Can Your Customers Love Your Company to Death?

Shortly after starting to work with BPK&Z a plating company client began to see its unique differentiator become its unique challenge. The plating company was known for doing small runs, having an accommodating schedule, and handling rush orders. While customers were happy, company profitability was a continuing issue. The sales team was selling the rush orders easily, but they were also giving pricing concessions on those same orders. The company started losing gross margin and profitability as a result.

Rush orders were the majority of the company's business, so it was important that the company continue to offer “rush” treatment. BPK&Z stepped in and assisted management in analyzing the cost of each job and determining a surcharge amount for all rush orders. This was a complete change from how the business was previously run, but the CPAs had the numbers to back up their recommended change. The plating company tested the new pricing out on a few clients, none of whom complained.

"You should always test a new policy, not just blanket change it," said Gary Turnquist, CPA, leader of BPK&Z's manufacturing team. “We assisted in stratifying the plating company’s customers and chose to test the new policy on customers who would not devastate the bottom line if they left as a result of the new policy.”

The test went well, and the plating company has since implemented the new pricing to all of its customers. The majority of customers have happily paid the surcharge, or decided their order wasn’t as urgent as they thought. Either way, it is a win-win for the plating company.

Thanks to BPK&Z, rush orders are still the majority of the client's business, and profitability has improved by approximately $200,000.

“Profitability is nice, but the biggest benefit for the client was that scheduling was under control again,” Turnquist said. “They are no longer struggling to put out the rush order fires because now customers only ask for rush orders when they’re truly needed. Our client feels like life is under control again.”

If your manufacturing company needs help with projects like this, contact Gary Turnquist at (763) 546-6211 or .

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