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Business Unplugged™
This blog features Carol Roth's tough love on business and entrepreneurship, as well as insights from Carol's community of contributors.

What Are the Dented Cans Within Your Organization?

Written By: Ben Baker | Comments Off on What Are the Dented Cans Within Your Organization?

Have you ever had canned tuna or salmon delivered only to find the can is dented?

You call, wait on hold, talk to some nice person who apologizes, new cans are delivered, and the next time you order the cans again, they come dented.

Beyond your frustration level, can you imagine what this costs the company in time, money, brand reputation, and loyalty?

This is the epidemy of communication disconnect, and is why companies unnecessarily waste millions and millions of dollars annually.

From a consumer’s point of view, it seems inconceivable that the information never gets from the customer service team to logistics, who can make a simple change in process and resolve the problem once and for all. However, time and time again, the lack of effective internal communication leads to frustration within the organization, customers get tired of complaining and abandon vendors for other options, creating enormous hits to the bottom line in the form of a thousand paper cuts.

About the tuna fish, replacing a six-can package does not seem like a big deal. However, it is.

  • There is time spent by customer experience dealing with the specific issue.
  • New product that could have been sold at a profit needs to be given away to consumers without the ability to be compensated by their vendor because the tuna was dented in transit.
  • Time must be spent by accounting writing off the six-can pack.
  • The tuna must be picked, packed, and shipped, costing time, expense of the additional packaging, and shipping costs.
  • And then there is the hit to the brand because someone decided to take pictures of the dented cans in your branded packaging and vent about it on social media.

What would be the cost if this happened one thousand times per year?

That number is not inconceivable based on the volume of packages shipped.

At a rough cost of:

  • $20.00 for the additional tuna
  • $15.00 for the time of the customer experience person online with the customer
  • $15.00 for accounting to deal with the write-off
  • $20.00 to pick an individual item, box it (including the price of the box and packing paper), and ship it out to the client

This could be as much as $70.00 to fix a single instance of this problem.

Multiply this by one thousand and then assume there might be thirty SKUs that have similar issues, and this could be $2M of unnecessary cost to the bottom line that could be easily fixed.

How could it be fixed?

First, a mechanism that allowed ongoing and protracted issues to be immediately flagged from customer experience and communicated directly to the logistics teams. From there, they need to assess if the materials themselves are showing up damaged from suppliers or if the packages are being dented because of their shipping methods.

From that point, it is developing a new procedure for those materials to be packed within a box to ensure they are not damaged in transport.

I have not run the math, but I am sure that is a problem as significant as the one I suggest; the different packaging option would be significantly less expensive and would enable customer experience to spend time on new issues instead of old ones, and logistics to not have to redo work that should have only needed to be done once.

Every business has its version of this problem.

Policies, procedures, and processes that frustrate people internally and externally cause unnecessary delay and expense and lead to clients being unhappy and searching for other viable vendors.

When was the last time you fully audited your policies, procedures, and communication to discover the holes in your current business model, and create alternatives that allow for happier internal and external clients and higher profits?

Ben Baker is the CEO of Your Brand Marketing. A strategic communication firm designed to enable you to align your internal teams with change management initiatives and other issues, allowing you all to move forward profitably together. 

 

Photo by Claudio Schwarz on Unsplash

Article written by
Ben Baker is a communications strategist, the storyteller of your brand and the author of “Powerful Personal Brands.” He believes that every brand needs to stop acting like a commodity and instead be a brand worth loving. You can contact him at www.yourbrandmarketing.com.