Performance & Hotrod Business - February '15

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February 2015 n Performance & Hotrod Business n 71 all increase in risk factors that change the way companies handle their purchasing. The key is to realign the internal processes using all of the available tools and technol- ogies to closely match customers' buying behavior and to maximize the use of their people's time and resources. The business landscape is evolving and changing. It is important to monitor these changes and continually adapt and modify the operating processes accordingly. Understanding Customer Profit Economics There is no doubt that many changes in the economy and marketplace have pre- cipitated a shift in customer economics. If anything, many companies have been induced to reevaluate the manner in which they conduct business. Companies are purchasing more care- fully and examining the return on invest- ment a specific product or service delivers to them. Consequently, unless employees understand the economics of their busi- ness and how their product or service fits into that picture, they will be quickly dis- counted. Understand what is of most value to your customer, and how your company can best provide it. Reconstructing Reward Programs As companies realign their internal processes and require more servicing of accounts, managers must adjust their com- pensation plans to reflect these changes. Compensation plans should be designed so that employees perform desired activities and functions, which can include business development and service. Research shows that employees will gravitate to where they are making the most money. If they are paid on commis- sion, it is unlikely service will be important to them. Managers should identify and prioritize desired behaviors. Based upon what they come up with, they will have a platform for creating a compensation program that meets their goals. Flattening Decision Making Managers are challenged to move the decisions typically made by man- agers directly to their frontline people. Employees are thus given the latitude to make quick and timely operational deci- sions that can positively impact the speed and quality of results. Understanding Profits Employees should be educated in the profit margins of the products/services their company sells. They need to under- stand the impact an order has on their business, as well as the financial ramifica- tions of customer concessions. Once furnished with this information, their performance should be evaluated not only on their specific work-related activities, but also on the profitability of the portion of business for which they are responsible. As buyers become more sophisticated and are forced to face the realities of increased global competition and a depressed econ- omy, their behav- iors change.

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