Fewer Credits, Happier Customers

               What if I said that you could increase profitability by whole percentage points without changing your growing practices or pricing structure?  Now imagine doing that while strengthening relationships with your customers.  Too good to be true? 

               Below is the process I like to follow for reducing credits, improving profitability, and building strong relationships of trust with my customers.  Take a look and please let me know if you have some strategies I’ve left out. 

Know your crops. 

I’ve heard it said that the best thing a farmer can put in the soil for plant health is their footprints.  The same applies for salespeople who wish to reduce credits and increase sales performance.  What does a busy salesperson get by walking their farm? 

1.       Limit Downside Risk: Avoid selling crops that may have a mistaken ready date or have some defect. 

2.       Opportunity Cost: Know what is looking good to make intelligent suggestions to customers. 

3.       Free Improvement: With a fresh set of eyes, you can provide scouting feedback to Production if there are issues with maintenance, IPM, inventory, etc.  This is free for the company since you’re already out there.  Avoiding issues before they become issues is how pros avoid credits and improve performance. 

Know your customers. 

               This is easy at the start of a relationship.  Most customers will request quite a few photos when they first start ordering from an unfamiliar nursery in order to build confidence in their availability list.  With new or old customers, it’s extremely important to ask them questions about their expectations and connect those to your minimum specs. 

Most of the time, their expectations will be based on years of experience and are mostly in line with what you produce.  With that being said, I’ve had several customers over the years who have unrealistic size expectations.  These conversations helped me to know when to reset expectations for a given crop to ensure they were happy with the material they received.  I definitely advise having these conversations early in the relationship.    

Proactively communicate the quality of your crops in the field. 

This step refers to the continuous process of advising on quality.  Stuff happens and you need to keep the customer updated so they can make educated decisions for their business.  They’ll love you for it.

Examples of issues to communicate:

1.       Seasonal life cycle things like hydrangeas being trimmed back in the fall which removed their blooms.

2.       Residual effects of IPM issues like height of Physocarpus after being cut back to remove powdery mildew that was treated.

3.       Quality issues like when a plant is up to height but only 80% rooted.

4.       Inventory issues like where a large order shipped from the customer’s crop and the leftovers don’t make spec. 

These are just a few examples, but the bottom line is to get ahead of issues as early as possible.  I prefer to inspect crops for spring orders in the winter months when everyone has a little more time available.  Either way, you and your customers both want to be aware of issues before it’s time to ship. 

People get upset when they’re negatively surprised.  By communicating early, you put the customer in the driver’s seat.  I’ve found several times where the issue I think is a deal breaker is actually something they can live with.  The dock discovered a little rust on Cleveland Select pears bound for Colorado so I called the customer to let them know.  The customer said the rust would not be a problem in their dry Denver climate.  They thanked me for the concern and asked to please ship the load. 

Even if they can’t take the material, you’ve proven that you are concerned about their satisfaction and wellbeing.  That’s worth something too.  It’s important to remember that if a customer can’t make money with your product, neither can you.  It does more damage to your relationship and future business if you ship it without alerting them than to simply remove it from the order preemptively.  And that is my default move if it’s time to ship and I can’t get ahold of the customer.  I’d rather not ship than ship something that is bad quality. 

Be deliberate when pulling.

I interviewed a man to work at the dock who said he likes to ship a few bad plants mixed in with the good ones, so the nursery isn’t stuck with leftovers.  It sounds bad when put so bluntly but it’s a very pervasive idea.  It’s also a very costly idea.  During a recent survey, I found that buyers were very frustrated by inconsistent products and quality issues that were not communicated proactively.  The rule is simple.  Only ship #1 quality material if you want to reduce credits.  

It might be convenient for the pulling crew to just grab the right number of plants quickly without considering quality but how much time did they really save if it is rejected at the dock and they have to go pull replacements?  If you can’t find time to do it right, you’ll have to make time to do it twice.  There are a lot of costs associated with restocking and repulling an order but those are nothing compared to the effect on your future business with a customer who receives bad quality.  That’s a silent killer of your reputation and business. 

