The Hassle Quotient: A New Formula for Industry Domination

Tags: Customer Service, Logistics, Supply Chain

Market domination starts with a customer-first attitude.

What does it take to dominate an industry? Companies can be good—or even great—by focusing on operational factors they do better than anyone else.

Domination, however, starts with a customer-first attitude that makes it easy to engage with them and provides fast, low-cost solutions along with superior user experiences. You have to see it all through your customers' eyes.

That's the idea behind the book The Unconventional Thinking of Dominant Companies: The New Formula for Market Domination by Jim Bramlett, a 30- year transportation industry veteran. This article introduces the author's Hassle Quotient score and how the internet has changed how companies compete, then focuses on how the Hassle Quotient applies to transportation and logistics.

CHEAP, FAST, GOOD: PICK TWO

You may have heard the expression, "You can't be cheap, fast, and good at the same time; you have to pick two." The internet has changed the game of managing consumer expectations, Bramlett says, requiring companies to do it all.

Rather than "Cheap, Fast, Good," however, the new formula for success is to follow the author's Hassle Quotient. This formula for industry domination contains factors that companies such as Amazon, Uber, Netflix, Google, and Facebook do very well.

The formula starts with making it easy for customers to engage with you, shortening the time that it takes to communicate and get a solution, while reducing the amount of customer effort. Add in the need to be a low- or lowest-cost provider. Top it off by giving the customer the best user experience. Do it all and become dominant.

TIME, EFFORT, COST, EXPERIENCE: DO IT ALL

The Hassle Quotient formula adds together customer-provided scores for Time, Effort, and Cost, then divides it all by a score for User Experience.

Hassle Quotient=(Time + Effort)+ Cost/User Experience

An overall low score is best because you want low values for time, effort, and cost, then a high score for user experience. Do it all and you end up with a low overall score.

First a few ground rules. One, you don't get to provide the values for these factors; your customers provide them by comparing you to all the competitors in your industry. Two, it is best to make it simple by providing a 1-10 point scale for each factor. For the top of the formula (time, effort, and cost), imagine laying out all competitors in an industry along a 1-10 scale from best to worst in each scoring category. For user experience at the bottom of the formula, the scores are flipped, so 10 is best and 1 is worst in the industry.

If you provide the lowest cost, lowest time, and lowest effort in the industry, the top of the formula is 1+1+1, or a total of 3. If you also have the best user experience score, a value of 10, then your company could score as low as 0.3.

If it turns out your customers actually say your company ranks at very respectable scores of 3/10 on time, 2/10 on effort, and 4/10 on cost, plus you provide a strong user experience of 9/10, then overall, your Hassle Quotient is 1.0.

If you have many customers, then take all the Hassle Quotient scores and average them to develop an overall Hassle Quotient. You could graph them out or put them in a table to see the spread of all the scores and how much they vary.

The developer of the Hassle Quotient says that industry domination, or doing it all, means three things:

  • Having the lowest Hassle Quotient score
  • A resulting market share that is double that of the next closest competitor
  • Being the most recognized brand in the industry.

THE INTERNET CHANGES THE GAME

In a popular 1990's business book, The Discipline of Market Leaders, authors Michael Treacy and Fred Wiersema told companies to focus on one thing to be successful: Learn to be the most operationally efficient, or be a product leader, or be customer centric. The message was that if you try to do it all, you only dilute your focus, which results in mediocrity. At the time, Bramlett was a big fan of the book and its message, but he says the internet has changed the game, becoming the most significant economic engine ever.

Today, to dominate in an industry, you have to do it all: Have a great website that quickly helps people understand who you are and what you can do for them and make it easy for customers by providing the kinds of intuitive tools that help them get their solutions quickly, provide low-cost solutions, and require minimum effort. At the same time, customers need to feel that they also had the best user experience.

We have all likely used at least one of the websites provided by Amazon, Uber, Netflix, Google, or Facebook. Each company has become dominant in its industry because it does it all. These companies are shining examples of the kinds of companies that would score best in their industry if they applied the Hassle Quotient.

The internet is certainly a huge influence, but not the only influence. All digital forms of communication and transactions have provided the ability to shorten transaction times and lower transaction costs. Your smartphone and all the other digital tools in your life, such as your tablet and your laptop, have all raised the bar, changing expectations for companies and restructuring relationships with customers.

