What makes the world's top companies so adept at providing stellar customer service? How do they meet the needs of every customer and still turn healthy profits? And, most important, how can you adapt their practices to fit your business?Thanks to over six years of ongoing research and an investment of $30 million, Arthur Andersen has created its Global Best Practices Database to uncover breakthrough thinking at world-class companies. Now, inBest Practices,Arthur Andersen for the first time shares its understanding of how more than forty best-practices companies focus on their customers, create growth, reduce cost, and increase profits. Managers of any business in any industry can adapt and apply what those companies do best.Unlike most books based merely on an author's own theories or limited anecdotal experience,Best Practicesis backed up by 30,000 pages of active, documented data on hundreds of companies worldwide. This book concentrates primarily on customers and how to involve them in everything from the design of products and services to marketing, selling, and product delivery.Perhaps the greatest value of the book lies in its linking of best practices to business processes, thereby encouraging managers to expand their thinking and engage in creative problem-solving with the help of insights from companies inside or outside their own industry For example, the manager of a clothing store chain can study how Federal Express adapted the concept of just-in-time manufacturing to its rapid delivery of parts between supplier and customer. The owner of a small coffee shop chain might learn from American Express and Peapod how to target customers by offering particular products and predicting exactly when they will make their next purchases.These and other examples will help business people diagnose the processes in place at their own companies and determine how best to improve them. Comprehensive and on the cutting edge,Best Practiceswill serve as an invaluable information resource.

Robert Hiebeler is the Managing Director of KnowledgeSpace, Arthur Andersen's innovative approach to leveraging knowledge for its professionals and its clients. Over the past five years he has pioneered the development and deployment throughout Arthur Andersen of the Global Best Practices Knowledge Base, an effort that has captured best practices information from around the world in key business processes. In addition to implementing several productivity and quality Initiatives within Arthur Andersen he has consulted with hundreds of companies worldwide about the search for, and implementation of, best practices to improve business performance. He lives in Chicago, Illinois.

Foreword by James D. Edwards, Managing Partner, Arthur Andersen -- Americas
Acknowledgments
Introduction New Insights Beyond Benchmarking
CHAPTER 2: HEARING IS BELIEVING
The Best-Practices Audit
CHAPTER 3: HITTING A MOVING TARGET
How to Understand Markets and Customers
CHAPTER 4: "NOT EMPLOYEES ONLY"
How to Involve Customers in the Design of Products and Services
CHAPTER 5: FACE-TO-FACE AND EAR-TO-EAR
How to Market and Sell Products and Services
CHAPTER 6: LET THE BUYER BE AWARE
How to Involve Customers in Product Delivery
CHAPTER 7: TO SERVICE, WITH LOVE
How to Serve Your Customers Best
CHAPTER 8: MINDING THE STORE OF DATA
How to Manage Customer Information
AFTERWORD
THE BALL'S IN YOUR COURT
Putting Best Practices to Work for You
Index

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From Chapter 2

In the summer of 2002, Martha Carr opened Coffee Xpress, a wholesale coffee and distribution center in Newark, New Jersey, with three coffeehouses in midtown Manhattan. Offering products such as coffeemakers, espresso machines, and glassware, Coffee Xpress specialized in an extensive line of firstrate coffees and teas from the Far East, Central and South America, and Africa. To serve her coffee shop patrons, Carr contracted with a local bakery to supply sweet rolls, doughnuts, and bagels on a daily basis (except Sundays). Two manufacturers -- one located in Michigan and the other in Milan, Italy -- supplied medium priced coffeemakers, which Carr sold at one of the three midtown coffeehouses.

When a good thing happens in New York, of course, people talk. Lots of customers came from uptown and downtown to drink coffee at the midtown Coffee Xpress stores. The wholesale business also did well, selling to restaurants and hotels in the city and in surrounding states as far away as Virginia. As robust as its Arabian espresso, sales at Coffee Xpress brimmed to $3 million in only five years.

Then, however, the bottom line of the business sank to the bottom of Martha Carr's cup. A drought in South America sent coffee prices soaring. Competition from the likes of Zabar's in her own backyard and as far away as Starbucks in Seattle, Washington, and Peet's in Berkeley, California, threatened to turn her stagnating business into lukewarm coffee slush. And the customers . . . well, they were just too fickle and unpredictable. In confidence, Carr lamented to her staff that she had no idea how to predict what customers wanted next. One month flavored coffees were all the rage; the next, you couldn't give them away.

Carr tried to set up her own Web page and advertise her products on the Internet, but the site had disappointing results: As few as twenty hits a day brought up nothing more interesting than one user's recipe for making the perfect cup of coffee. A small but enthusiastic group of employees even resorted to door-to-door visits to drum up potential business with restaurant owners, other coffee shop proprietors, even residents in an adjacent building. Although it had moderate success, this effort proved tepid at best.

In frustration, Carr called in her team of salespeople, marketers, wholesalers, distributors, and customer service reps. "It's clear that we can't change this company around with a quick fix or two," she announced. "We ought to do some serious studying of our market, our customers, our sales and distribution channels, and those processes we need to develop in order to survive and prosper."

