4 A/R lessons you can learn from IKEA’s business model
Ikea founder Ingvar Kamprad died at the age of 91 last month, but his pioneering work in the field of manufacturing lives on. Whether minimalist Swedish furniture is your style or not, the long-lasting impact of the Ikea manufacturing and sales model has changed the way manufacturers frame their business today. Regardless of whether you’re a B2B or B2C manufacturer, the lessons we learn from Ikea will help you keep up with your competition, and help your accounts receivable team come out ahead.
Lesson 1: Reduce Costs Everywhere
From the “flat pack” ship model to the “fetch it yourself” warehouse, Ikea constantly finds innovative new ways to reduce the cost of manufacturing and selling their products. Like Ikea, you should be looking to reduce costs across your accounts receivables process with solutions that can lower credit card interchange fees or help switch your paper billing customers to electronic invoicing. Even providing a 24/7 self-service portal can reduce the number of calls that your customer service department gets. As you handle each step more efficiently, your overall costs will go down, increasing your margins and helping you keep your pricing competitive.
Lesson 2: Strive for convenience
Another one of Ikea’s hallmarks is how convenient it is to buy a piece of furniture and bring it home the same day. (Of course, assembling it is another story.) By taking an industry previously dominated by fancy showrooms and delayed delivery, and transforming it into a same-day service model, consumers enjoyed a new level of convenience.
The invoicing and payment process your organization currently uses is a huge piece of the convenience puzzle. Do you make it easy for your customers to pay you? Do you offer them multiple options when it comes to invoice delivery? Are you able to apply credits and resolve disputes quickly? Do you offer flexible options? Is your brand name one that your customers associate with the word “convenience”?
Lesson 3: Trust is Paramount
In a 2006 survey of Swedish citizens, more than 80% said they trusted Ikea. A 2007 global survey by Reputation Institute put Ikea as the #2 most trusted brand in the world. Around the world, customers feel safe buying Ikea products and using their debit and credit cards to pay for them.
When it comes to collecting payments, trust is the only thing that matters. A security breach or a break in at your office could result in stolen payment information. In an instant, their trust in you would be violated. If your customers don’t trust you, they won’t turn over their payment information and instead they will buy from your competitors. Is this a risk you’re willing to take? An electronic payment solution that provides flexible, secure, PCI-compliant payment options mitigates this risk by removing the sensitive payment data from your hands. You can direct your buyers to pay online, and improve your cash flow with one-day processing at the same time.
Lesson 4: Focus on Customer Experience
Ikea puts the overall customer experience at the forefront of everything they do. The Ikea website allows visitors to add items to a virtual shopping list which can be printed, complete with the in-store location of each item. They offer free storage lockers, inexpensive dining, stress-free babysitting, and other perks that make their customer-centric shopping experience unique, and it has paid off.
Developing a customer-first strategy is critical for businesses that want to build customer loyalty and drive sales growth. For A/R teams, it means creating an infrastructure where customers can get invoices delivered and make payments using their own preferred methods. Sophisticated buyers are now using A/P networks and other automated tools, and you’re going to have to meet their demands in order to get paid. An outstanding experience, even within billing and payments, is going to help raise your customer satisfaction scores.
Your competitors are maximizing efficiency and keeping costs down by utilizing cloud-based, secure solutions for automating invoicing, payments, while also handling short pays, virtual credit cards, and other exceptions that fall outside the standard processes. It’s time to take your cue from Ikea and ask yourself what you’re going to do to stay ahead of the competition, increase your margins, and make your customers love you.