This is a story about sales and service, and their relationship to profit.
The failure of my bicycle’s gear lever meant a trip to a cycle retailer. All very polite, they identified the required part, but didn’t have it in stock. Never mind – you can order online. And they continued “while we’ve looked at your (elderly) bike, it needs a new chain. Which usually means new sprockets front and rear. Once you’ve done that you may find the wheels are old and making the ride less smooth, by the time you’ve done that you may as well be talking about a new bike…” Needless to say, I was in a bicycle shop with hundreds of new bikes to choose from.
I thought this type of sales approach had gone out decades ago, probably before I even bought my bike (new) from an independent retailer in 2005.
But this retailer, while totally competent, was not an independent. It was a chain and owned by a private equity investment company, whose priorities are ensuring good shareholders returns. Maybe – and it is maybe – that’s why I got the sales pitch.
Having not found the part I required on their website, some further Googling revealed something close which I fitted myself. This was where my comparative lack of expertise showed up in some sloppy gear changing.
So, back to the shop, or rather, a shop.
This time I went to Cyclists Fighting Cancer near Stratford on Avon, on the recommendation of a neighbour. A quick call, and they welcomed me to drop it in. They asked me to give them a few minutes to check the gearshift which gave me a few unsupervised minutes surveying their stock of used bicycles. By the time they fixed my gears – maybe 5 minutes – I was keen to enquire about a couple of their bikes for sale. As you can guess, having arrived with one bike needing a repair, I left with 2 roadworthy cycles.
Sales and service are naturally related and often arrive together. Yet one reflection on my recent experience shows how being keen to sell may not be enough: you must have the interest of the customer at heart. An impulse purchase for me was much easier to an organisation which has a purpose which is not just commercial, and not blatantly commercial.
I highlight here a correlation between my sales experience and private equity: it may or may not be the cause.
But having a cause in addition to your commercial outcomes comes across to your customers. It may even result in more sales.
https://www.cyclistsfc.org.uk/
Buzzword of the Week – Pension Fund Deficit
Definition – The gap between how much a pension is required to pay out vs how much money is available to pay out. i.e., when the liability is greater than the assets.
While a pension deficit is clearly not a positive situation, it does not necessarily mean that the scheme is going to fail. Once the deficit is reported to The Pensions Regulator, the sponsoring employer will create a plan to close the deficit – although this will often be over a significant period. Funding the deficit means that the sponsoring employer could have its growth affected as it directs revenue and profit into closing the gap.
Alternate View – It all depends on size: which in turn is driven by the estimate of liabilities and future asset expected valuations. Some notable examples include BT (hence the line about a pension fund which runs a telecommunications company). Revaluations usually occur every 3 years and the discount rates and valuations can see significant swings in value and consequent deficit. This now has a balance sheet impact, although the nature of this liability means it does not have to be paid for potentially decades, providing plenty of opportunity for things to improve. Or maybe get worse: the Carillion example from 2015/6 had a negative impact. So, it could be terrible, just bad, or not a problem.
Coming Up…
CIPD Coventry & Warwickshire HR Hot Topics Friday May 13th 1.00pm – an informal online gathering to discuss the hottest topics in HR. This week – mental health & wellbeing – are employers doing enough?
This is not business but: Stratford Musical Theatre Company present Legally Blonde at the Stratford Playhouse from May 4th-7th. A musical story of a woman’s struggle against sexism in the legal profession – its funny too! Tickets from https://www.ticketsource.co.uk/stratfordplayhouse2/legally-blonde-stratford-musical-theatre-company/e-rxqqrz