Simplification (Phase 2) How do you approach treating customers fairly but not equally?

When you have to make a decision about where you're going to place your resources, how are you going to treat customers fairly but not equal? It just comes down to the data. At the end of the day, you're going to have data in front of you that tells you exactly where you're making money and more importantly, where you're not making money. And what you're going to find when you're facing this is you will need more resources to put after the opportunities where the money is really at, where the where the customers show value and they demonstrate that value by doing business with you. No matter how large you are, no matter how small you are, no matter where you are in between, we all suffer from limited resources. The only way that you can take and get more is you have to stop doing something. You have to make a decision. I'm no longer doing that. That frees up your resources. And when we look at them and we segment the business, if you remember why we talked about it earlier, They go into 4 quadrants, right? In those 4 quadrants, in each one, about 25% of your resources are going. It's what's taking it, supporting it. When you're only getting 4 or 5% revenue out of your Quad 4, but you're spending 25%, it's a natural place to go and get the resources. So you've identified where they're available. Now you have to be able to deal with, or you have to be able to make that decision to take them out of Quad 4. And make them available for Quad 1. You may or may not need all those resources. But as you make that decision, you're going to find within your organization, people are going to push back on you, right? Because they're going to sense that as a loss. They don't see the opportunity. Maybe they only work on Quad 4 customers. Maybe they're only working on some of those projects. And they'll take and, and candidly, they'll fight you for it, right? They'll come out and they'll, it'll come out in different ways. You'll have it in meetings where people start feeling left behind. You have people leave the company. All these things happen. You know what I found by going through that as a leader, you have just really a couple things you have to do. First is you got to be honest about it. You got to be candid about it. If you want a different outcome, you must do different things. You can't keep doing the same thing and hope for something to happen differently. You know, it's the old joke about Einstein, right? The definition of crazy, keep doing the same thing and hope for a different outcome. Here, you're going to make those decisions. And as the leader, you have to help the team go through it. But you have to get them through that. And some people who don't want to make that journey, that's okay. There's other opportunities, other places they can go inside the company as well as outside the company that maybe that's going to fit them better. But the most important thing you can do for the organization is get a unified team focused on a critical few areas that we can go win at. And we know we can win there because the money tells us it's there, the resources tell us it's there, the numbers tell us that it's there. So, First, it's being candid and honest with it. It's having that clear vision, setting it for it so the team knows where you're going. Secondly, is once you're presented with the data, once you're presented with that data, you have to be willing to make a call. Is it going to always be perfect? Absolutely not. It doesn't have to be perfect. All the thing I'll promise you is wherever you start is not where you're going to finish, right? But you're going to take that journey, you're going to take it together. And since the team, the team owns the strategy of how to get there, they're the ones that's going to be dealing with it on the front line. They're the ones going to see what's happening and they're going to make those choices each and every day. Many of them are micro choices. They don't even realize the actual what's happening is going on, but they're going to decide, what am I charging for that product? Do I add freight to it or not? Do I develop the next generation with it, right? So in order to win, the first thing you realize, you can't satisfy everyone. You need to recognize that there's going to be a few customers that are going to make a huge difference for you. And by organizing your company around it, by putting your resources there, you're going to give your company the best chance to, to do it. Your best customers love it because all of a sudden they're starting to feel it's different. They're starting to see a higher level of customer service, to see the on-time delivery. They're starting to see the products developed for them. But the interesting thing where you can run into trouble with is when some people maybe leave your company, maybe you have competitors out there, they will use the knowledge that you're making changes and they will actually go to the customers and say you're going to get left behind. They no longer do these types of things, right? So they'll have input coming from third parties that will tell them things that candidly may not be true or may not be exactly true. So let's assume that there's all good intent on it. What you have to do absolutely right out of the gate is you got to get in front of your customers. You got to tell them what you're going to go do, and you got to tell them why they're going to support it, right? Because you're not actually going to spend time going out and telling customers you're going to They're going to go into the B category. But you for sure got to go out and see your best customers. You got to tell them what's going on. The second place that you're going to get a lot of pushback, it's almost surprising, is your suppliers. Your suppliers, they think every order is a good order, right? Think about it. They're, they're dealing with you. They want to sell more product. If you're not selling that product, all they hear is you're going to buy less from them. So they're going to come in. And if you're distribution, your contracts can actually say you have to take care of certain customers. That maybe you don't want to take care of, right? Well, if we were dealing from a clean sheet of paper, maybe we could take and make it up to where it would work in that situation. But the reality is we are where we are and our contracts are what our contracts is. We have to navigate our way through that. Let me give you an example for it. So in one line that we have, we have a line of compressors. We have absolutely fantastic partners in these products. In the big compressors, We make a lot of money, we offer a lot of value, and our customers love buying from us off of it, right? We know how to service them, we know how to take care of the customer with it. It's just really a wonderful symbiotic relationship all the way from the customer to us to the manufacturer of the compressor. When you look at the really small stuff though, is there's not a lot of value in these compressors. And candidly, when they break, customers just like to throw them away, right? They're so cheap, they could just easily be gotten rid of. We're not particularly good at that. And the reason we're not good at that is where we make our money is taking care of our customers, and we do that through service. And so when the product breaks and it goes down, what they do, they don't have the ability to fix it. They call us 24 hours, 7 days a week, 365 days a year. We're going to get someone out there really quickly, get them up and going again. We provide that service. If it's a throwaway unit, nobody cares. They just throw the thing away. And so since we don't have an opportunity to really make very much money on it, we don't actually care that much about that business, right? But here's the rub. Our OEM, the person, the company that makes that, they love those units. They want volume through it, right? So how do we deal with that? We don't walk away from that business. We don't say we're not going to be in there. We've set up things like e-commerce. We've set up more inside sales. So whereas on a normal customer, you might have one salesperson taking care of only that customer, we may have— 2. specific inventory in. We may give a guarantee on uptime, all sorts of things. On these more disposable units, you can order them online. We'll ship it to you. It comes in a box. They can take it out, take it and change it themselves, and things like that with it, right? So what it is, we call that fair but not equal, right? So both sides are important to us. Both sides are important to our customers, are important to our suppliers, but we have to treat those differently because if we put the same level of resources on those disposable compressors, we'd go out of business. You could not support that network. But by giving an appropriate level that both the customer is happy with, they get what they need, our suppliers are happy because we're still selling it and we have an opportunity to make money off of that, it works for everyone. So it's important to have a process that does not treat them all equal. They don't want all the same things. They do want to be taken care of. They do want to be taken care of in a very efficient and timely manner, but it should be appropriate for the situation. It's one of the hardest things we deal with is teaching our employees to treat each one of those differently. What's appropriate for them, for one, is not necessarily appropriate for the next.