The first time you hear a story about how internal organizational structures, politics, and incompetence gets in the way of a potentially strong business model, you think it’s just a random case of a lack of business acumen understand ing. The next time you hear a similar story of how a business organization doesn’t want revenue from quality, high margin customers because it’s too much of a hassle, you think it’s just a coincidence. The third time you hear a similar story (within a few weeks) you realize that there are patterns occurring and another blog post needs to be developed on how to improve business acumen skills to help drive higher margin business.
This blog identifies three business acumen examples of business decision and execution behaviors that devalue the organization, tarnish the brand, and turns away valuable customers. After providing three brief examples, I offer three business acumen tips gained from experts and experiences for making sure your business isn’t turning away good revenue due to a lack of awareness of what really matters most; valuable, high margin customers.
As a consultant who specializes in the design, development, and delivery of business acumen, business leadership, and strategic business selling talent development engagements using business simulations, I have the privilege of listening to and talking with some of the best – and not-so-best – business people on the planet to fully understand company issues and opportunities. Recently, I started hearing these incredible stories about business organizations literally turning away revenue and customers because of internal structural issue, misperceptions, and poor recognition of execution that will achieve the right goals and objectives. A few of the examples:
Walgreens started turning away patients/customers who were legitimately trying to fill their pain medication prescriptions. One of the published stories detailed the tragic trials and tribulations of a patient who suffers from a devastating combination of multiple sclerosis, fibromyalgia and peripheral neuropathy. He barely survives the pain of his life by legally and legitimately taking pain medication prescribed by his real and accredited doctor. Helping people overcome illness is the reason scientists invent medicine and why investors take incredible risk to provide capital to healthcare organizations. Unfortunately, Walgreens instituted a new policy of checking with every pain patient’s doctor before filling any pain prescriptions. This process typically takes up to five days! Even more unfortunately for patients - and at the same time - Walgreens instituted a policy that a patient can’t refill a pain prescription until the previous supply has been used over a monitored daily limit. It is literally a no win situation as patients go without their medication for at least 3-5 days. The reason why Walgreens has become so strict on pain medication prescriptions is because of an $80 million fine they received by the FDA for poor processes and procedures related to pain medication dispersal and abuse a few years ago. So because of internal issues and poor execution, high-paying, high-margin customers who are suffering and in pain are being told Walgreens doesn’t want their business.
The next story comes from a specialty materials company that claims to have a strategy of customer intimacy. This company sells customized specialty and advanced materials to B2B customers and has an “interesting” account management and business model. Instead of their sales professionals managing entire strategic accounts - which is fairly standard and called Key Account Management - these sales professionals sell their customized products to specific brands within a customer account. At the same time, there is a rule in place that states that the sales people selling the specialty materials are not allowed to “own” more than two brands within any account. Based on this system, there could be more than 10 sales people from the same company acting totally independently and without knowledge of each other trying to sell customized advanced material solutions to potential customers who run the brands! One day, a Brand Manager within a large account got promoted to a larger and more significant brand. When he called the sales professional from the advanced materials company who he had previously worked with and liked very much, he was told that the new brand is “owned” by a different sales person and that he should call the different sales person. When the customer said that he didn’t want a different sales person because he had a relationship with the sales person servicing his former brand, he was told by a senior manager at the specialty materials company “We can’t let customers tell us how to run our business. Either you work with the new sales person or we aren’t able to work together.”
The third example is from an independent privately owned athletic club that includes indoor tennis, weight lifting, aerobics, and many different classes. The club – like most athletic clubs – has struggled financially. The tennis portion of the club originally focused on established adult players and built up a reasonable membership. After about five years, the adult tennis community was thriving and new players were joining and the brand of the club was gaining recognition. In an effort to expand the tennis program, the owners decided to build a youth program including camps and lessons. The program took off and soon court time for the adults and the kids was an issue. Usually a nice problem to have! But instead of figuring out a way to optimize the court situation, the General Manager of the club decided to eliminate the adult program. All of the members who were there from the beginning and built the reputation and brand of the club were told they would no longer be able to get any prime court time because the youth program was growing so fast. Money of course was a big factor because the typical adult member generated about $2,000 a year and the typical youth player participating in all of the programs generated about $6,000 a year. So, all of the adult members went to other clubs and although the youth program is going ok, there are hours and hours of empty courts that could have been filled by the adult players.
Three Business Acumen Examples
- Take time to look at your customer’s experience from the customer’s perspective (not yours)
How many times has your business or your team stopped and looked at the complete customer experience from the customers’ perspective? It is a worthwhile off-sight exercise that goes beyond just listening to or looking at voice of customer - Be willing to make structural and organizational changes to make the customer experience better (not the employee experience better).
In the example of the specialty materials company, the account structure was set up for internal reasons such as not giving one sales person too much power and/or commissions and supposedly creating an environment for learning and growth. But the customers hated it. You have to be willing to change and evolve your models to create customer-driven long term success. - Empower employees to fix incompetence that hurts the business
Many good leaders know that the employees in the field and on the ground actually doing the work often time know about issues and challenges way before senior leadership does. If you have employees who are seeing issues - especially customer issues – that are bad for the customers and therefore bad for the company, encourage them to speak up, listen to what they have to say, and empower them to fix the problems.