Wholesalers Rethink Customer Retention

October 10, 2000
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DES PLAINES, IL — If you are a contractor or technician and you go into your supply house, you expect good prices and good service. And chances are you’ll get both — if that supply house expects to stay in business in a highly competitive sector.

So what makes you go to AAAA Wholesalers Inc. rather than Super Superior Supply House down the street?

The owners and employees of those establishments want to know the same thing. Some of them turned out for a workshop here sponsored by the Northamerican Heating, Refrigeration & Aircondi-tioning Wholesalers Association (NHRAW).

The presenter was John Sedgewick, formerly of Honeywell, and now a consultant and speaker with Applied Learning Associates Midwest.

“The heating and air conditioning industry is an industry without an underlying growth driver.” Demand is not surpassing supply, as is the case in a growth market. “You must adapt your company to a mature market,” said Sedgewick. “That’s what the market says you must do.”

He focused on what he called the process needed to determine what kind of wholesaler you want to be.

One approach, he said, is differentiation. It doesn’t come with price or product, since everybody else is close on cost and what is on the shelf. It comes with service.

For example, if a competitor promises items in stock, you can offer a consignment plan. If that competitor can deliver the next day, your goal could be by 4 p.m. that same day. If he offers 30-day credit, you can say you’ll take payment when your contractor-customer gets paid by his customer.

Sedgewick described this differentiation strategy as involving “communications, speed, and customization.”

Say Goodbye to the Good Old Days

He suggested that wholesalers need to take a hard look at what kind of supply house they want to be. The days of being able to offer hvac, plumbing, and refrigeration under one roof may well be over. Even hvac-only houses need to decide if their focus is on equipment, parts, supplies, or accessories.

Another goal of a mature-market wholesaler is to determine how to go after those contractor customers. Do you use a “cannon” and go after every contractor in sight and hope to land a certain percentage? Do you use a “rifle” and focus on top prospects? Or do you use a “shotgun” and try something inbetween?

Sedgewick noted the traditional wholesaler marketing approach was to offer a list of supplies and services and hope such supplies and services are what the neighborhood contractor-customer wants.

Now, he said, there is a move toward what is called a “market segment of one” approach. In its most extreme form, it means a salesperson approaches the contractor and says, “Joe, I have a blank sheet of paper. If you can have anything you want, what would you say you need?” If the contractor puts technician training and availability of certain products high on the list, the “market segment of one” calls for the wholesaler to do that.

He admitted that such a concept “is tough to manage.” But it signals the direction a mature market wholesaler can take.

Sedgewick called for attendees to begin internally to define the type of business they are, the direction they want to go, and how to get there. They then need to have the willingness to make significant shifts in focus if needed.

Publication date: 10/16/2000

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