THE USER EXPERIENCE

Think about your best experience as a customer. It was likely not just easy, fast, and low cost, but you enjoyed the experience more than any other in the industry. It doesn't mean you had one of the best overall user experiences in your life, but for the solution you wanted, the user experience was best among all the available solutions in that industry.

Many factors make up the user experience. You might like the company's website design or navigation, the packaging, the friendliness of the people, the layout of a physical or online store, suggestions for options, information accuracy, customer reviews, or that promises made were promises kept regarding time, cost, and information.

But it goes beyond just this collection of factors, being better summed up in an overall feeling that this company was the one that made you feel like you wanted to continue doing business with them more than any other company. Every touchpoint matters.

Amazon dominates the e-commerce industry because it has mastered the factors that make up the Hassle Quotient. From its start as a small e-commerce bookseller to the giant it is today, Amazon has had a customer-focused obsession with providing the best selection and ease of ordering (single click). It raised the bar on delivery expectations (two-day free shipping with Amazon Prime or even same-day Amazon Now) and utilizing customer feedback, reviews, and purchase data to make shopping a hassle-free and low-cost experience.

Amazon has put tremendous competitive pressure on the logistics sector by growing so fast and shifting the game so quickly with so many innovations. Transportation resources, such as trucks and drivers, distribution center construction, and equipment manufacturing all become tighter as the economy expands and unemployment is low.

While using considerable transportation resources of other companies, Amazon is also growing its own fleet of assets such as planes and trailers. You may have had your Amazon packages delivered by the U.S. Postal Service, even on Saturday or Sunday. Finally, it contracts with a variety of other independent couriers or smaller last-mile providers to keep the package pipeline flowing, even assisting with the startup of small delivery businesses.

Innovations? Early on, the Kindle made it easy to shop, purchase, and take your electronic books with you anywhere. Amazon Alexa has become the leading household electronic assistant. The Dash Button for reordering frequently used items has some traction in households and businesses. Going somewhat full circle, Amazon has established a variety of brick-and-mortar stores, starting with bookstores that also carry its electronics and some specialized gifts, but now adding Amazon Go convenience stores that let you walk in, grab what you want, then walk out, being automatically checked out.

Where will Amazon take us next? How will it continue raising the bar for the transportation industry? Perhaps its patents for 3D printing of products on trailers while being transported to customers seem a reach for now. So does its plan for widespread drone delivery to businesses and homes, which faces major limitations on the use of airspace governed by the Federal Aviation Administration.

However, if anyone can pull off continuing to lower its Hassle Quotient score for ease, time, cost, and user experience, it's Amazon. Bramlett firmly believes Amazon has the lowest Hassle Quotient score of any company.

LOGISTICS AND THE HASSLE QUOTIENT

Jim Bramlett has spent most of his life in transportation and logistics and believes there is a long way to go for any company in the industry to dominate and score well on the Hassle Quotient. When you have a shipment that needs to get from Point A to Point B, you aren't interested in becoming a logistics expert; you just want to serve your customer and fill an order, getting that shipment to the right place at the right time at the right cost with the right information and delighting the customer.

Those companies that make it harder to understand what they do and how it applies to your shipment, then complicate the time and effort of the transaction, don't provide clarity regarding the cost of that shipment, and keep you in the dark regarding how it is being carried out…well, they will find themselves earning a high Hassle Quotient. Remember, high scores are not good.

The transportation industry is very fragmented, with many carriers, options, rates, routes, and classifications making it difficult for shippers to engage every carrier directly on their own. Add in vetting them for proper authority to carry certain kinds of loads, whether they have the right kinds of insurance, and whether they can easily tie into a shipper's information system, plus coordinating the actual pickup and delivery process, among other details and you find that the seemingly simple process of getting a shipment from Point A to Point B can quickly get complicated.

The logistics sector's fragmentation and complexity have resulted in a variety of intermediaries that link shippers and carriers, plus shepherd shipments through supply chains. These intermediaries can help shippers lower their Hassle Quotient scores by providing services and expertise that may be difficult for shippers to develop and maintain in house.

