Chapter 9
Co-existing With the Industry Giant

The Emotional Triggers That Repositioned a Service Business

If you only look at what is, you might never attain what could be.

—Anonymous

Some changes occur gradually. At other times, the competitive landscape is rocked by a seismic shift. This is the story of a mid-sized independent moving company that found themselves in such a situation. When an industry giant introduced a revolutionary new way of doing business, it threatened this mid-sized company’s very survival. Emotional-trigger research provided the framework that enabled them to compete.

LESSON #6

Don’t be intimidated. Bigger isn’t always better.

The Times, They Were A-Changin’

There was a time, in the not too distant past, when small and mid-sized businesses could thrive on the basis of providing superior customer service, but that was before external factors outside their control sparked a paradigm shift. Large corporations, often their major customers, came under mounting pressure from shareholders and their board of directors to contain costs, frequently at the expense of other considerations. Their requirements became more demanding and more sophisticated. Lacking both the resources and the expertise to accommodate this new dynamic, it became harder and harder for many small businesses to remain competitive.

In one industry after another, from banking to steel, consolidators saw an opportunity to swoop in and transform the way business was conducted by promising large corporations the ability to better leverage their expenses. When it happened within the relocation industry, a second-generation moving company known for their personalized service became the latest victim of this sad but all too familiar tale. Seemingly overnight, they went from a thriving local business that enjoyed long-term contractual agreements with a number of major corporations to a company struggling for its very existence.

Up to now, this mid-sized moving company had successfully competed against larger chains by establishing close personal relationships with their clients. They worked directly with the corporate employee responsible for relocation and, through the years, had gained the trust of these individuals. On the strength of the personal relationships they had cultivated, their company had grown and prospered. But times were changing rapidly and the old ways of conducting business no longer guaranteed future success. As change swirled around them, their approach to the business had not kept pace. Their systems were antiquated, and they were behind the curve when it came to using cutting-edge technology or innovative new marketing strategies. That made them extremely vulnerable to a predatory competitor, who was rethinking their entire industry.

David Versus Goliath

Although this mid-sized moving company continued to conduct business as usual, a major consolidator, busy redefining the overall business model, loomed on the horizon. First, the consolidator acquired several established real estate companies. Then using those acquisitions as a springboard, they set out to become the country’s preeminent turnkey relocation resource. Not only would they provide moving services, but they would also assist employees to secure a mortgage, sell an existing home, and purchase a new home. They intended to transform the industry from a fragmented group of small, independent, service providers to a consolidated, national service business that handled every aspect of a corporation’s relocation requirements.

“They intended to transform the industry from a fragmented group of small, independent, service providers to a consolidated, national service business.”

From the consolidator’s vantage point, the timing couldn’t have been better. Corporations were looking to cut back on non-essential internal support functions. Unfortunately, this mid-sized moving company had concentrated their efforts on forging relationships with lower-level relocation specialists, the very people most likely to lose their jobs. Focusing instead on the decision-makers, the consolidator plunged into the “power vacuum.” They met with senior human resource officers and promised to save them money on every aspect of employee relocation, from the cost of moving services to all the related real-estate transactions. Then they went a step further and convinced human resource executives to outsource the entire process. They guaranteed corporations they’d be able to reduce staff, free themselves of time-consuming tasks, and, most significantly, reduce their cost per move.

Eager to find relatively painless ways to reduce their overhead expense, many large corporations quickly embraced this new concept. Within record time, the internal relocation-specialist positions had been eliminated, and the consolidator was responsible for awarding business to all the suppliers who had previously worked directly with corporate personnel.

The mid-sized moving company had been completely squeezed out of the picture. In the blink of an eye, they had lost all their major clients to this menacing new “employer.” Soon the consolidator became a powerful gatekeeper that dictated all the terms under which they would employ local moving companies. In exchange for future business referrals, they not only demanded a commission, but pressed the moving company for bigger and bigger fee concessions. The cost reductions that came out of the midsized moving company’s profits were then split between the consolidator and their corporate accounts.

