Last issue, we did an article entitled Are You Still Building Houses? We got a lot of feedback on the article as it apparently sparked discussions among many of you. If you missed it, I would encourage you to jump on our website and put the word “birdhouse” in the search criteria and give it a read. Basically, the article deals with filtering out and maybe saying goodbye to customers who no longer fit the strategic profile. These might be legacy customers brought on in the early days when the aperture was wide open as far as what you would build, or just customer builds that no longer fit within the capabilities that have evolved within your organization.
The response from Lyle Fahning was very poignant, and we decided to share with you. Lyle is familiar to many of you as past Chairman of WHMA and he successfully ran his own harness business for many years. We thank him very much for his take:
Read your article in the May/June WHN and found it quite interesting. Thought I’d give you a couple of ideas we used as we progressed from $10mm to $60mm in sales.
At the beginning we wanted “any” dollars we could get, but as noted in the article it takes about the same initial development work for thousands of dollars of business, as hundreds of thousands or millions of dollars. We initially had a minimum of $50,000 potential business, which eventually went to a min of half a million dollars.
However the way of letting a past customer go was a little different. We started with who met our company criteria and who didn’t. Then we looked at how we could help them to transition to someone else. From our involvement in WHMA we had some ideas of who could meet their needs and would appreciate and need their sales volume. Then we made a commitment to continue supporting them until they had the new vendor in place. We did set a time goal to make sure they stayed on top of the process
This did several things. It gave our customer a very favorable impression on how they were treated and would come to us when they got bigger or gave us a very favorable recommendation to anyone who asked. Also, the new WHMA company who gained business also was appreciative and gave us as a good recommendation when they couldn’t serve a potential customer.
All in all it was a “win, win, win” and some of the least expensive marketing and reputation development we could do.
Thanks for sharing those thoughts, Lyle.