Straight talk, common sense and powerful interactions all describe Frank Hurtte. Frank speaks and consults on the new reality facing distribution. Contact Frank at River Heights Consulting via email at email@example.com or via phone at 563-514-1104.
Contractors, dealers, and other customers are changing their attitudes toward the whole sales process. Further, process, industrial, and institutional customers, along with larger dealers, are growing harder to reach.
Last week, I wrote an article for a contractor-focused publication titled, “Are You Getting Everything Your Favorite Distributor has to Offer?” In this piece, I imparted two very important points: First, contrary to popular belief, distributors don’t produce enough profits to impact the contractor's price of materials substantially, and, more importantly, most contractors don’t get all of the value their distributor partner has to offer.
Without people, distributors basically become an empty warehouse, a collection of well-used computers and an assortment of worn out office furniture. Speaking with an assortment of folks looking to purchase distribution businesses — from inside and outside the industry — the conversation typically revolves around three major points — profitability, solid customer relationships, and stability of people.
As we spend time together, it’s hard to believe 2018 is just a few short months away. It’s been an awesome summer. The weather has been great, the family vacation allowed some important bonding and, on the work side, business remained brisk. Most of our working hours have been a balance between summer activities and keeping the business running. Life is good.
It’s impossible to ignore the competition. Like the forces of market supply, recessions, economic recovery, and upticks in energy prices, competitors influence your business environment. Extending further, competition varies from market to market and even territories within the market.
As part of our follow-up, we did deep dives with nearly two dozen distributors, in four lines of trade (HVACR, industrial, electrical and automation, and building supplies). Clearly, distributors are struggling to get to a compensation plan that drives the right behaviors. And thoughts on commission extended past outside sales.
Finally, and at long last, we are entering a time of high growth. This information comes not just from anecdotal reports from distributors across the country but also from some pretty respected economists. While speaking to the National Association of Wholesale/Distributors Executive Summit, economist Alan Beaulieu of ITR Economics confirmed much of what distributors were noticing in their local territories: business is expanding.
Quite frankly, I can’t imagine any distributor not assigning a value to their service and recouping at least a portion of the expenses tied to the service. While I personally believe 10 percent is a bit low, it is a start in the right direction.