Dazed and floundering, this mid-sized moving company had no idea how to co-exist with a consolidator who combined time saving state-of-the-art technology with guaranteed cost reductions at their expense. When the situation became untenable and threatened to put them out of business, they turned to emotional-trigger research to find a solution.

The Courtship

From the start, when the consolidator first met with senior human resource executives to introduce their service, they were greeted with considerable interest and enthusiasm. Managing employee relocations was a difficult, emotionally draining, and labor-intensive job that was not a core competency for these companies. Under pressure to reduce overhead costs and become more efficient, executives were quick to embrace outsourcing the entire process to a national, turnkey relocation resource. It was a perfect fit. Or so it seemed at the time.

“It was a perfect fit. Or so it seemed at the time.”

One large corporation after another jumped on the bandwagon. There were many apparent advantages, while the downside appeared negligible. First and foremost, they would reduce their cost per move. The promise of exceptional service was enticing, and it was very reassuring to be guaranteed round-the-clock hand-holding by an extensive team of experts drawn from their partner’s very own real-estate companies. The consolidator had convinced senior executives they were being presented with a win-win opportunity. Human resource departments would gain a resource with the experience and commitment to better manage employee relocations. They’d be able to reduce expenses, cut headcount, and get rid of a myriad of thankless administrative tasks. Why would anyone hesitate to sign up? Well, as it turned out, very few did.

As the consolidator pressed their case, skillfully elaborating on all the advantages they offered, how could anyone not be tantalized? They promised accurate and timely processing of all claims. They promised significant cost savings per move. They promised enhanced capacity because of the depth, breadth, and reach of their expertise. They promised unparalleled service. And, with heartwarming sincerity, they promised to handle each and every one of the corporations’ employees with great empathy and care.

So, after such a masterful courtship, when the consolidator finally “popped the question,” corporations responded with a resounding “yes,” most without so much as a backward glance.

The Honeymoon

Initially, as with most honeymoons, the relationship began on a positive note. Confident they had chosen the right partner, senior human resource executives outsourced their entire relocation operation to the consolidator. Relinquishing the reins of control was liberating. They had freed themselves of a thankless job and gained a team of professionals with far more resources and expertise than previously existed within their own internal departments. It was a heady time characterized by optimism, trust, and high expectations.

At first, their trust and optimism seemed justified. No one even entertained the notion it may have been misplaced. After all, the consolidator had quickly honored their promise to reduce the cost-per-employee move. In addition to delivering significant savings, they made it possible for large corporations to reduce the number of full-time employees on their payroll.

Oblivious to the strong-arm tactics being used to accomplish these objectives or the potential longer-term consequences of such tactics, human resource executives basked in the kudos that came their way from top management. At a time when large corporations were being hammered by shareholders and their boards of directors to streamline operations, aligning with this relocation consolidator was being hailed as a smart and innovative decision. If it came with a hidden cost, the cost had not yet been discovered.

“If it came with a hidden cost, the cost had not yet been discovered.”

Instead of being required to manage countless numbers of independent vendors around the country, human resource executives liked having only one point of contact. Corporations were happy. The consolidator was certainly happy. Everyone benefited from this new arrangement, with the obvious exception of the mid-sized moving company.

Marriage: The Reality Check

By the time emotional-trigger research was conducted with senior human resource executives, the turnkey relocation partnership had been in place for several years, and the bloom was off the rose. The honeymoon and all the hopes that went with it had faded to a distant memory. In the cold light of day, this arrangement was seen through an entirely different prism. Problems were surfacing everywhere. Rather than being the beneficiary of the consolidator’s services, human resource executives now felt hostage to a marriage that wasn’t working.