How can freight transportation take less time and less effort, and be price competitive while providing a superior user experience? The magic lies in an Amazon-like experience of being able to describe or submit a shipment's information into cloud-based portals tied into all the best providers, allowing fast and easy classification, transparent and accurate pricing, and a best-in-class user experience that tracks shipment flows and simplifies billing, auditing, and paying of invoices.

Sounds easy to say, but in the truckload, less than truckload (LTL), and parcel worlds, Bramlett believes the industry has not made it close to happening yet. Yes, a variety of portals have been established, but many have failed and he doesn't believe anyone has found that magic formula yet.

Much of the baggage the LTL industry carried prior to deregulation in 1981 still exists in the industry today. "If ever there was an industry that did not practice the tenets of the Hassle Quotient, the LTL industry is one," Bramlett says.

Deregulation allowed carriers to service any territory and lanes and charge whatever they wanted. It also stirred up a Wild West of complications as companies jockeyed for position, creating a huge, unstandardized variety of options.

If you have already found a carrier and successfully classified and shipped a particular type of load repeatedly over time, then it doesn't seem so complicated after a while. However, if you have significant changes in types, quantities, timing, and destinations (including countries), then the job can be daunting.

It is enough to deal with various weight categories (generally following the hundredweight or price per hundred pounds), plus the many commodity classifications. But when you factor in the many add-on possibilities for various options, then the widely varying base and discount percentages carriers and service providers offer, it shouldn't be surprising that it is difficult to compare quotes. It is like trying to compare apples and steak.

Next are the many additional charges and surcharges that may apply to shipments, making the West even wilder. It certainly makes sense to account for the time and costs of the various options a shipper or customer specifies.

But the author also makes the point that the industry behaves like some of the discount airlines that nickel and dime customers to death. In shipping, many charges may appear as part of invoices after the fact. The author says that fuel surcharges, in particular, have become a profit center and a dirty little secret of the industry.

The lack of upfront visibility to these charges is the author's biggest concern because it affects both the cost and user experience aspects of the Hassle Quotient. It's not just the carrier that is responsible. There is a shared responsibility for both shippers and destination customers. Better accuracy up front regarding weight and dimensions, plus accurate shipment classification and all the aspects of delivery restrictions at the destination would also reduce the high number of invoice variances the author says exist in the industry.

CAN THE INTERNET CHANGE THE TRANSPORT GAME?

Getting the transportation industry to score similar to Amazon will require simplifying and standardizing processes and improving connections between company processes and systems. Transportation Management Systems (TMS), particularly the ones that are cloud-based and link together networks of partners throughout the industry, are already helping and quickly evolving.

Early TMS systems were only for the larger companies with high shipment volumes. Now, for many shippers, their third-party logistics (3PL) providers have adopted TMS and other systems to provide carrier links, track-and-trace capabilities, international shipping, and—to manage the added complications of freight invoicing—audits and claims.

The author says that shippers navigating the waters themselves are like people trying to understand the tax code; they need to hire accountants and lawyers. 3PLs have the opportunity to apply their knowledge and experience to lower Hassle Quotient scores across the industry to make it easier, faster, and less expensive for shippers, carriers, and end customers.

SMALL PACKAGE CARRIERS AND THE FINAL MILE

Shipping small packages, particularly for e-commerce, has been easier and less fragmented with well-known names such as USPS, UPS, FedEx, and DHL. UPS, using its stores for example, will accept unboxed shipments, then pack, weigh, measure, ship, and track them. With all its locations, daily delivery to every address, weight-based-only simplified charges, and no surcharges for particular addresses, UPS scores the best overall on the Hassle Quotient, Bramlett says.

Many independent contractors also carry smaller shipments along the final mile. The author estimates there are 7,000 local and final-mile carriers in the United States, many represented by two industry associations—the Customized Logistics and Delivery Association and the Express Carriers Association.

Given the generally smaller sizes of these couriers, sophisticated information systems infrastructure is not available. The opportunity lies in creating an Amazon-like marketplace and systems capabilities for a variety of merchants, providing all the local and final-mile carriers with a marketplace that integrates with other transportation and freight systems to allow for a more seamless tradeoff between truckload, LTL, and final mile.


Adapted from "The Unconventional Thinking of Dominant Companies: The New Formula for Market Domination" by Jim Bramlett, 2018.