Long-term deals Featured

7:00pm EDT February 23, 2010

Randall Lipps had screwed up — and to the tune of nearly a million dollars.

His company, Omnicell Inc., provides systems and software solutions to increase patient safety and operational efficiency in health care facilities, and it had incorrectly installed a product for a customer.

“We botched up an install of a new product, and it was totally our fault,” the founder, chairman, president and CEO says.

The customer had spent between $700,000 and $800,000, so it wasn’t chump change he was dealing with. While most leaders may point to the fine print of a contract to get out of making right on the situation, Lipps did the opposite.

“They spent a lot of money with us, and I called them up and said, ‘Hey, I’m sending your money back. We didn’t do what we said we’d do. You can keep the products. You don’t have to return anything, but I’m giving you your money back. … You might say, “That thing is botched up,” but you can’t say that Randy Lipps wasn’t fair to you.’”

He sent them a check — nearly $1 million now gone. The customer kept most of the equipment, and his team worked diligently to deliver on what it had promised originally.

While it was an expensive choice, he knows it was the right one for both the customer and employees.

“Employees see that and they know, ‘Hey, we got to deliver what we’re talking about because if we don’t, we can’t go back and point to a contract,’” Lipps says. “We do have contracts, but it’s really not the basis of doing business. It’s just a backstop.”

It also set the right tone for the customer, and as a result, while it was a short-term loss, it became a long-term gain.

“That customer has stayed with us,” he says. “I just recently had some discussions with that customer again. I think they’re going to move toward us. They’ve got some products coming up for renewal, and I think we have a chance of getting that business.”

Focusing on the long term is key to building successful customer relationships.

“There are a lot of customers we tried to win 10 years ago, and we tried to win five years ago, and both times, we went to the customer, and we lost the deal to the competitor,” he says. “But on the 15th year, after going to the customer, we won the customer. Every three business days, we get a new account, and every five days, we get a new competitive account, and that’s because we’ve taken the long-term approach — not because we’ve taken the short-term approach.”

Lipps says he’ll continue growing the $214 million business by taking the long-term approach to building customer relationships — here’s how he does it.

Conduct effective customer meetings

When Lipps sits down for a meeting with customers, like most leaders, he has an agenda. But before he gets to his agenda, he turns the tables a little bit.

“I start the meeting off by saying, ‘We have a really nice agenda here and a great day, but this isn’t my meeting — it’s your meeting. What do you want to talk about? You probably have one or two top things that’s on your mind that you want to make sure gets covered or you have a question about me or anything. I’m just going to take notes on what you have to say before we even get started. I’m not going to show you any slides. I’m just going to listen to what you have,’” Lipps says.

“Instead of showing a sales presentation or jumping in with an agenda, you just say, ‘This is not my meeting; it’s your meeting. You tell me what you want to talk about and what are the top couple of questions on your mind.’”

Lipps says that one of your biggest goals in building customer relationships should be to talk less.

“I always had a rule, and I said this in meetings, that when the customer’s talking, you’re winning,” he says. “When you’re talking, you’re losing, so how do you get the customer to talk?”

Asking those opening questions accomplishes that, and, inevitably, that ends up being an hour-long discussion, so it’s important to use that hour wisely. Whatever customers say, take notes, but don’t address their questions and concerns right then.

“You actually say, ‘I’m not going to answer the questions — I’m just going to write them down, but I’m going to try to make sure during the day we answer it,’” Lipps says. “You’re not there trying to defend yourself. You’re writing it down.”

After you’ve listened to them, then look at your agenda.

“Review your agenda, and ask if you think the agenda will answer your questions,” he says.

If it’s yes, then you’re set, but if the answer is no, then make modifications to incorporate what the customers want to learn into your agenda. Then you go to it. Work through your agenda with the customer, but then bring it full circle at the end of your meeting.

“At the end of the day, I come back to the questions,” Lipps says. “I said, ‘Well, these are what you said you wanted to talk about and get answers. OK, in our second meeting, we talked about question one. Did you get your question fully answered there? Are you satisfied? Do you need more explanation? Would you like an engineer to come out and talk?’”

Taking this approach is going to win your customers over and make them admire and respect you, as well.

“I guarantee you that if any company would start out every customer meeting about reaffirming what they want to accomplish or what questions they want to get out of it and readjusting their agenda, it will be the biggest positive experience a customer can get,” he says. “Way too many companies talk at the customer, try to communicate stuff to the customer all the time, which may not be even in line with where the questions are. You always win if the customer talks and if you’re able to talk about only their concerns. Everything else is wasted breath.”