The consolidator’s rate of growth was outpacing their ability to deliver services as promised. Plagued by constant staff turnover, details routinely fell through the cracks. Having already eliminated their own relocation staff, the consolidator’s failure to meet contractual obligations left human resource executives with nowhere to turn. Large corporations found they were saddled with as much work as they had before they ever outsourced their relocation operation. The type of work may have changed, but not the volume. On top of everything else, they had to constantly retrain new staff assigned to their account on their company’s policies and procedures. There was no continuity.

At least their in-house staff had been stable. Human resource executives regretted what, in retrospect, now seemed like a hasty decision. Yes, they had saved the cost of a few in-house employees, but at what price? The original hassles they sought to eliminate now paled in comparison to what they were forced to confront. When the decision was made to utilize the turnkey relocation service in place of in-house staff, senior human resource executives assigned oversight of the function to someone else within their department. It was originally assumed these individuals, none of whom had relocation experience, would simply pass along general information and the consolidator would take it from there. But as problem after problem arose with the consolidator, these human resource employees were forced to take a more active role, and they were overwhelmed.

Regret

Senior human resource executives felt betrayed by the consolidator, but they were equally upset with themselves. Many felt they had been too trusting. Without hesitation, they had tossed aside long-term relationships with the local, mid-sized moving company for an unknown. Under the best of circumstances, employee relocations were emotional for those uprooting their lives and those of their families. But the mid-sized moving company, with their exceptional level of service, could always be relied upon to make the actual move as stress free as possible. It was a bitter irony that the cost savings realized from eliminating a few staff jobs and outsourcing the relocation operation resulted in actually demoralizing employees in the midst of moving, at the very time when it was most important to maintain their spirits. The cost of cost reductions was too high!

Had they been fair? Had they been wise? Or, had they been careless? These were the questions senior human resource executives were asking themselves. They hadn’t anticipated their congenial relationship with the local moving company would become strained, because the consolidator was demanding the same level of service at considerably lower rates. The local mover was no longer willing or able to extend themselves. Employees were caught in the middle. They were increasingly unhappy about how their moves were being handled, and it was reflected in their work performance. That was the last thing human resource departments wanted.

Relocations were supposed to ensure happy transitions for valued employees. Realizing that just the opposite was happening, many senior human resource executives lamented how they had gotten their priorities so wrong. They had bought into the consolidator’s emphasis on profit potential and staff reductions to the exclusion of everything else. Now that it may be too late, they realized it did little good to receive rebates on every move if job performance suffered because of poor employee morale. They were struck with buyer’s remorse.

Now What?

Regardless of how unhappy senior human resource executives were with the consolidator, they were boxed into a situation of their own making. Having already been publicly praised for contributing significant cost savings to the bottom line, they were in no position to return to management, hat in hand, to request more money. There was no putting the genie back in the bottle. Some executives worried their credibility and influence with top management would be diminished and wanted to save face, regardless of the consequences. Others, even more concerned, feared their mistake might cost them their job. They desperately wanted to return to the service levels the local mover had provided before the consolidator ruthlessly decimated their profits and incentive. But how? They had run out of options.

Emotional-trigger research uncovered the extent to which senior human resource executives were driven by two emotional triggers: their fear of admitting their mistakes publicly and their sense of powerlessness to undo a bad situation.

A One-Two Punch

Emotional-trigger research made it clear that many senior human resource executives wished they had never formed an alliance with the turnkey relocation company. They were eager to undo the damage that had been done, but they didn’t know how. Powerless to alter the relationship if, bottom line, the cost per move increased, they were a dispirited group.

Although human resource executives and the local moving company had each lost ground, they shared a common objective. Both wanted to reconnect with one another. But the rules of the game for these large corporations, as well as the service providers they had previously employed, had been inextricably altered. Fortunately, the insights uncovered through emotional-trigger research revealed how their interests converged.

Human resource executives needed to improve employee morale by offering a relocation package that, once again, included first-rate, personalized service. The local mover needed, once again, to make a reasonable profit. Neither was in a position to eliminate the consolidator, but they could join forces and, by presenting a united front, deliver a one-two punch to their nemesis.

