When Rich was in college, meals were pretty unexciting. The cafeteria, at the state school (Go Cyclones!), was, pretty much, the only game in town. So they didn’t feel any need to offer more than a couple selections and, living on a limited budget, he had to eat one of those selections or go hungry. Since the cafeteria staff had seemingly decided to combine the food service and their cleaning function (they added disinfectant directly to the food…or at least it tasted like they had) “going hungry” was sometimes the best choice. (Dad would probably also tell you that he walked to school, uphill both ways in the snow). Contrast that with when Jen went to college 30 years later, at a state school (Go Hawkeyes!), where the cafeteria selection would compete with many national chain restaurants. The students had somehow convinced the university that they had other options and that their food service had to compete with those alternatives.
We’ve said this before: Wholesaling and manufacturing have gone through the same kind of evolution. Frankly, the industry used to be a lot easier…at least in some ways. Before consumers and trade customers got so well informed and product and supplier options became so diverse, the world was forced to “eat” what the manufacturers served up or go hungry. Often the buyers’ selection was even more limited since there were fewer wholesalers which often resulted in selections limited to the brands stocked by that wholesaler. Those wholesalers knew that plumbers were, pretty much, forced to “eat” what they stocked. Many markets were lucky to have a single supply house. This situation was not a monopoly but, over time, those “only game in town” wholesalers seemed to adopt the arrogant attitude of a monopoly.
As we work with wholesalers, it seems that some still think, or more to the point, act like, they still enjoy this lock on their market. To be fair, most
of the senior managers we work with understand that the industry is evolving at an alarming pace. As you go just a little south on the org chart, the message may not be getting through. To be sure some of the issue may be adversity to change. People know there is a need to change but it is tough to learn new tricks. Others have reached a comfortable position in life and change forces them from that comfort zone. Whatever the reason, they just don’t want to budge from their daily, “that’s the way we have always done it.”. Others are defiant because they enjoy mistreating and bullying customers. Having to adopt a more conciliatory role with customers is just demoralizing…sounding like a servant role. We’ve heard this sentiment in a variety of forms but the essence is clear, “I worked a long time to work my way to this job and I’ll be darned if you expect me to suck up to those stupid plumbers.” Not exactly a good foundation for creating a customer service powerhouse.
This positions wholesalers to be sitting ducks for the innovators. As you have probably gleaned from other columns we are not big fans of amazon and some other disruptive innovators on a number of fronts but, in the same breath, will tell you that they are not to be ignored or underestimated. They have probably invested more money on e-commerce in our industry than any of the traditional industry players and many of the smaller players combined. Make no mistake, Amazon is all about customer service but their plan is to replace as many people as they can with robots and machines.
A strategy reminder: the most dominant wholesalers we know are working every angle to earn the role of primary supplier with their customers. That’s where they get first call, first stop, first webstore visit, first mobile store visit and last look on quotes. They earn the role of the customers’ everyday wholesaler. They are the plumbing version of Starbucks. (For a reprint with more on earning this role email us at: email@example.com)
Whether we like it or not, many customers have a policy of uncompromising self-interest (USI) - Many of your customers and target customers subscribe to the “What’s in it for me” decision-making flowchart. When there is no personal reward available, the next level of the decision tree is “What’s easiest for me.” (EFM) We are not being critical of customers exhibiting this basic human behavior. We are being critical of businesses that try to ignore this reality due to their arrogance or ignorance.
1. So the way to their heart is to figure out what directly rewards them. Most immediate: Doughnuts and hot coffee trump a lot of other business issues on a cold Monday (possibly hung-over) morning so why not win that battle. Ice and a cold soda will draw business on 100degree days. Free hot dogs at lunchtime drive traffic for the midday pickup. Some wholesalers have told us that they don’t want the kind of customers who can be influenced by this kind of fluff and we tell them they are disqualifying most of the human race. The beauty of this approach is, of course, that your pricing was not a factor in getting them to your store. You didn’t need to dump the price on copper, you just messed up the some of morning traffic to Dunkin and Mickie D’s. Plus unlike how your competitors would retaliate for any lowball copper pricing, Mickie probably won’t start selling cheap toilets. (Except to the extent that your pricing must be fair and in the market. A free doughnut will not cause a customer to ignore highway-robbery type pricing but the sugar-high may cause them to be less grumpy about paying a little more.)
