Saving a shaky contract

21 September 2012
Saving a shaky contract

Keeping clients is easier than winning new business, so a high retention rate can help you weather the recession. But what can caterers do when a contract starts to look shaky? Siobhan O'Neill reports

So we've weathered another interesting British summer, and in gardening terms at least, it's time to trim out the dead wood. For businesses, too - six months through the financial year - it may be time to examine the books and look to pinpoint some savings. An obvious place to trim might be their catering contract, especially if the service seems not to be meeting their requirements. So if a contract starts to look shaky, what can a contractor do to ensure they don't get dumped on the client's financial compost heap?

"What we do is try to act rather than react," says Tony Carr, joint managing director at Catermasters. "I worked for a large contractor in the past and they almost had this dripping tap syndrome, where you gain business at the top and lose business out the bottom, and that has never been a desire for us. In the past two or three years we've been looking at the economic climate, and we sat down and said ‘OK, new business is hard to get hold of', so we always wanted to have that tap firmly fixed off."

Catermasters, like most of its contracting counterparts, has developed a retention strategy that ensures it loses very few - if any - contracts a year. But if things do start to go wrong, what are the signs?

"Some contracts can start off a bit shaky and you do get some warning signs," says Noel Mahony, chief executive at BaxterStorey. "It can be all sorts of factors: getting poor customer or client feedback, maybe the sales or participation levels aren't what they should be… and you normally realise you're in trouble when you go to a meeting and procurement start referring to the legal contract!" he jokes.

Carr agrees that it's possible to get to a point where the relationship is a bit weaker than it was, though you can usually read the signs. "Maybe the client won't call you back or they don't want to meet as regularly as they used to," he says. "There are a few signs that might make you think ‘OK, we need to find out what's going on here'."

Good monitoring practice can help you stay ahead of any potential problems. "Most professional caterers utilise a range of metrics to monitor satisfaction and performance," says Carl Morris, director of marketing and communications at Elior. "They probably monitor in two areas; qualitative and quantitative. On the qualitative they're looking at client feedback, customer satisfaction, and so on. For quantitative, it's things like performance to budget."

Once it's clear that some issues have identified themselves, building trust with the client is essential to stand a chance of putting it right. "You have to try and get your client on side so you can have an open and honest dialogue," Mahony says. "It could be down to a change in the objective that the client outlined during the tender process. Maybe their cost base changed."

Any change of heart is often driven by the wider environment. For instance, if a company gets taken over there could be different policies. There may be also be other warning signs, such as a client suddenly planning on downsizing the business or having a change of strategy.

Once you've got the bigger picture, it's time to act fast. "From my experience, if a client has an issue, what they really want to know is do you understand what the issue is, what's the solution and when will it be actioned and rectified," Morris says.

The first step is to ensure that your team is doing the job you pitched in the first pace, then to meet with the client and to understand what they believe the challenges are. "You need to have a very open and honest dialogue and to make sure that they have visibility over that plan," Mahony says. "Then you have regular meetings, maybe weekly, to ask how are we doing, are we where we said we would be. And in most cases you can correct it really quickly as long as there's a willingness on both sides to do it."

And, where there's a problem with staff on the ground, you shouldn't be afraid to pull out the odd weed to save a flower bed. "Business is about people so we will always look to match the right person with each client to build a strong relationship," says Sue Parfett, managing partner at the Brookwood Partnership. "The quickest way to react is to find a person who the client feels comfortable with in order to regain the trust."

But any action must be followed through. "So long as you have a plan, a lot of clients are happy with that, but you need to put in a mechanism that says how you are going to stop that happening again in the future," Morris says. "So it's not just a temporary fix, it's a permanent fix."

Strong relationships with the client are essential for both parties. Occasionally, a contract may become financially unviable, prompting the caterer to seek an ending to the partnership, but with trust and transparency, the client may prefer to remedy that. "We have an open-book policy," Carr says. "Our clients can quite freely audit if they wish, and we do share a lot of information. I issued notice to one client five or six years ago, and actually they upped the subsidy."

A caterer should know what works and appreciate that one size doesn't always fit all, Parfett says. She adds: "We provide value for money but we know we might not always be the cheapest, and although we have worked with existing clients to reduce cost, we have withdrawn from a tender process where we could see a poor fit with our business model."

In essence, the contract has to work for both parties, with clarity as to what is expected by each out of the relationship. "It's making sure that it's tailored toward each client expectation," Morris adds. "The way to keep it alive is then to continuously test, so at least once a quarter you should be sitting down together and saying is there a different path that we want to take?

"The customer experience strategy is something we've been working on for a few years and our retention this year would be about 98%. By providing the whole customer experience - every aspect of it - it does pay dividends."

And tuning into each client's needs will ensure you're always one step ahead. "One of the talents that you need is to have your antenna in the right place," Mahony says. "Don't just listen to what your client says but be under the skin of their business so you can stay ahead of the game. Some people would say ‘it's only catering' but we are an extension of that client's brand. We have to be embedded in the culture of that business and understand what's going on."

How to turn around a failing contract

Brookwood Partnership Sue Parfett
Brookwood Partnership Sue Parfett
Sue Parfett at the Brookwood Partnership describes turning around a troublesome school contract

Almost 10 years into a contract, a new headmaster joined and asked for a meeting. He said he was unhappy with the food offer and was going out to tender. He talked about his previous school and was proud of the range of food they had on offer there.

Although our policy is based on fresh food, previous heads had insisted on a largely "fast-food" offering. I was immediately able to assure him that the food we offered in that school was not what Brookwood normally provided and asked him to see some other sites.

We took him to four other sites and relaunched the catering services to our normal style; giving the pupils more choice.

The tender went ahead and we were given the opportunity to deliver on our promises and our long relationship counted for a lot.

We've since strengthened our relationship with the school. Although the re-tender was just for a year, when the anniversary came and went in June he was happy to stick with us.

Maintaining a strong relationship won't keep you where you are, but it will often get you a second chance.

Tips for saving a floundering contract

â- Be sure you have a good grasp of the figures and also the situation under which the facility is operating. Do the hours of service suit the personnel on site? What's selling and what isn't working?

â- Do you need to be more competitive with the local retail offering?

â- Create efficiencies by examining opening hours and staffing levels but don't compromise on quality.

â- Create a new vision for the service that matches the client's needs and agree it with them. Make sure you're adding value they can see.

â- Work on marketing and promotion to your customers.

â- Meet regularly with the client to ensure you're both happy with the momentum of the service.

â- Create an action plan that keeps the service fresh and ensures the same problems never arise in the future.

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