Practically, I like to use a single point of contact to streamline everything so we advised pulling teams to communicate any issues with the dock foreman.  More often than not, she could answer their questions and that streamlining kept salespeople focused on selling until the material made it to the dock.  Remember, the first step was to know the crops.  Each element is important.

Prepare Materials for safe shipping.

When I first started, we had a slew of credits for premium ProvenWinners hydrangeas.  We tried only stacking them on the top row, we tried only palletizing them.  Ultimately, we settled on using kraft paper plant sleeves and only stacking them on the top few rows.  That little cost of the plant sleeves saved our customers from buying a wooden pallet, saved freight, and reduced credits.  It takes very few broken hydrangeas to justify the cost of a few cents per sleeve and the main takeaway was our customer satisfaction went through the roof. 

We’ve taken similar steps with different product lines.  The main thing is to analyze if breakage is a major cause of credits and take steps to reduce that.  Everyone will be more grateful.   

Dock Team Inspection

Our number one cause of credits was miscounting material on the dock, especially during shipping season when there were so many moving parts.  We instituted the dock inspection.  The dock foreman or her coordinators would count every plant on the load.  If they were short, they’d just call the pulling crew and get a new plant.  It makes no sense to go to all the trouble of growing a plant and selling it only to not put it on the truck. 

Our dock inspections also entailed checking picture tags and checking for quality issues.  They had carte blanche to reject poor quality material if there were more good ones in the field.  They would call sales when they had questions or concerns, and we’d solve those issues before the truck ever showed up.  Hopefully you’re catching the “Proactive” theme here.  They say an ounce of prevention is worth a pound of cure.  Having everything ready to load on the truck makes it so much easier to close out shipping on a Friday afternoon.  Everyone goes home happy. 

Sales Team Inspection

Once the material is on the dock and accounted for, the sales rep will walk the dock as well.  This isn’t for counts, it’s just to make sure that the quality matches what the customer is expecting.  If a customer is going to call and complain about something you sent, it’s imperative that the rep knows exactly what they’re talking about.  This last inspection puts the rep at the helm of the sales process and quality control while providing the opportunity to send pictures, make substitutions where possible, and solve problems. 

A secondary but important benefit of this salesperson inspection is that most solutions require the dock foreman’s help.  This helps the dock to see the plants through the customer’s perspective.  It’s exponentially beneficial for the nursery as a whole, for future shipments, for all customers, etc.  This is synergy in its truest form, where two people working together can accomplish more than both of them working separately. 

Safe Mode of Transportation

There are quite a few modes of transportation and it’s important to choose the right kind that corresponds to your clients’ needs and your acceptable risk level.  I’ve written a blog post about it earlier. 

To make it very simple, for a container nursery that ships year-round, it’s my practice to only use reefers.  Climate control is a beautiful thing and has saved me several times from unforeseeable circumstances in the past.  I’ve had trucks involved in collisions and mechanical breakdowns during spring and summer.  The reefer units were still functioning, so it bought us time to come up with a plan B. 

If a customer would like to save a few hundred bucks using dry vans or railcars, that’s their prerogative but it’s also their risk.  I will not credit for climate related damage on a dry van or railcar.  With that being said, I’ve never had a climate related incident on dry van or rail car either.  I’m just naturally cautious. 

Load Carefully

If breakage is an issue for your customers, just take a closer look at your loading practices.  You want big stuff on the bottom and delicate stuff on the top.  If you’re manhandling the product, you’re going to have breakage regardless. I’ve seen hydrangeas sheered off at pot level because the loader shoved too hard. 

One thing oddball credit issue we encountered was from broken pots.  The cause was surprising.  We’d shifted some old #3 shrubs into #10 and reused the #3 container for another round of planting.  Those 4–5-year-old pots had become brittle over time.  It didn’t matter how gingerly you touched them; they’d arrive with large chunks broken out of them.  I mention this here because we thought for weeks that it was a loading issue but it wasn’t.  This is why it’s important to pay attention to credit reasons and really drill down to isolate the root cause. 

Our solution was simple.  We switched out those old pots in the field for new pots.  The new pot expense was already built into the price and replacing it was well worth not having to credit a whole plant. 