And his success rate demonstrates that.

“It’s just amazing about when we get customers to come in, and we follow that format, we get about a 90 percent win rate out of the deal,” he says. “People love our products, but they end up saying, ‘That’s the kind of person or company I want to work with because they’re not sitting there telling me what I should do or how I should do it or telling me a bunch of stuff I don’t want to hear.”

Visit your customers

Relationships with your customers are no different than relationships with your family or friends. You have to know them well and know what gets them excited and what drives them crazy in order to meet their needs and have a strong relationship.

“You’ve got to be really connected to customers to understand what their problems are,” Lipps says. “They can’t always translate that into what solutions they want, but they can tell you what their problems are, and by doing that, then you can propose different solution sets and make them well-tested before you make the big investments of going in a certain direction.”

While there are a plethora of online tools you

can use to stay in touch with your customers, he says there is no substitute for old-fashioned customer relations.

“There’s nothing like going out and seeing customers personally in their environment — where they are — to meet with them,” he says.

It’s the best way to really understand your customer, even in today’s high-tech world.

“To be connected to a customer, you’ve got to go live in their environment, and particularly, you have to have a culture where everyone in the company is involved with customers and actually goes on-site to a customer site and experiences what happens at a customer site,” he says.

When your employees visit customers with you, it gives you a chance to demonstrate the kind of behavior you want them to have when interacting with customers, but it also shows them that you’re not just talking a good game.

“I say [to customers], ‘Hey, you’re a partner. I feel your pain, or I want you to be successful. Here’s my number. Call me — call me at home,’” Lipps says. “I offer that to any customer, and our employees do the same thing.”

They may get calls at home at 11 p.m., but it’s worth it because it shows the customers that what he told them when visiting wasn’t just for show.

But when you visit, it’s also more than handing out your home number or just smiling and taking a tour. You need to have a plan and look to garner some information from your visit.

“What’s really important is not focusing on your particular sector right away,” he says. “I love to come in and ask customers, ‘What’s your biggest efficiency problem?’ It may not have anything to do with my products, but I just want to know what their biggest efficiency problem is. Where are they not getting enough to get the desired results of the cost they want?”

He also asks about what their biggest safety concerns are and what their biggest regulatory issues are.

“Most have issues and compliances to keep with, so start with these broader questions of their environmental issues,” Lipps says. “Then I ask, ‘What will be your biggest safety or efficiency or regulatory issue in five years? If I’m sitting and talking to you about the same things, what will those questions be?’ It’s very interesting because they sometimes see the solution to those issues in the near future, but there’s a bigger one behind the one currently on their desk, and then you get a real sense of what is facing your customers, and it’s amazing what they’ll tell you.”

Bring customers to you

If Lipps was the only one concerned about building customer relationships, Omnicell wouldn’t have grown like it has. Instead, he works to ensure employees are adopting his approach, as well.

“If you’re going to be customer-centric, it starts at the top,” Lipps says. “It’s a constant communication. It’s just not every now and then or in the users’ group.”

So, like most companies, Lipps has meetings, but his are a little different.

“Every company has employee meetings, right?” he says. “But we make sure that there is a customer at about every employee meeting we have. We have the customer say what they like about us, what they don’t like about us or maybe what they’re struggling with — maybe not necessarily in our area, but just what’s on their mind.”

Involving customers in your meetings and letting them talk showcases their importance to your employees.

“What’s really amazing is that when a customer speaks, and we have the whole company on the line, and the customer is talking about their day or the systems or the good job someone did or the improvements they want to see in the systems, the whole room is just quiet,” he says. “You could drop a pin because it’s like a hallowed moment — a customer is speaking and deserves the ultimate respect, and they’re speaking truth. There’s no interpretation used by marketing or someone on the front line to tell you what they’re saying. They’re saying real stuff.”

He also has a policy that when he’s in town, he has customers come on-site to do training for Omnicell’s next product releases. He’ll go and speak for about 10 to 15 minutes at each customer training session.

“Our customers took the time to fly here and some may have been our customers for a while and what a great opportunity to connect with them,” he says.

Between all of these efforts, Lipps says one-third of his job is to spend time with customers, and he gladly does it because it builds the relationships necessary to propel Omnicell into the future.

“I’ve been here for the last 18 years, and I’m going to be here another 18 years, and I want to make sure that the things we’re doing today are not just going to help us win a contract in the next 30 days but are going to be the things that will help us and our customers be successful over the next 18 years, as well.”

How to reach: Omnicell Inc., (800) 850-6664 or www.omnicell.com