Magazine Article | December 7, 2010

Managing Customer Relationships? Think Mutual Success

Source: Life Science Leader

By Peter Soelkner

"Businesses planned for service are apt to succeed; businesses planned for profit are apt to fail.” — Nicholas Murray Butler

The great American philosopher, diplomat, and educator Nicholas Murray Butler was president of Columbia University, president of the Carnegie Endowment for International Peace, and a recipient of the Nobel Peace Prize. He became so well-known and respected that The New York Times printed his Christmas greeting to the nation every year. Of course, becoming a successful contract manufacturer and effectively managing client relationships today does not require that your Christmas greetings to customers are worthy of reproduction in The New York Times, nor does anyone expect your business efforts will win the Nobel Peace Prize. However, Butler was correct in his belief that businesses planned for customer service first and profit second are the ones most likely to succeed.

Never before has the practice of managing customer relations been so important to the CMO as it is today. Factors such as the high value of API, escalating costs of development, product safety, security of supply, and increased competition have added new dimensions to the world of business since Butler spoke those words more than 50 years ago. Nevertheless, at the corporate level, relationship management remains key in building and maintaining new business, creating a positive image of the company, and positioning it for new growth. And at the manufacturing level where the actual project is completed, well-managed customer relationships continue to provide the necessary intellectual fuel not only to ensure a successful project outcome, but also to optimize costs and improve efficiencies. Properly managed, customer relationships will always win out in the effective implementation of a client’s strategy across an entire spectrum of projects and ensure a smooth working relationship.

Getting Started
So where do we begin to implement Butler’s concept of “service” as it pertains to relationships with our customers? And what must we do to ensure that these relationships are successfully managed and any challenges overcome? What tools can we employ to enhance these relationships and affect the outcome of the project today and tomorrow? As a start, we can begin by managing the expectations of our customers. This is quite simple, we think. Take in the project, develop and manufacture it according to their specifications, and completely deliver it on time and within budget. With that task achieved, have we not managed their expectations by completing the project as promised? A happy customer, we assume, with future projects ensured. Unfortunately, a CMO managing a customer relationship with this mindset is almost certain to fail, if not on the initial project, then most likely in future projects.

Today, to do well by our clients means more than just accepting and completing a project. A customer’s expectations of a contract manufacturer far exceed a project’s simple execution. They want to know that you understand and care about their business as much as they do. They expect that you will make every effort to understand their strategy and that you will add value at every step of the process. Not understanding or anticipating their needs, compounded by the failure to adapt to their changing business model will most likely lead to poor customer relationships and a failed opportunity for common business growth.

Every CMO must understand a customer’s overall goals and objectives, the evolving market needs and regulatory requirement beyond the project at hand, and the processes that address them. How this is executed in a tactical manner is critical to the management and well-being of the relationship.

Building Solid Customer Relationships
To excel and build a solid foundation for future growth, it is imperative that we identify ways to help our customer’s business as a whole become more successful, not just the success of one specific product. The core philosophy of management of customer relationships is relatively simple and constant, i.e. focus on the relationship with your customer not as a single transaction but as a partnership.

Of course, such a level of trust requires a mutual effort. A plan to develop comprehensive relationships that move in that direction from the start, making every effort to cultivate and grow the relationship as time passes, will create a desire for mutual success.

The benefits to both the CMO and the customer resulting from such trust are many. Some of the obvious include optimized costs and improved efficiency. Project budgets are kept on track and overruns are avoided. Capitalizing on lessons learned from successful projects and applying them to new products with the same customer across its business model will also result in a continuous improvement in outcomes and most likely increased business for the CMO.

Remember, too, that while you may understand your business extremely well, your customer may not. For example, a small biotech company hoping for success with its first compound may find everything about the contracting manufacturing process to be completely new. As such, make every effort to not only understand its business but also to educate your customer about yours.

Anticipating a customer’s needs as the relationship evolves and addressing challenges as early in the process as possible will also help minimize misunderstandings and strengthen the relationship. Understanding the customer’s strategy, learning about its entire portfolio, and familiarity with its business model are critical to success of the current and future projects.

Projects cannot, and should not, proceed without anticipating the customer’s needs. Address problems immediately and creatively as the product is being developed. Carefully monitor adherence to production schedules; immediately communicate any anticipated delay. Keeping channels of communication open should address any problem before it becomes critical.

Communicating For Success
Virtually any breakdown in the business relationship can be traced to a breakdown in communications or the failure to make the most of lessons learned. Teams that communicate well are also more efficient. Properly integrated, good communication among parties will result in optimized costs and improved efficiencies.

Unfortunately, good communication among team members and peers is not always easy to achieve. Differences in corporate cultures and business models, varying levels of knowledge, and experience at all levels are just a few of the issues that can make communication among parties more difficult. There are, however, a number of communications tools that can be employed to help overcome many of these issues.

Employing The Tools Of Effective Customer Relationships
As Butler observed, “When businesses are planned for service, they are apt to succeed.” Here are some of the tools commonly used in the practice of integrated communication. This is by no means an exhaustive list, but planning on their use from the beginning of the project will help ensure that the outcome is positive and communications between you and your customer are successful.

Speak with one voice — Customers want to know that their needs are being addressed consistently throughout the organization. Be certain that the goals and objectives of your customer are communicated at every level throughout the organization so that your customer hears consistent messages about its project and its status at all times.

Incorporate regular communication at all levels of the organization — Peer-to-peer communication and regular team meetings help keep all members of the team abreast of the project’s goals and objectives. Any changes that might occur as the project progresses should be communicated quickly throughout the organization. Regular, ongoing communication involving all team members usually results in more creative solutions to difficult problems and saves both time and money.

Create parallel teams — When organizations have the appropriate staffing capabilities and internal structure, the functional alignment between the CMO and the customer will help better align assignments and foster peer-to-peer relationships. Such teams also help to ensure that individuals on the project are speaking with one voice.

Assign a key account manager — A high-level individual with significant managerial experience and extensive market knowledge can be a vital go-between for the two companies, particularly in times when problems arise or when appropriate teams or staff members are being assigned to a particular project.

Create a dedicated technical solutions team — A lack of creative approaches to difficult projects will challenge any relationship. The development of innovative solutions when problems arise is critical. A dedicated technical solutions team will help move a product more swiftly through the production process and can also anticipate problems early, reducing the risk of difficulties and increasing efficiencies.

Establish high-level contacts — A steering committee consisting of individuals from both companies is invaluable in helping to review the efficiency and comfort with which the two companies work together. Such a committee will also help to identify potential risks and offer solutions to the teams, reinforcing the strengths of the relationship.

Create a daily resource for the customer — A department responsible for the management of day-to-day dealings with clients is vital. If appropriate, a permanent on-site office at the CMO for the customer may enable immediate resolution of issues and quick decision making.

Making the Effort
Effectively demonstrating good practices in customer relationships is the key to success. Few, if any, companies do it perfectly. However, show your customer that you are making the effort to go beyond the traditional customer/contractor relationship by adding value to the partnership in every step of the process. Learn from your mistakes, and capitalize on your strengths. And, most important, trust in Butler’s words; businesses that are “planned for service are apt to succeed.”

About The Author
Peter Soelkner has been a managing director of Vetter Pharma-Fertigung GmbH & Co. KG since June 2008. In 2009, he was also appointed managing director of Vetter Pharma International GmbH, the company’s marketing and sales organization.