Provide Feedback

When we were providing feedback about those broken pots to the loading team, they mentioned they’d received them broken.  I thought that it was odd until we inspected where the pots came from and found the rims shattered in my hand just trying to lift them.  It’s vitally important to provide feedback as part of this “drilling down.”  The root cause is not always apparent, and these broken pots were causing headaches up and down our supply chain until we identified the culprit. 

Feedback loops must be always constructive, solution oriented, and without criticism.  Let’s take the example of a tree with a broken leader.  There are four potential causes for this broken leader. 

1.       Pulling an already broken plant. I would include trees with a weakened bud union in this group because those can look nice on the outside but snap apart with the slightest pressure. 

2.       Breaking during the loading process. This could be vent jousting where the loaders run the tree in too close to the ceiling and either damage the tree or the truck.  It could also just be caused by stacking too quickly where you break branches, by going too high in the stack, or by putting something heavy on top of something tender.  Doesn’t matter except to say these are all 100% avoidable. 

3.       Damage in transit from shifting load. This comes back to loading processes because the cargo should be secure enough to endure 2000 miles of travel without breaking.  Still, stuff happens. 

4.       Breaking during the unloading process.  Whoa, this never happens!  Just kidding.  The reality is, as good as we are on at loading, stuff can still go wrong on the other end.  The trick here is to mitigate risks by executing well on what we can control. 

When giving feedback on breakage, I always try to be graceful with loading team that something else might have happened that wasn’t their fault.  Then, I circle back to a recommitment that we’ll be careful on how we stack, because we control that.  I always think to myself, “I’ll agree that you didn’t do it if you’ll make sure not to do it in the future.”  That attitude keeps everyone from pointing fingers and helps them focus on what really matters. 

Manage Credit Requests

The final way to reduce credits is through fair and open discussion after the request has been made.  It is rare that a customer will request a credit without a justifiable cause so it’s up to the salesperson to understand their reasons.  It might be miscount, damage, disease, quality, spec size, etc.  

I like to see pictures of the issue whenever appropriate.  If you ask this in a weird way, it can sound mistrusting so make sure you’re not saying it in a doubtful “habeas corpus” sort of way.  The reality is a picture helps both parties get on the same page of the issue.  It also allows you to provide feedback to your team which helps avoid future issues. 

Once I see the issue and feel I truly understand the complaint, I am generally in agreement that there’s an issue and we can start solving it.  The solutions vary based on the issue at hand.  I’ve had products ship under spec where a #5 shrub was really at a #3 spec.  In that case, the customer just requested a discount down to the #3 price.  Breakage can be tricky as it depends on how much it affects the value.  Typically, if it’s a peripheral branch or a small break, the customer may request partial credit.  The general rule is to reasonably evaluate the value of the plant that arrived and then credit the difference. 

There are scenarios where full credit is appropriate.  It might be severe breakage, miscount where they receive fewer than ordered, disease, etc.  Miscount is a great example of why it is important to have the pulling crews notate what they pulled on their paperwork, have the shipping team mark their counts on their paperwork, and the BOL accurately reflect exactly what shipped. 

A customer once requested credit on several blue point juniper spirals, but the dock was certain they’d shipped, and we had our paperwork in order.  I asked them to please check once more.  Turns out their dock team moved a pallet of spirals into their yard while the foreman was out to lunch, so he thought it was a shortage. 

That scenario was an honest mistake, but some have been known to pull that trick as a way to offset freight costs.  I prefer not to think that way and would rather be surprised by dishonesty than to expect it.  The main thing is to have good procedures for pulling, shipping, and invoicing.  This will help remove doubt and give you, your team, and your customers more confidence in your performance. 

In Closing

It has been my experience that each credit request is the result of multiple failures along the way, typically 3 or more.  Everyone must pay attention to their work and do the best they can in order to execute.  None of us is perfect or above mistakes so we must be gracious and remember that this is about progress, not perfection.  The fact remains that fewer credits make happier customers.

It is like diet and exercise.  It takes daily effort but once you get the hang of it, it gets easier and easier to build upon.  The further you go, the happier you will be with the way things look.