Distributors Help Dealers Watch Expenses
July 21, 2008
HVACR distributors do more than just sell parts and equipment - much more. They offer support for their dealers by sponsoring training and education, both technical- and business-oriented. Their goal is to ensure each dealer customer is successful and continues to make them, the distributors, an important part of their business plans.
One of the business concerns among many HVACR contractors is how to survive and compete in a down economy. Survival depends on how well contractors can manage costs while keeping their eyes on expenses. When costs are stable, contractors can establish their pricing models to cover costs and margin based on market opportunities and growth objectives. But today, with rising fuel and commodity costs, contractors are facing greater challenges. Many of them are turning to their distributors for help and advice.
“A dealer maximizes their success by fully leveraging on the combined talents and resources of their company and employees, the brands that they offer, and their local distributor support team,” said Mike Branson of the Habegger Corp., Cincinnati distributor of Bryant products. “It is like a strong and well-balanced, three-legged stool.”
Liz Haggerty of Carrier Sales & Distribution agrees. “Our focus as a distributor should be to build a relationship with the dealer and to provide them with the tools they need to grow,” she said. “Providing business training as well as technical training, assisting with advertising, and generating leads all enable the dealer to focus their energy on selling and installing.
“Right now the problem is managing the cost of fuel. The quick rise in fuel prices has caught everyone off guard, and in most cases were not planned for in the dealers’ business plan. Dealers need to make sure they are being efficient in dispatching and routing trucks to make the best use of their vehicles and their labor.”
TRIMMING AND MANAGING COSTSObviously fuel costs are the most recent and significant contributor toward many contractors’ expenses. Branson suggested that an HVACR contractor can save significantly by combining orders for multiple jobs and taking advantage of delivery services offered by distributors. “This not only saves on fuel expenses,” he said, “but also helps keep dealer employees focused on serving customers, rather than traveling to purchase and retrieve equipment, parts, and supplies.
“Preplanning jobs in advance and combining orders for distributor delivery will help reduce time of employees picking up. E-commerce transactions are becoming more prevalent and offer an opportunity to plan and combine on delivery trucks.”
Haggerty noted that contractors need to look at opportunities to find efficiencies in their businesses and develop standard processes. “The ability to streamline internal processes such as job bidding, product ordering, inventory management, sales routing, and truck dispatching can allow the dealer to take cost out of their business by eliminating redundant work and administrative burden,” she said.
Trimming costs are one way to keep expenses down, but in many instances trimming gives way to managing, especially when some business costs simply cannot be cut any more.
For example, managing technician time to ensure that all hours are billable can be a challenge. As one of the larger HVACR distributors in the country, Habegger uses its purchasing power to negotiate the best prices possible on behalf of its customers and to provide as much notice as possible about changes in costs to help customers prepare for any impact.
“We focus on developing very capable employees who are able to work in an entrepreneurial environment to create positive relationships and to serve our customers by differentiating our value and responding quickly to local market conditions,” said Branson. “In addition to negotiating with suppliers for the best costs possible and notification prior to costs changes, we help our dealers manage costs by offering extended services to help them work more productively, saving time and money.
“These include a comprehensive product line of equipment, parts, and supplies, including service parts for all major brands positioned in local markets near our dealers. We also offer extensive delivery services to reduce the time dealer employees chase parts and equipment. Dedicated parts people help dealers manage their inventories to maintain sufficient parts on hand. Crane service is offered in some of our major markets as a value-added service to again help our dealers save scheduling time and money.
“We offer extensive business, sales, and marketing education programs to help our dealers succeed. We are also introducing a new e-commerce system to enable dealers to order anytime and plan deliveries or timely pick up.”
Managing costs can be as easy as understanding how to manage time, according to Haggerty. “The easier we can make it for a dealer to purchase from us, the more time they can spend generating revenue,” she said. “Having convenient locations, delivery, and easily accessible ordering processes all allow a dealer to focus on their customers.”
USING CONVENTIONAL MEANSBoth Bryant and Carrier distributors continually look for new ways to help dealers cut expenses and increase profitability, but often rely on the proven strategies. Habegger is launching an e-commerce Website that its customers can utilize to place orders online for equipment, parts, and supplies. “The site is extremely simple to use and the online experience is customized for each customer,” said Branson. “Dealers will be able to place orders any time it is convenient for them, even after hours. The site also includes additional information on Habegger products and services to help them save time and money.
“In addition, Habegger is investing in training facilities and programs to help its dealers to grow in product, technical, and business segments.”
Publication date: 07/21/2008