand that it wasn’t something that we were doing independently of the industry, and it wasn’t necessarily the decisions that we were making, but that it was a broader systemic issue.”
Once it was understood that it was a systemic issue it was quickly realized that everything that the company had been doing before had to be thrown out the window. You had to play by all different rules because no one had ever seen anything like this before.
“It just comes down to the fact that you’ve got to be honest,” he says. “You’ve got to be able to look people in the whites of the eyes and say, ‘Listen, it might be my job to be president, but that doesn’t mean I have all the answers. The reality is here’s what’s happening, here’s what we’re going to do or try to do to solve it.’ With respect to the people in our business and the people in this industry and a lot of industries, 2008 and 2009 was unprecedented. Nobody had any experience. Anytime there is a radical change in a business, often times it is uncharted waters and I don’t think there is anything wrong with telling people, ‘We’re in uncharted waters and we’re going to do our best, but we don’t have all the answers.’ You’ve just got to be honest and humble. If you come across like you have all the answers sooner or later people are going to see right through that.”
When the environment changes as drastically as it did, you can’t look for answers by staying within your company or even your industry. You have to get ideas and help from other industries where things can translate over.
“Everybody during that time was talking with friends on the side and asking, ‘What’s going on with your business and your industry?’” Mlakar says. “Whether it was casual conversations or talking with friends or just being open to ideas and things that were happening somewhere else, the benefit of a catastrophe like we went through is that you become much more open to ideas and potential solutions. I found myself listening to friends that are in the medical industry about what are they doing and trying to find a way of how could I apply that to our business.”
Whether you’re in tough times or not, it’s very important to develop a network of people that you regularly talk to that are outside of your industry.
“Too often people in business and in leadership positions inhale their own exhaust and they either sit in a room full of people that tell them what they want to hear, or they sit in a room full of people in their industry, in which case the only ideas you have are the ones that are going to perpetuate what’s currently happening,” he says. “You have to go outside and find things that are totally new and different to your particular industry. Find somebody that is in a totally different industry and look for those creative ideas.”
Millcraft focused on two parts of the business: assets/working capital employed in the business, and expenses.
“With both assets and working capital it really comes down to efficiency and analytics and how do you run your business more efficiently and where is there waste you can do without,” he says. “We’ve continued to do that and as our business is now growing again and we are in much better times, we’re finding that the work that we did two or three years ago is beginning to help us exponentially now. It’s the same thing on the expense side. That’s resulted in lower expenses, but more importantly, it’s also opened up the ability for us to grow more cost effectively.”
Once Millcraft had hit its low and was starting to grow again, the company found ways to continue that growth through a focus on its local communities.
“Lots of companies looked outside of their current territory or geographic area to open up new opportunities,” he says. “While we have diversified the products that we sell and the things that we can offer to our customers, we really focused more and more on the cities and the markets that we were already in. When other people said Cleveland doesn’t have the growth potential and we’re going to look elsewhere for revenues, we really said, ‘This is home. We’ve got to make this work and we’ve got to find a way to improve what we’re doing here in Cleveland and Buffalo and Pittsburgh and everywhere else.’”
Mlakar and Millcraft turned toward buying locally and supporting other companies in those same locations.
“We align ourselves with organizations that call home the same place that we call home,” he says. “We all have to realize that the decisions that we make every day go far beyond what we pay for a product. The only way that we’re going to support our communities is to make sure that the dollars that we have to invest on a daily basis as businesses stay in our local communities. Go the extra mile to find a local supplier. Go the extra mile to find out how you can do something that’s going to support somebody that’s going to keep the money here. The reality is that there is a huge downstream effect from your business decisions. When our customers, who tend to be local businesses, do business with Millcraft, those dollars, in turn, are going back into the community once again.”
Along with remaining loyal to local companies, Millcraft asked its customers and clients how it could add value to its products and services.
“We listened and we went to our customers and said, ‘Here’s the situation, we’d like to grow, and we’re not going to grow in other areas of the country, we need to grow with you. What is it that you buy? What is it that we can offer you as products or services? How else could we be of value?’” he says. “We listened to our customers and they said, ‘Well, we currently are buying this and we’re buying that and we’re doing this and it would really help us if you were doing that.’ So we really reengineered our business from our customers backwards. Once again, we didn’t try or attempt to think that we had the answers. Don’t focus on the products, focus on the customers. What you’ve got to do is redefine your organization’s strategy away from ‘Here’s what I have to sell,’ to more of ‘What is it that you need?’”
In conjunction with the company’s philosophy of remaining local and supporting the community, Millcraft started the “Buy and Give” program.
We have developed programs that are designed to give back to the community,” Mlakar says. “The thought behind it is pretty simple. We’re paper, it’s a commodity item, it’s something that nobody thinks about and it’s a supply item that every business has to buy. What we’ve done is we’ve taken that and we have teamed up with two organizations; the Cleveland Clinic Children’s Hospital being one and the United Way of Greater Cleveland being the other. We’ve developed a program to say for every carton of paper that we sell, we are donating back a dollar to the Cleveland Clinic or the United Way of Greater Cleveland to help support those organizations. What we want to do is find a way where we can turn a business decision into a much more efficient business decision by helping organizations and helping our communities and that’s what it is about.”
HOW TO REACH: The Millcraft Paper Co., (216) 441-5500 or www.millcraft.com
- Make the effort to evaluate where you can improve your business.
- Be honest and communicate every chance you get with employees.
- Look outside your industry for solutions to problems within your business.