Distributors think outside the box, but most of them won’t venture past its four cardboard walls to find new revenue streams. That is what Peter Bonfe, president of Bonfe’s Plumbing, Heating & Air Service Inc., Minneapolis-St.Paul, Minn., discovered when he went in search of a distributor to help him haul equipment off a jobsite. Tough economic times found Bonfe analyzing every dollar spent, and he discovered that it cost his company a lot of money to have equipment delivered to his establishment, carted to each jobsite, and then hauled away and scrapped.
“There was a lot of wasted man-hours and a lot of wasted money in the delivery of new units and collection of old units,” explained Bonfe. “We had a lot of business coming in due in part to the tax credits, but removing, placing, and scrapping a unit takes time, and I didn’t have the staff or the volume to make this process worth it.”
Taking all these factors into consideration, Bonfe devised a solution and put together a proposal to take to his suppliers. His proposal asked the distributor to bundle all the materials necessary for a job, including parts and pieces, and then have them sent directly to the jobsite. There, the delivery staff would help Bonfe’s technicians remove the old unit, place the new unit, and then haul the old unit away. In return, Bonfe would bring its parts and pieces business to the distributor, pay a minor convenience fee, and allow the distributor to keep the scrap.
“Scrap can be very lucrative if there is enough to justify hiring someone to break the units down,” said Bonfe. “Using this proposed program with other customers, eventually the distributor should get to where it had enough scrap business to make hiring someone for scrap a profitable move.”
PITCHING PROBLEMSBonfe pitched his idea to the multiple suppliers he was purchasing from at the time and met quite a bit of opposition. One company listened, but responded, “This is not the way our company operates.” Another came back with a $100 convenience fee per delivery.
“That wasn’t going to work, it only costs me about $60 to do it myself,” said Bonfe.
Taking the idea to one of his Air Conditioning Contractors of America (ACCA) Mix Group meetings, he told other members about his proposal. Liking the idea, they returned to their distributors to pitch the concept and met with much the same results.
“Some distributors are so ingrained in their way of think- ing and their way of doing things that they just can’t seem to figure out a way to make this idea work,” commented Bonfe.
Confident that someone would see the benefit to both the contractor and distributor, he decided to ask another company: Johnstone Supply.
CALCULATED RISKBonfe pitched his idea to Aaron Radke, territory manager of Johnstone Supply, Bloomington, Minn. After listening to the pitch, Radke said, “We’ll do whatever it takes; we want your business. However, it is going to take some time to get the kinks out.”
It was approximately one month after that conversation that Johnstone Supply’s St. Paul branch made its first delivery.
“When I told him yes, we didn’t even have a truck at that branch,” said Radke. “The first few deliv- eries were made on a standard pick-up truck. We had to go buy a delivery truck and have it outfitted with the Johnstone logo.”
Even though deliveries had begun, this customer service effort still required some investment and some hard work to make it run smoothly.
“We were nervous as to how much inventory we would have to keep,” explained Radke. “We supplied all the parts, pieces, and installation supplies including ductwork, thermostats, copper, PVC, etc. If we don’t have an item in stock, then the whole thing falls apart.”
Working through the headaches in the beginning, Radke de- scribed some scrambling, some investment, and a lot of hard work as he, the branch, and Bonfe worked to iron out the details.
The end product is a smoothly running program that provides Bonfe exactly what he was looking for with a $20 convenience fee per unit.
“The Johnstone Supply St. Paul branch had to buy into the vision as well, and they have been instrumental in the success of this project on a daily basis,” said Radke.
The program, being mutually beneficial, has provided John- stone with approximately a tenfold increase in volume of business from Bonfe.
“The vision of our company is to be world class through customer service, and you don’t get there by saying no,” said Radke. “We knew this was a risk, but it was a calculated risk, and we felt it was worth it.”
The program has been in operation since spring of 2008, and Johnstone Supply is in the process of running the ROI numbers. The company plans to roll out the program in the near future to other select customers. According to Radke, this program is not a viable fit for every one of his customers.
“You can’t just say yes to every pitch that comes across your desk,” he cautioned. “Do your homework on the dealer. You have to make sure it is a good fit for both sides of the partnering relationship.”
Bonfe pays its bills consistently and on time and moves large volumes of product; two characteristics that made them likely partners in this grassroots venture.
“The phrase ‘partner in business’ gets tossed around a lot, but we really have taken it to the next level,” said Radke.
PARTNERING PAYS OFFSince beginning the program, Bonfe’s HVAC side has grown approximately 15 percent, not including preventive maintenance work. According to Bonfe, this is due 50-75 percent to the program pioneered with Johnstone.
The distributor has benefited as well. “By saying yes, it gave us the ability to earn more of Bonfe’s business that we didn’t already have,” said Radke.
According to Bonfe, before the program began, Johnstone received approximately $30,000 of overall business from Bonfe. With the program, the distributor is now receiving approximately $300,000 of business from Bonfe.
With the help of the St. Paul branch staff, some ingenuity, and the willingness to take a risk, Johnstone Supply is redrawing the boundary lines of good customer service.