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(6) CEO RoundTable - the Client is King

by WC


Most of my colleagues at the CEO level spend a lot of time with investors and with Wall Street analysts, while I take that time and spend it with customers, said Frank Scheibner, who heads up the North American operations for Hellmann Worldwide Logistics, the worlds largest privately-held logistics firm.

Focusing on the clients needs was a common thread at our most recent CEO Roundtable, held at the Mandarin Oriental hotel, where Scheibner was joined by Maria Yip, executive director of Daylight Forensic & Advisory, Guy Cote, partner at Heidrick & Struggles, Frank Behrens president of UTO USA and Aldo Ruiz, regional sales director at Marriott International.

We think thats the way our clients want to be served, said Guy Cote, when asked by Scheibner why his company recently implemented a radical shift from a geographical focus to an industry-specific focus.

Up until June of this year, Guy Cote was the managing partner of the Miami office at the global recruiting firm of Heidrick & Struggles. But as of July 1, he heads up the companys hospitality practice nationwide, managing Clevel searches for hotels, resorts, cruise lines and tourism
boards. The reason we made this change was to develop greater knowledge of specific business segments, explained Cote. Our competitors are generalists. We now compete in a more dedicated way.

We, too, are very much customer-centric, chimed in Aldo Ruiz, who runs Latin America and Caribbean sales at Marriott International. Ruizs Miami office is part of a global sales division with other offices in London, Hong Kong and Dubai, whose focus are large multinational firms. We focus on key clients who use Marriott worldwide. Frank Behrens of UTO USA, the Doral-based U.S. subsidiary of a 230-year old Dutch liquor-maker, has yet to discover who exactly his client is, but hes a man on a mission, determined to find out.

The assignment I received three years ago in Holland was to develop the U.S. market, said Behrens, who set up shop in Doral in January 2006. After the first visit to the U.S., it was clear that the only liquor in this country is vodka, which accounts for 70 percent of all U.S. liquor sales. So we used our secret family recipe of herbs to develop the first herbal vodka for the U.S. market.

A year and a half later, Behrens has tested his Sonnema vodka, which competes with 300 other vodka brands in the U.S. market, on various segments of the liquor-drinking population. Weve tried everything ethnic groups, the hip-hop generation, the gay scene, the urban crowd, young people, older folks but we still havent found our core consumer. When he does, the payoff could be huge. Not so long ago, recounted Behrens, some smart fellow introduced U.S. consumers to Grey Goose vodka. He spent seven years building the brand and then sold it for $2 billion. Thats the challenge I face now. And I have a chance to make our companys American dream come true.

Equally enthusiastic about her new assignment as executive director of the Miami operation of Daylight Forensic & Advisory, launched last December, Maria Yip said the reason her firm has such a big potential here is that the big four accounting firms have failed to provide the kind of customized service that clients are looking for in the area of investigations, forensics, due diligence and litigation support. Our advantage, said Yip, is that we are truly a boutique firm.

So how is all this attention on the client paying off so far this year for Yip and the others?

The established firms Hellmann, Marriott and Heidrick & Struggles are all enjoying exceptional performances. Hellmanns sales are up 19 percent this year and Marriott
Latin America has booked 16 percent more room-nights (In revenue, were much higher than 16 percent, said Ruiz.) Meanwhile, Heidrick & Struggles sales have surged more than 40 percent this year.

2006 was a little rough for our business, explained Heidricks Cote. When times are good, companies add positions. And when times are bad, were also busy because companies that are in trouble replace their top executives. The problem is when times are stagnant and when there is a lot of uncertainty, as was the case last year, said Cote. When companies dont have a good sense of how they are doing, they tend to hold off making changes.

But the stagnant period is now over and busy is booming. Our business tends to be three to six months ahead of the business cycle, said Cote. When we feel the pinch in our business, thats usually a sign that the economy as a whole will be affected similarly within three to six months.

Theres no sign of any pinch in the hotel business, however. Marriotts global sales revenue from clients in the Latin America and the Caribbean are growing steadily. Still, they account for only $250 million a year, a modest 2 percent of Marriotts worldwide sales of $12 billion. And, despite the strong growth of late, sales revenues of the hotel group, which includes 14 brands and 2,800 properties worldwide, are only now reaching the level they were at in 2000. Its taken seven years to get back to pre-9/11 levels, said Ruiz.

As for German logistics firm Hellmann, business has been growing rapidly since Scheibner took the helm of the North American division in April 2005. In just over two years, Scheibner has opened half a dozen new Hellmann offices in the U.S., raising the total to 25.

One of the reasons for his success, said Scheibner, is the autonomy he is given by the companys owners in Germany. Because he has the freedom to make stratgeic decisions
decisions, which in large publicly-traded companies would typically be encumbered by a complicated approval process Hellmann is often much faster in the market than our competitors.

Hellmanns success in the U.S. market, which accounts for $500 million of the firms global revenues of $2.3 billion, is also due to its focus on clients, such as Norwegian Cruise Lines, that require a high degree of specialization and custom-made logistics solutions. We look for the complicated stuff, said Scheibner.

As for newcomers UTO and Daylight Forensic, they are off to a good start.

Sonnema vodka is selling well after only 18 months in the U.S. market. Behrens recently managed to convince one of the three largest liquor distributors in the country to carry his brand. Hopefully, we are now entering a new phase with higher exposure and wider distribution, said Behrens.

Behrens, who imports all of his product through New Jersey, said his goal is to reach annual sales of 100,000 cases a year within five years. When you reach 100,000 cases in our industry, that means you are an established brand.

For Maria Yip of Daylight Forensic, building the brand is also her major concern. Like the Sonnema vodka, Daylight is not yet a familiar name in Miami. Nor are clients familiar with the companys founders, Joseph Spinelli and Ellen Zimiles, who are both local celebrities in their industry in New York. Spinelli was New York State inspector general for eight years, while Zimiles was a federal prosecutor for 10 years.

For Yip, who formerly headed up the statewide forensics practice at the accounting firm of Grant Thornton, the challenge is getting the Daylight name known in the market place. What I have to sell, said Yip, is my own name and reputation.