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MARKETING

Customers as Consultants

The president of a distribution company meets with his customers to discuss strategic planning.
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By late 1992, after a decade of fast (and not always profitable) growth, Prime Technology, a $3.5-million machine-tool distributor in Grand Rapids, had lost its edge. So last spring president Phil Pachulski called the best consultants around: his customers. Eleven of them agreed to meet one-on-one with him to take apart his business. (His salespeople stayed home.)

Says Pachulski, "The meetings were extremely successful for strategic planning." Here's the report card Prime got back:

Product mix: too fragmented. The mom-and-pop customers said they wouldn't pay for the value-added services that often boost thin margins. As a result, Prime cut several existing and planned services, conserving research-and-development dollars.

Service: needs improvement. Customers demanded salespeople with more technical skills. To save time, they also wanted a sales and service person in one.

Sales training: beef it up. Customers were willing to share the cost of technical product training. And they liked Prime's idea of segmenting salespeople by product line and saving the technical salespeople for more advanced products. "So we're doing that now, which helps with sales hiring and training."

Prime's bill for the meetings totaled about $2,000 (less than the cost of some professional consultants for a week's work). The salespeople grumbled about the private sessions, but, says Pachulski, "We'll keep doing it."

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