As seen in The Chicago Tribune

MINDING YOUR BUSINESS
Client-focused companies learn to grow with the flow

Small businesses can capitalize on their ability to know customers personally by responding to their cues and moving swiftly to serve them.

By Ann Meyer, Special to the Tribune.
Chicago Tribune. Aug 30, 2004.

Josh Silvers had a brainstorm that launched him as an entrepreneur six years ago, but nowadays, he takes his direction from his customers.

Running a $10 million-plus medical supply distribution company wasn't his original intention when he first imported disposable gloves in late 1997. Instead, the former commercial real estate broker simply seized an opportunity.

Because of growing concern about AIDS, he recalled, "Everyone needed gloves."

Silvers had friends in Shanghai at the time who helped connect him to glove manufacturers and ship the product to the United States .

But that niche business was only the beginning. By asking his customers outright what other products they would like to buy, Silver gradually built a full-fledged medical supply company, Xcel Medical, that now has 25 employees and offers about 5,000 items, including medical, janitorial and food-service products.

The ticket to Xcel's success, Silvers said, has been listening to customers and striving to do whatever it takes to make their lives easier. It's a strategy that works particularly well for small businesses, which by nature get to know their customers and can move swiftly to serve them, experts say.

Evanston-based Xcel scours trade shows and works with international medical supply companies to find products that will help its customers, mainly nursing homes and assisted-living facilities.

Like a manufacturer, before Xcel distributes a new product to its customers, it tests it on a small sample and gets feedback. It will take its research back to the manufacturer when changes are necessary.

While businesses of all sizes often crow about how well they serve their customers, smaller companies can have a leg up, experts say. They often can execute on customers' needs more quickly, said Kim Mims, president of the International Customer Service Association, which is based in Chicago .

"They don't have as much red tape as larger companies," Mims said.

But listening to customers isn't always automatic for small businesses, said Eugene Fregetto, who teaches entrepreneurship and marketing at the University of Illinois at Chicago.

"Entrepreneurs tend to be product-oriented," he said. "They have this idea of what people need."

Even if they hit pay dirt with their innovation, their success generally will only go so far until they start paying attention to what their customers are saying. "The ones who succeed become customer-focused," Fregetto said.

Like many small companies, Xcel relies on its sales force to obtain feedback from customers, and that includes garnering new ideas.

But sales reps generally aren't the best-trained market researchers, experts say. With a focus on closing the sale, they're likely to put customer suggestions on the back burner, said Jonathan Frenzen, clinical professor of marketing at the University of Chicago Graduate School of Business.

"The flow of information from sales to marketing group is rarely as rich and powerful as it should be," he said.

And the tidbits of information garnered from customers that could lead to the next breakthrough product or service often get lost in the shuffle. Instead, he recommends focus groups, surveys and other conventional research tools.

Still, in small companies, it can be worthwhile for top management to regularly query sales reps for front-line market research.

"If you have a group of hand-picked, trusted people and everyone has a vested interest in the outcome, then those people are more motivated to listen to the customer and take it back," Frenzen said.

© Copyright 2004 by the Chicago Tribune)