As Marian DeVoe looked at her financials at Chardon Rubber Co., she
knew there was a problem.
“In the rubber industry, we’ve been in a
very challenging environment, both cost-wise and with pressure from our customers over the last several years,” says
DeVoe, president and chief operating officer of the company that designs and manufactures engineered rubber and plastic
component systems. “We got so focused on
just growing the top line that we lost track
of where we were really getting value from
that growth.”
DeVoe discovered that about 15 percent
of the company’s customers were contributing 90 percent of its sales dollars.
“We had a huge amount of customers that
were really not contributing, and, in fact,
might be taking us down with the type of
products we were trying to make,” DeVoe
says.
In hopes of fixing the problem, DeVoe
and about a dozen other Chardon Rubber
employees attended a SOAR to Strategic
Excellence event. SOAR — invented by
Larry Goddard, founder and president of
The Parkland Group — is designed to
measure business health and help achieve
improved profitability.
“Going through the SOAR process, we
were able to understand that we were trying to be all things to all people rather than
focusing on our company strengths,”
DeVoe says. “We put in a new pricing strategy. We realized that our standard costing
system did not accurately represent the
true cost of servicing our customers. Once
we could understand we were spreading
ourselves too thinly and we were not
appropriately allocating the costs, we made
a determination to change our pricing
structure.”
When the company first considered the
change, DeVoe says some employees were
apprehensive. But with clear communication to both the company’s employees and
its customers, fears eased quickly.
“You coach them along, and you try to
understand why they are apprehensive and
what they feel they have to lose by making
the change,” DeVoe says.
The company, which has 130 employees
at its Chardon plant, held meetings at various levels but often relied on supervisors to
have conversations with their employees.
“The supervisor at that level is the one the
employees have the most confidence in
and the person they deal with day in and
day out,” DeVoe says.
The company also had to communicate
the change to customers. DeVoe says the
key to keeping customers happy is to be
direct, but you also have be clear about the
value you bring them with the service you
provide.
“If you’re convinced you’re on the right
course, stay the course,” DeVoe says. “We did
open up dialogue with customers that may
not have existed if we hadn’t taken this
approach, and it enabled us to offer some
alternative ways of doing things that helped.”
When looking at changes in the way you
make sales, DeVoe says it becomes critical
to know your customer.
“You have to know who your ideal customer is and focus on them,” DeVoe says.
“A lot of analysis, a lot of evaluating costs
and the potential for growth with that customer. We found that customers that
require the most technical support also
offered, in many cases, the most growth
potential.”
By being clear about the changes, DeVoe
says Chardon Rubber lost very few customers as it made the transition.
“We attempted to define for our customers what we thought the value was that
we were bringing to them,” DeVoe says.
HOW TO REACH: Chardon Rubber Co., (440) 285-2161 or
www.chardonrubber.com
Go beneath the surface
While financial statements can give an
indication of a business’s health at a
given moment, they don’t tell you much
about the future, says Larry Goddard.
“Are you making money or not making
money?” Goddard says. “That’s not a
very good indicator of the health of a
business over the long term. We wanted
to develop a process that could dig
beneath the surface and identify the
strengths and weaknesses of a business
but be able to do it very quickly.”
Goddard, founder and president of The
Parkland Group in Cleveland, invented
SOAR to Strategic Excellence to do just
that. The program is designed to measure business health and help a company
determine in one day the steps it needs
to take to achieve significant improvement in profitability.
At a SOAR event, businesspeople
answer more than 300 questions about
their business. The answers are put into
a database, analyzed and turned into
recommendations for improvement.
“People get a tremendous amount of
introspective knowledge in eight hours,
and they get it in a color-coded format
that essentially tells them where to focus
on,” he says.
When Chardon Rubber Co. President
and COO Marian DeVoe attended a session, she learned that all sales are not
good sales, Goddard says.
“Before you go and pursue growth,
you want to make sure that your existing
base of business is appropriate for you,”
Goddard says. “They focused on better
quality of sales before they focused on
growth of sales. Once you focus on better quality of sales, you know which customers to pursue in the future.”
HOW TO REACH: The Parkland Group, (216) 621-1985 or www.parkland.com