What Carr was asking for was an audit, but not just in the traditional sense of someone from outside coming in to look at the company's books. The wordaudithas its roots in the Latinaudire"to hear," more precisely in the formauditusmeaning "that which is heard." First applied to business in the sixteenth century when it was common practice to have public readings of financial statements that could be "audited" by interested parties, the audit is the first step in understanding the problems that confront the specific business, seeing how those problems can affectanybusiness, and then discovering solutions -- often in the least expected places.

As we approach the twenty-first century, hearing -- both in the sense described above and in the sense of listening carefully to what customers have to say -- has never been more crucial. To search for best practices is to study what other companies have accomplished, to adapt their processes to your business situation, and to hear and learn about your customers' experiences with your products and services. In doing so, you should search not only for local wisdom but also for insights from across the street and around the globe. Finally, it is to share this information with people throughout your organization and with your customers and suppliers. Your search for best practices is likely to lead to a refining products to meet your customers' changing needs and wants. The best way to learn what they need, of course, is to share what you have learned with them.

The decision to audit an organization's processes does not take place in a vacuum. Rather, it is part of a carefully orchestrated undertaking specific to each organization. A best-practice review may lead to some relatively minor adjustments in a company, or it may end in what we call a full organizational transformation.

The review begins by asking the unasked questions of managers, customers, employees, and suppliers, challenging their assumptions about the marketplace as well as future directions it might take. The review studies a client's customers to find out how they define their needs. The review doesn't rely solely on the reports of sales and marketing reps but studies competitors and the degree to which they meet the needs oftheircustomers.

The team that examined Coffee Xpress began working closely with Carr and her associates to develop a precise, unambiguous picture of the market environment -- what constituted the company's value chain, how the company could act faster and more cheaply, and how it could still give customers exactly what they wanted. The group discussed strategies for improving sales and decided to conduct a thorough study of coffee sales and distribution. This approach required that the team learn everything they could about the entire value chain, which begins with the coffee plantation owner thousands of miles away in Chile and ends with the coffee hound on Eighty-ninth Street and Central Park West who religiously buys three pounds of Mocha Java every two weeks.

Most small companies and a number of large companies, as Carr and her staff came to realize, are not vertically integrated. They have only the slimmest of ideas about who their suppliers are, where the raw materials come from, who can supply those items when the regular suppliers run dry, and how accomplished their competitors have become in integrating those suppliers into their own supply chains. The "market," as the folks at Coffee Xpress had originally conceived of it, consisted solely of customers -- either those who walked into one of the coffee shops and ordered a cinnamon roll and a cup of java, or those who mailed in their purchase orders along with a check.

Sensing their error, Carr took pains to point out that the concept of "market" deserves a much broader definition: The market environment includes not only the company's customers but also its suppliers, competitors, and those companies that can furnish substitute products when the coffee industry suffers a devastating drought. And what about those cartels of producers who might decide at any moment to roast their buyers as well as their beans? Mindful of these contingencies, the team began examining the costs of delivering various products, their link to profitability, and the suppliers' place in the delivery chain. Exploring the degree to which employees understand customer needs, the team built an encyclopedic knowledge of Coffee Xpress and developed an instinctive feel for the organization -- its strengths and weaknesses.

Then one salesperson in Carr's group brought up yet another matter: Congress would consider the following week a piece of legislation proposing new tariffs to punish some country for offensive international behavior. That country would no doubt retaliate by raising its export duties, forcing companies such as Carr's to raise their prices to consumers. World events could percolate smoothly for months, even years, but then someone would turn up the heat and the whole pot would boil over.

In their study, the team focused on those individual processes and subprocesses currently in place at Coffee Xpress, evaluating each step to determine how the company spent its time and money. First identifying the company's markets and customers in the broadest sense, the team attempted to understand the key forces that motivate customers to purchase coffee products and services, and then segment those customers by appropriate identifying characteristics.

Next, the team examined how Coffee Xpress designed, built, and produced its products. By evaluating the feasibility of these operations, they helped employees at the company learn how to refine existing products or develop new ones to take advantage of segments previously overlooked. After this part of the hearing, the representatives assessed the company's current marketing and sales practices -- specifically, its channels of distribution, pricing policies, advertising, sales force deployment, order processing, and strategies to capture customers.

The penultimate stages of the audit process included a scrutiny not only of the company's production capabilities but also of its ability to customize products and services in order to meet customers' current needs and form stable, long-term relationships with them. Once established, those relationships would have to thrive on one-to-one interaction between the company and the customer. "Points of contact" -- individual service representatives, salespeople, technicians, and the like -- would give the company with its new customer-oriented focus a means of solving problems more quickly. When shared throughout the organization, these service interactions would build cross-functional cooperation. The company could thus gain a decisive advantage over its competitors.

Finally, the team evaluated how Coffee Xpress could best manage the information that it collected about its customers" purchasing patterns, preferences, and values. Typically, this evaluatior often takes the form of suggestions on building a common database to create customer profiles, then tracking the customer's entire experience of buying, receiving, and using a product or service Through these means the team predicts how successful the company will be if it implements all of the key processes.

Excerpted from Best Practices: Building Your Business with Customer-Focused Solutions by Arthur Andersen, Robert Heibeler, Thomas B. Kelly, Charles Ketteman
All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.