ACHRNEWS

Switching Distributors Can Pose Problems

December 9, 2004
As Neil Sedaka once sang, "Breaking Up is Hard to Do." Although the song was about romantic heartbreaks, in the business world there is another form of breaking up - for example, when a distributor sells or merges his or her business, or makes changes with key personnel.

The News asked its panel of Contractor Consultants if there is any way to cushion the blow of a business breakup.

"I am sure that over time this has happened to all of us," said Scott Getzschman of Getzschman Heating & Sheet Metal. "You do rely on a certain level of service, and, when you lose that, it does cause a disruption in your company. In some cases that level of service never returns, and you may end up doing less business with that company or ending the relationship."

Disruption In The Channel

Jim Hussey of Marina Mechanical talked about the effects of losing a sales rep. "Our problems have revolved around sales reps moving from one distributor to another and distributors losing a line," he said. "In the first case, our business usually follows the sales rep. We are very responsive to quality service from a quality rep.

"If that rep moves to another employer, we are inclined to move our business with the rep. This is particularly true if the replacement rep is unable or unwilling to deliver a level of service that is at least equal to the support we received before."

"In our 27 years, we have chosen to change distributors and brands six times and it has never caused us excessive trouble," said Steve Miles of Jerry Kelly Heating & A/C. "[But] being in a larger metropolitan area, there are perhaps a lot more choices."

"I have not lost a distributor, but during this year we have had three territory managers ... if it wasn't for the owner and the sales manager staying on top of the account, I probably would have changed," said Arthur Pickett of Royal Air Systems Inc. "They had us switch from one warehouse to another and also had the warehouse manager handle all of our orders personally."

Russ Donnici of Mechanical Air Service Inc. said, "We have never experienced a distributor closing down; however, we have experienced a few consolidations or mergers. Generally the mergers have been fine because the distributor wants to maintain their distribution network. Sometimes they can develop an attitude."

"Keep emergencies in perspective," advised Dave Dombrowski of Metro Services/ARS-ServiceMaster. "A major recall or a closing of a distributorship is a serious issue; losing a sales representative is simply an inconvenience."

How To Avoid Disruption

"We try to go further than just the local level and meet the corporate people behind the distributors," said Hank Bloom of Environmental Conditioning Systems.

"Then, if this [change] happens, it will be an easier transition because of the relationships we have built at higher levels."

"We make sure that we are in contact with the sales rep and the owner/president," said Vince DiFilippo of DiFilippo's Service Co.

"This ensures that our needs and expectations are heard from the street and up in the office. When we do lose a good sales rep, we just talk to the owner/president and let them know we will stick with them as long as the great service doesn't relax with the new rep."

It's "all about relationships," said Larry Taylor of Air Rite Air Conditioning Co. "If you are staying in contact, you most likely will know of the problems or changes of ownership, etc., and this advance knowledge will give you the time to make corrections," such as lining up new vendors or meeting new owners.

"In short, staying in touch with your partners will make the difference," Taylor said. "Staying in your office, out of touch, will create your own problems related to these issues."

Tom Lawson of Advanced Air Conditioning & Heating Inc. said trust can ease the stress related to change. "My local sales rep did change this year," he said. "I already knew and trusted my new rep. It was somewhat of a struggle in the interim, but our regional sales office was there to assist us when we needed help."

Miles said, "The best way that I can think of to avoid any disruptions is to avoid having all of your eggs in one basket. Develop relationships with all available distributors. And as a friend said to me, it never hurts for a salesperson to know that his competitor has been there."

Dombrowski agreed. "We all need to be involved with our distributors, but we do not need to be married to them. Even if you utilize one source for 90 percent of your equipment and materials, it is a solid business practice to maintain other options in case of emergencies."

Sidebar: How One Contractor Solved A Sticky Problem

Roger Grochmal of Atlas Air/ClimateCare noted a specific example of how his company faced a problem of changing a distributor.

"Several years ago, my major wholesale-distributor merged with another," he said. "It was a trying time, to say the least. They became so caught up in the process of merging internal operations as well as blending cultures, they forgot about the impact this was having on their customers.

"My staff were at wits' end; they couldn't seem to establish any sort of meaningful working arrangement. My staff was ready to write them off and started looking elsewhere for new suppliers. Fortunately, I had a good relationship with the owners of the company and liked their long-term approach to supporting us in a very competitive marketplace. I didn't want to see this great relationship go down the tubes.

"I decided to be proactive," Grochmal said, "so I called a meeting with the owner and my staff to let him know we weren't happy and to air out all the problems we were having. We established a communication framework with key people in both organizations, with an escalation plan as required. We wanted to avoid dead-end situations and minimize frustration.

"We became the eyes and ears from the outside looking into the organization. We helped him identify processes that weren't working so he knew where to prioritize his activities. By initiating this activity, our staff established a strong connection, and today we have a working relationship that is stronger than ever."

- John R. Hall

Publication date: 12/13/2004