Archive for January, 2007
Sometimes I forget why we’re here. In a business, contractors’ sense. Here’s a brief history. Helps remind me that “Oh yeah! That’s what it’s all about. Read on:
1) Human beings consume things to live >> they are consumers
2) Consumers need things to consume >> companies provide things
3) Other companies provide the same things >> consumers can choose
4) Companies must produce things better, faster, cheaper >> or else
5) Companies hire employees & provide facilities to produce things
6) Companies tell their employees to produce things better, faster, cheaper >> or else
7) Companies use fewer employees >> those employed are stretched
Employees want/need help to produce things better, faster, cheaper
9) Employees contract with companies to help (this is you) >> employees become customers
10) Other contractors provide the same help as you >> customers can choose
11) Customers choose contractors who they believe help them produce things better, faster, cheaper
12) If contractors don’t >> next contractor
QUESTION >> How are you persuading customers that your help is more valuable than other contractors?
January 22nd, 2007
I wish there was a university somewhere for customers who contract facility services. They could learn how to work with contractors more effectively and efficiently. A kind of ivy league Vendor U.
Many customers (those who buy facility services) do little things over and over again that can drive sane contractors up the wall, around the bend, and into a new line of work.
These irritations make our job harder, and ultimately cost us more time, effort and money. It would be nice if we could pass that waste back to the customers that caused it, but I don’t think so. Do you?
Don’t get me wrong. This isn’t a slam against all customers all the time. We all make mistakes, it’s part of learning. But some customers are learning 24/7. And many probably don’t even know they’re a pain to contractors.
So, enough with the kvetching. The first post in this series is not going to start with big irritations, but with small ones. As time goes by, with your input, we’ll work up to the Everest of customer disfunctions. Maybe even come up with an award.
Here goes – the little things that I wish customers were smarter about.
#1: Customers Require Us to Email Proposals
Told you we’d start small, but this one gets me when RFPs come out.
WHAT CUSTOMERS DO:
In the RFP customers will ask us to email them our proposal. Our formal responses to their RFP questions. Have you seen this? It doesn’t happen every time, but frequently enough for me to realize someone is asleep at wheel.
THE PROBLEM:
The file size of many proposals can be too large for customers’ e-mail servers. Most corporations have file size limitations where a large file is rejected and not delivered to the recipient. Whether it’s a Word doc or Adobe pdf , file size matters.
If we don’t deal with this problem early in the RFP process, we can get last minute heartburn at a time we probably don’t need any other pains.
WHAT WE CAN DO:
Try one of these, see if it works for you:
Notify customer at beginning of RFP process. Ask the customer about this problem and see if they can work out a solution, push the problem back to them.
Overnight courier a CD. Burn your file to a CD on off you go. You’ll need to complete your proposal production 1-2 days earlier than the RFP deadline to allow for courier delivery. Plan for that.
Create a web page for customer download. Make it secure. You’ll need user names and passwords, and the tech knowledge. Don’t post your confidential proposal on an unsecured web page. You may get customers questioning your confidentiality.
Use a file transfer service. Like YouSendIt , it moves big files to customers. 
With YouSendIt, you upload your file to YouSendIt’s server and include your customer’s e-mail address. An e-mail is sent to your customer from YouSendIt. They click a link and they’re taken to the YouSendIt download area. Files are only kept for a limited number of days
What do you wish customers were smarter about?
Let me know what customers could be smarter about. Come on, don’t be shy.
January 15th, 2007
After a business dinner recently a vendor I’m working with said security guard service is a commodity – the only difference is price. To be honest, that torqued me a little.
I’ve heard the “commodity” label so many times over the past years I’d stopped listening. The vendor’s comment reminded me why I DON’T think our services are commodities. Not guard services, not janitorial services, and not any facility service business.
Here’s how Merriam-Webster defines commodity: a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (as brand name) other than price.
Yes – facility contract services ARE widely available AND have smaller profit margins.
Yes – price is a distinguishing factor. But it isn’t the only one. Otherwise, if only price mattered, low price would win each time, every time – and it doesn’t.
So, while facility services have some things in common with commodities, it’s Webster’s “diminishes the importance of factors” that reminds me our services are not commodities.
Why? Because of variability.
Think about it. A commodity can’t be distinguished from one another, from one provider to the next, right?
Yet everyone, even the person on the street, recognizes the fact that a service varies. Has to. Services are performed by people – the most variable things on the planet. Can’t do it the same way each time, each day, at each location.
And if the people who provide services vary, think about the variances in how supervisors supervise, managers manage, and owners own companies. It’s a world of difference.