First, the mid-size moving company needed to change their business model. Remaining competitive in the corporate relocation business required forming a strategic association with a nationally recognized partner. Reclaiming their fair share of the long haul relocation business began with the recognition that this midsized moving company was only one of many local movers being squeezed by the consolidator within their market. They had to close ranks to gain leverage.

The solution was to form an association and then reach out collectively to a major national moving organization that had the resources, expertise, and “muscle” to compete with the consolidator. And that’s what they did. Under this arrangement, local movers paid a fee to affiliate with a leading national moving company and, in exchange, the national organization favorably renegotiated terms with the local consolidator. Buttressed by their newfound strength, the mid-sized moving company circumvented the consolidator and met directly with their former corporate accounts. They emphasized the superior level of customer service they had always provided but, in more recent years, had been undermined by the consolidator’s greed.

Senior human resource executives weren’t going to make the same mistake twice. This time around, they established their own list of approved moving companies. Then they demanded the consolidator only hire movers from that list. The pressure applied by senior human resource executives, combined with the clout the mid-sized company acquired through affiliation with a national moving organization, provided the ammunition to deliver that long awaited one-two punch. The consolidator was forced to renegotiate its fees and reduce their demands.

The very act of organizing put the consolidator on notice that they had overplayed their hand. Commissions to the local mover increased. Employees being relocated were treated with the care and attention they deserved. Human resource executives reclaimed a measure of control by improving the customer service they received without incurring additional expenditures. At last, the moving company was able to successfully insulate themselves against the consolidator’s strong-arm tactics. For the first time in years, business was booming.

Emotional-trigger research provided the customer insights this mid-sized moving company needed to create a successful new business model that served both their interests and those of their former customers. They learned that bigger isn’t always better. And human resource executives, much to their chagrin, learned that too.

SUMMING UP
CO-EXISTING WITH THE INDUSTRY GIANT

Situation

A mid-sized moving company known for personalized service was shocked when many of their long-standing, corporate customers suddenly signed with a new organization. This new organization, positioned as the “resident relocation expert,” offered a revolutionary turnkey relocation package that not only included moving services but assistance with securing a mortgage and purchasing a new home. They promised companies would be able to reduce staff, outsource time-consuming administrative tasks, and, most significantly, reduce the cost per move. Soon they became a powerful gatekeeper that dictated all the terms under which they would employ local moving companies. In exchange for future business referrals, they demanded fee reductions as well as a commission. With their long term survival at risk, the moving company turned to emotional-trigger research to help develop a competitive strategy.

The Clients’ Emotional Triggers

Many former corporate customers felt betrayed, because the turnkey consolidator had failed to deliver on their initial promises. Left to cope with inadequate services, the problem was now exacerbated by a lack of in-house resources. They were angry at having lost control and some feared losing their jobs. Reduced to merely hoping service levels would improve, they felt helpless.

Genuine Insight

Because the promised cost savings had already been realized, corporate executives were resigned to keeping the program in place, but they lamented the loss of valuable personalized attention. They desperately sought a way to maintain cost savings, reinstate the former levels of service, and save face within their own organizations.

Solution

The solution was to reinvent the mid-sized company’s business model by forging an association with a national moving organization that had the resources, expertise, and “muscle” to compete with the consolidator. In exchange for paying to affiliate, the arrangement with the consolidator was favorably renegotiated. Buttressed by their newfound strength, the midsized company circumvented the consolidator and met directly with their former corporate accounts. They emphasized the superior level of customer service they had always provided. Senior human resource executives, determined not to make the same mistake twice, demanded the consolidator only use movers on their approved list. The combined pressure from corporate clients and the national moving company they had affiliated with delivered a one-two punch and forced the consolidator to renegotiate fees. The moving company was able to successfully insulate their company against the consolidator’s strong-arm tactics. For the first time in years, business was better than ever.