2. Then, in addition, work to understand what is easiest for them and how to make it come true. Have your team load the customer’s truck whether the guy is stiff from a job, weekend softball or too much partying. Drive-through pickup has been tried by some in the industry with mixed results but we think the folks in generation-X have a significant “drive-through” bias. They are going to order online and have their product loaded without having to get out of their truck or, maybe more important, having to talk to another human face-to-face. We are not kidding, this is part of the personality profile of your 30-something contractors. (Rich: Jen would think nothing of driving an extra 10 miles out of her way to get a good drive-through coffee so she doesn’t have to get out of the car. Jen: Dad doesn’t complain that I can work on my phone while I wait.)
3. Make sure the customers know about 1 and 2 above. How can they use your company to implement their selfish, USI strategy if you don’t communicate with them about how to do it? Make sure your message is repeated often.
4. As we have said before, in all cases connect the dots. Don’t just say you are a great wholesaler with great service, tell them what is in it for them, in terms and ways that matter to them. Show them the money…or doughnuts or soda. For example, our great service saves you time which allows you to serve more of your customers which means this much more $$.
We are a service industry...maybe we should start thinking and acting like it – Many wholesalers seem to align themselves with a manufacturing mindset. Many in our industry are surprised to hear that wholesale distribution is actually defined as a part of the service sector. Many of us clearly know that restaurants, hotels, entertainment and professional services companies are service businesses. However, from an economic perspective, wholesale distribution is formally a part of the service sector. In other words, we don’t extract raw materials (primary sector) or convert raw materials to products (manufacturing sector). We take those finished products, stock them, work to find buyers, get the product delivered to the buyer, provide credit (sometimes to the un-creditworthy) and collect for the sale.
Develop and evolve an “Easy to do business with” customer reputation – We like the “Easy” button concept that Staples has created. The idea that Staples offers a magic button that somehow makes the customers’ lives “Easier” is one cool marketing campaign. We have not researched their copyright but would guess that you cannot use it in your marketing activities. You can, however, work to promote a similar message to your target customers. Rich scoured his thesaurus looking for a single term that conveys that same simple thought and he didn’t come up with one. Just because you cannot come up with a slick marketing slogan should not keep your company from adopting the essence of the concept.
1. Are your warranty processing procedures a maze of forms and detailed requirements that take months or years to resolve? Consumers have become accustomed to going online, filling out a form, getting a return material authorization (RMA) number within hours and then having their account credited within a small number of days after the product was physically returned. Yet we hear stories that warranties can take several to many months in our industry. If your manufacturer is the problem, take time to get them on board with “Easy to do business with.”
2. We know this is controversial but many wholesalers continue to buck the wave of contractors who want to pay on their account using a credit card. Some of them for the frequent-flier points (USI) while others like the control and convenience (EFM). We know the credit card companies’ share is outrageous but this is the way of the jungle Simba so you can embrace it or earn a reputation of being difficult to do business with. If the credit card processing costs will be too big of a hit to be possible, use pricing management to raise your margins in advance of the action as a way to pay for the hit. We would recommend that you not allow customers to string you out 90 days, not pay the service charges and then expect you to eat the credit card fees on top of that. (For a reprint on “More On Pricing” contact us at firstname.lastname@example.org).
Make sure your team is not implementing a “What’s in it for me” or “What’s easy for me” mindset – some folks either don’t get it or don’t want to get it. We see this played out in 100s of small opportunities where your team choses between, making the customer’s life easier or their own lives easier. With that uncompromising self-interest described above, they often pick themselves. Why would you:
Ask what you need to do in order to earn the sale?
Work to remind the customer of other products that might be needed for a job?
Say thanks to every customer, even the jerks, for every order?
Beware of acronyms-du-joir – just like fad diets, business and technology acronyms are running amuck. Vendors and consultants are slicing dicing and repackaging the same good and bad ideas in shiny new wrappers hoping to attract some of your interest and, of course, your money. Frankly, in Rich’s 45 years in business, there have been very few true advances in how things work. Sure computers are faster, smaller and cheaper but they fundamentally work a lot like they did 50 years ago. The techniques and Businesses operate on the same basic principles that drove them centuries ago. Some of you will, legitimately, argue this over simplification but just last month we reprised one of Joe Schmitt’s columns on Management by Walking Around and we believe it still carries weight. (In our other life, at Schmitt ProfiTools, we’ve had content management software for 20+ years but now, all of sudden, we have a PIM).
Whether you’re 30ish or 60ish, your customers have expectations that need to be met and you are not their only option for fulfilling them. Help yourself by making sure you are their best USI and EFM option.