I think the “commodity” label gets attached to us for 2 reasons:
We’ve Done a Poor Job Distinguishing Ourselves
As facility contractors we’ve done a poor job distinguishing ourselves from each other. Customers have a hard time choosing when we’re all saying the same thing. We’ve made ourselves look like each other.
- Who doesn’t have a Quality Control/Assurance program?
- Who doesn’t train their employees?
- Who doesn’t use technology in some manner?
We can’t blame customers who believe they’re buying commodities instead of facility services. We’ve taught them. The good news is we can do a better job distinguishing ourselves to customers. Hey, that’s my career.
Expecting Higher Margins
When someone says a facility service is a commodity, they’re talking about margins. They don’t think our margins are normal, that they’re too low. And they’re right. Our margins can be thought of as low…when compared to software companies. But compared to supermarket companies (1-2% net) – our margins can look pretty good.
Is Your Service a Commodity?
What are your thoughts? Is your business a commodity, or not? What are you doing to distinguish yourself as not being a commodity? Post your comments here.
January 10th, 2007
More and more customers use performance based contracts, especially public agencies. However, measuring service has more potential pain than a bag full of broken glass.
Most customers don’t doubt contractors’ integrity. Many just can’t tell how well services were delivered, or even if they were delivered at all.
Performance based contracts put some portion of contractor payment at risk, based on performance. Customers want reassurance they’ve received everything they paid for. That’s fair, isn’t it?
However, if measurements aren’t appropriate, or are flawed in their design, it spells trouble written in fewer contractor dollars.
Measuring Service is Hard
Services by their nature are very difficult to measure. Why? Service research shows that:
- Services are performances, not things
- Performance varies by worker, by contractor, by customer, even day-to-day
- Services are performed on-site, often in front of customers
Service Delivery as Important as Outcome
To make it even harder to measure services, customers don’t evaluate service solely on the outcome (i.e. a clean lobby, or zero thefts last night); they consider how service was delivered (i.e. is the day porter friendly? does the guard act professionally?)
Here’s what customers have come up with.
The Lingo –> KPIs
Key Performance Indicators (KPIs) are metrics. Customers try to gauge performance from them.
“Try” is the key word here. And the beginning of contractors’ concerns about performance based contracts.
Problem #1 –> Not all KPIs are in Contractors’ Control
The biggest problem with performance based contracts are KPIs outside the contractor’s control.
For example, a guard contractor may have customer satisfaction as one of it’s KPIs. The customer surveys their own employees about security and results say security is too hard, too militaristic. Why?
Because the customer’s security policy requires 100% package searches and ID badge compliance at all times. As a result, the customer satisfaction KPI is below acceptable and the guard contractor suffers financially. Because they’re doing their job well.
Doesn’t seem right, does it? KPIs outside contractors’ control are red flags screaming for negotiation.
Problem #2 –> Customers’ Perception & Expectation
A cleaning contractor has a KPI for quality inspections, to be performed separately by the customer and the contractor.
The contractor self-scores their quality rigidly, not wanting to appear self-serving. However, the customer, looking at exactly the same window ledges and blinds, sees a different story.
Now, the contractor was capable of cleaning to the customer’s expectations. They just didn’t know what they were. Customer expectations are never in the specifications.
As a result of the unacceptable scoring, the contractor suffers financially. Why? Because their understanding of the customer’s expectations and perceptions was way off.
Also, customers’ expectations change over time. The great job the contractor’s been doing for some time is now the new expectation level. So, the bar continually raises. And KPIs can reflect that to the contractor’s disadvantage.
Problem #3 –> Too Many KPIs
Some customers, usually those new to measuring service, fall into the trap of having too many KPIs.
How many are too many? 10-20-30? KPIs by definition are the “vital few” measurments, not the “useful many”. My recommendation is between 3 to 7.
A Boeing 747 has 27 feet of instrumentation in the cockpit. However, pilots can’t monitor all of them at once. So, there are 6 critical gauges they check. If something’s off in one of those, only then do they check other gauges. The same should be true for KPIs, only the “vital few”.
Problem #4 –> Service Performance vs. Vendor Performance
However, not all KPIs measure service performance. Some measure vendor performance, such as invoice accuracy and timeliness.
These KPIs indicate how well a contractor works with their customer. Although customers don’t hire a contractor only for quick, error-free invoices, customers will incentivize contractors to make their life easier.
Why is this important? If contractors distinguish between these different KPI types, they’re in a better position to manage customer expectations – they can educate customers by pointing out the difference and adjusting importance.
What Are Your Horror Stories?
If you’ve been involved in a number of performance based contracts I’m sure you have one or more horror stories. Especially in government (public agency) contracts. Would love to hear them. Post your stories here.
January 2nd, 2007
