Hi and welcome back. It’s been a great and festive holiday season. The kids have been around the house; there have been events by the basket load. We’ve built some quality memories — the kind that matter. If you’re like most, it was hard to concentrate on keeping things rolling around the office. The truth is, even some of our customers were less attentive than normal. Somewhere along the line, we have not been thinking strategically.
Let’s take a couple of moments to think about three things.
One: What should you be doing better this year than last?
Customer Service and Retention
Many distributors intend to provide better customer service in 2017 than in the past. For the outside observer, the question becomes: What precisely does improved customer service mean? Specifics rock, and generalities are likely to find us with the same level of customer service as last year or maybe 1999. Make a list of things you would like to change about your service. To whet your appetite, here are a few points shared during a recent distributor visit:
- Install an app to automatically acknowledge orders placed with the distributor, whether by phone, email or fax, before end of first quarter;
- Install computer software to alert customers when their product shipped by the end of June 2017;
- Provide “guaranteed” 15-minute counter service to eliminate wait time for service drivers. Announce and implement before the spring season; and
- Institute inventory management for 10 key dealers, complete with automatic replenishment and put away.
This list isn’t for everyone. Instead, it came from some comments from important customers in the distributor’s market. Your version of improved customer service will be different. One point to stress is each of the statements above were specific and carried a time line.
In Marks' and Deist's book, Myths and Misperceptions: How Markets Are Really Made in HVACR, finding a low-cost method for keeping in touch and monitoring the competitor’s top customers can alert your organization to potential opportunities to “flip” a customer and bring them on board your organization.
Further, the cost of maintaining traditional outside salespeople continues to escalate. Most distributors have a few marginal customers who don’t really justify full-fledged support. In the past, distributors went ahead and assigned them to a sales guy with the belief the seller would stay in touch “just enough” to keep the relationship warm. Research indicates this rarely happens. Newbie sellers overinvest in the customer, and tenured salespeople get busy and just let things happen.
Setting up a system for reaching these people with interesting specials and training events keeps the door open for new sales opportunities and sometimes the discovery of a disruptive slip in service at a competitor’s prize account.
The point: Everyone reading the book nodded along on the idea of instituting such a program, but only a few have made a move. Is 2017 the year for you to step forward?
Improved supply partner relationships
Back in early 2015, HARDI announced the development of a Supply Chain Scorecard. There were a number of supporting events ranging from articles in this publication to presentations at various HARDI meetings. One would make the assumption that everyone is on board, but time commitments and general business activity get in the way. Yet, those progressive folks in the vanguard of the industry report major progress and, more importantly, dollars to the bottom line.
Evaluating and discussing issues with your supply partners creates an air of cooperation and allows the distributor and supplier to eliminate expensive bottlenecks in the process and roadblocks to growth. What’s more, going through the process provides the right environment for prioritizing suppliers.
Are there vendors (not supply-partners) you should not spend time with in 2017? Who are they? And who will be their connection with your company? In a day when open door management is encouraged, it’s very easy to find yourself frittering away valuable time hearing the latest from a vendor that has no strategic impact on your company’s future. It is January and I encourage you to make a list for 2017 right now.
Two: What is your real competitive advantage, and are the competitors catching up?
Since we started our conversation with customer service, let’s touch on a point. When I ask distributors about their competitive advantage, most launch into the great customer service song and dance. Experience dictates, with perhaps a rare exception along the way, every competitor in your market provides a bundle of services similar to your own. There is no competitive advantage in providing the same “stuff” as your competitor. Further, in today’s environment of expanding national and regional players, you most likely will find that being just a bit better than the guy down the street isn’t much protection.
Let’s get real?
Competitive advantages sometimes come in mysterious ways. We know one distributor who figured out his advantage came by way of his location. He was located downtown where a great deal of activity was taking place. His store was just minutes away from a couple of major downtown-centric renovations. Contractors working in the area determined it was easy for them to put his location to work. And the competitive advantage was further advanced with the addition of temporary office space for those needing a table and computer port to catch up with their offices.
The right flagship lines are also a competitive advantage. Recently, a distributor spoke of breaking into the “major contractors” even though he lacked one of the big three lines of hard goods. Realizing that zone-based air conditioning was not a major strength of the other guy’s significant lines, he negotiated a deal to become the distributor for one of the leading suppliers in that emerging industry. The move worked. Competitive customers now saw him as a supplier of an important set of products. He won, the competitors lost, and that’s part of determining a competitive advantage.
Inventory can be a competitive advantage. Still another wholesaler points to his large inventory of hard- to-find repair parts for aging HVAC systems. They carry the stuff the other guys must order, and this makes them the first stop for lots of lucrative service truck business. The best part of this advantage comes by way of the training provided to their sales team. Inventory is part of their sales pitch, and no customer ever tours their facility without walking through long aisles packed with specialty replacement parts, some covering installations three decades old. The more they stress their service parts, the greater sales of new equipment grows. That’s how competitive advantage works.
Staying ahead of the competition
Having a competitive advantage is just one slice of the competitive pie. Trust me when I say other distributors are watching your progress. The smart ones have already figured out your advantage and are looking for ways to duplicate or diminish your lead in the field of competitive battle.
Unless your competitive advantage is massively costly or extremely complicated, others will strive to re-create their model of the plan. Returning to our earlier comments about the distributor with the spiffy downtown location,what happens when another wholesaler creates a similar location a block away? Is this expensive for the other distributor? Yes, but by doing so, they neutralize at least a portion of the advantage. Re-creating the right inventory might require more brain power, but again you have a diminishing advantage.
Answer just a couple of questions.
- What is your real competitive advantage?
- Will your advantage be greater or smaller when 2018 comes rumbling into town?
Three: What are you going to do to make life better for your customers in 2017?
I know this sounds like a contrived line from a motivational talk. But I bill myself as America’s No. 1 De-motivational speaker, and I’m serious as a coronary. What are your plans to make your targeted customers’ lives better in the coming year? Will you enable them to make more money? Will interactions with your company be more streamlined? Will they find a gleam of joy when you solve a long-standing issue?
The world around us is getting more complicated, and yet most things are easier. For instance, a year or so ago, I had the hassle of late-night shopping for dog food. We always managed to run out at the worst of times. Rain, sleet, snow, or dark of night found me running down to the pet store to ensure the doggies got their breakfast. Now, a month’s worth of food arrives the third of each month. I do nothing, and it arrives. And, at competitive prices.
What’s the point? Our customers compare business, personal, and professional against ever rising standards of the norm. Failure to understand this becomes fodder for others to lure your best customers away.
Shuffling (with a spring in your step) into 2017 …
Reading some of the economic reports for 2017 points to better times. Some even hazard to pronounce a new surge in the economy — pent-up consumer demand and other indicators all coming together at once. It’s going to be busy. So busy in fact that a lot of us could miss the opportunity to position for the future. A moment of thought now could make a big difference in how your 2017 turns out.