Providing great customer service can be an effective strategy to beat out larger competition.
Ed Zimmer walked the customer service walk for 25 years. In 1985, he and his brother-in-law, Jim Thompson, took over Ecco, a maker of backup alarms and lights for trucks. Quickly, they understood that customers—theirs were mostly vehicle manufacturers—had to be their primary concern. Without that focus, Zimmer says, they couldn't have built Ecco, which is based in Boise, Idaho, into the $100 million operation it was when he retired as CEO in 2009. Zimmer talks here with writer Amy Barrett about how he made sure his customers felt the love.
Why did you and Jim Thompson focus so heavily on customer service?
For the first couple of years after we bought the company, we focused on improving the product and getting the company's manufacturing operations up to speed. But after we did that, we realized we were still a small company competing with much larger companies. We couldn't differentiate on price, because those bigger companies had scale. And we did have some real nifty product features—but those could be duplicated eventually by the competition. So we made a strategic decision that the place we could differentiate ourselves was on customer intimacy. And we stole ideas on how to do that, shamelessly.
Whom did you look to for ideas?
Well, we read a lot—books from folks like Tom Peters. And we took note of others who provided good service. I remember in the late 1980s ordering a jacket on the phone from LL Bean. I couldn't decide which size to get, and the representative on the phone was trying to describe the two sizes to me. She finally said she would bill me for one jacket and send me two sizes so I could see which one fit correctly and send the other back. She was empowered to do that, and it made the sale.
We started talking to our customer service people about that experience. And we even bought gift certificates to LL Bean and gave them to our three customer service folks at the time, so they could order something for themselves and see what the process was like. We wanted our customers to have that kind of experience.
How did you get a handle on what customers wanted?
We talked to customers a lot. We were always accessible. And we did some simple surveys. We would mail these to customers, and they would have just six or seven questions on rating things, such as our product reliability and our delivery times. And at the end, we'd have an open-ended question that would ask, "If you ran Ecco, what is the one thing you would do?" We learned quite a bit from those surveys. One important thing was that customers liked the fact that when they called us, a live person answered the phone. So while other people were putting in automated phone systems, we continued to have someone answer the phone—and our goal was to have it answered on the first ring.
What else did you learn from your customers?
About 40 percent of our sales are to OEMs [original equipment manufacturers] that put Ecco alarms on their vehicles. Back in the late 1980s, I went on a sales call with one of our representatives to visit fire-truck maker Pierce Manufacturing in Wisconsin. It was not a customer yet. I asked the electrical engineer at Pierce how alarms got fixed onto their vehicles. He took me into the factory, and we watched as one of their people was putting a competitor's alarm on a truck. It took him about 30 minutes to get it prepped and installed. I asked how much of a benefit it would be if our alarm came with the right wire length and connector so it could be put right on the truck. He said that would be great—after all, it would save half an hour at union labor rates.
So we started doing that for them and other OEMs. We had pretty flexible manufacturing operations, and as we grew, we incorporated this concept of modifying the product at our plant for OEM use. We would talk to the engineer at the customer company first, get him interested in the product, and then talk about how we could reduce the cost of installation. We ended up winning a lot of business that way, huge accounts such as Caterpillar and John Deere. And in our manufacturing, we specialize in short runs for very specific products. We now supply more than 500 vehicle manufacturers worldwide, and 50 percent of that business is modified for that OEM.
How has that service to OEMs evolved over time?
In the late 1990s, we set up a separate, dedicated customer service group just for the OEMs. The OEMs have their own language and way of doing things, so that just made more sense. Those OEM orders typically come by e-mail or fax, not over the phone. And one customer even requires that we go to its website daily and pull the orders down ourselves. So it is a different way of communicating.
Then, in the early 2000s, we formed a separate product marketing group focused on these big OEM customers. We were finding that it was very time-consuming for our product development group to manage all the modifications for a new product. So we pulled a customer service person, a product manager, and an engineer together on a team, and they worked solely on creating these customized versions of our new products.
How did you differentiate your service from that of your competitors?
For one thing, we put in pricing policies that made it more profitable for the distributors to sell our products instead of those of a competitor. A big piece of our business is the aftermarket, which is where distributors sell our product. And a lot of our distributors carried six or eight brands, and they could sell any one of them to their customers. As we got bigger and our margins improved, we shared some of that with distributors by cutting the price we charged them.
Then, around 1993, we changed our shipping policies. Previously, we had said when we received a new order, it would be shipping within three to five days. That's how most of the competition did it as well. But as we talked to distributors, they said that lag meant they had to hold more inventory than they would like so they could turn orders around quickly for their own customers. So we changed and promised we would ship all orders within 24 hours of receiving the request. It took six months of planning to do that, and we had to double our own finished-goods inventory to make that happen. But that really boosted sales and was a major differentiator for us.
Did many of your ideas come from your customer service team?
Absolutely. One thing our internal team came up with was the idea of stepping up to tell customers if there was going to be a delay with their order. So rather than having the customer call up when a shipment didn't make it in time, we'd call them first. In some cases, there was only one piece of that order that the customer desperately needed, and we might be able to get just those few items out as promised. But even if we couldn't solve the problem, the customer wasn't surprised when something didn't arrive.
What makes this customer-centric model a success?
We'd often see competitors try to duplicate what we were doing, and they would fail. The problem was, they didn't have the entire company focused on this. So they would try something new in terms of customer service, do it a few times, and then stop. We never took our focus off our customers.
And the bottom line was, the management team really liked dealing with customers. You have to get very close to your customers and find out what they want. So unless the leader of the company really loves customers, loves talking to them and working with them, it won't work. In that case, you better find another competitive advantage to exploit.
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