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We think the simple strategy of wholesaling that we have espoused for decades is continuing to evolve. As a reminder, it is, “Become the primary supplier to a group of selected customers.” We use the term “simple” since it is simple to say, not because it is simple to implement. We think this fundamental strategy, practiced by many of the most successful wholesalers in our industry, is still sound.
You want to build a base of regular customers who use you for most, or even all of their work. As before, you need to earn this important role, but after you have earned this spot in the customer's life, they may even permit you to make fair to very-fair profits.
The “selected customers” part is still on point for wholesalers, and possibly growing in importance as the industry evolves. For some irrational reason, wholesalers continue to sell and support bad customers. They put up with all the bad behavior served up by these rascals knowing, in their hearts, that the company would probably be better off without them. Just like spitting into the wind, selling to bad customers seldom, if ever, ends well. The highest-performing wholesalers are investing more effort in understanding the dynamics of customer-fit, so they can adjust how they support, price, and sometimes remove customers who do not allow the wholesaler to make a fair profit. The focus is bottom line dollars not top-line dollars, and we have heard numerous stories where wholesalers opt to make more profit on less total sales dollars. Less work, more money, seems like a no-brainer, yet many wholesalers stay the course of more work, less money for reasons we do not understand.
Now having decided which customers are your targets, the focus shifts to what you must do to earn their day-in, day-out business. (First stop, first call, first website visit, last look and maybe some forgiveness when things aren’t perfect.)
Our four checkmarks to earning that role seem to fundamentally continue, but the details are evolving. By your actions, you earn their arrival at your counter, on your online store or accepting your visit to their shop because you add value to their life.
Some updates we are observing under each of the four checkmarks include:
1) Convenient and easy to do business with
2) Reliably getting the product to the customer
3) Building a personal relationship
4) Pricing that is fair
Moving from valuable to invaluable
The bar is being raised, and the forward-thinking wholesalers will understand that these changes result in the need for more than merely providing value to customers. The basics are becoming the norm; the four checkmarks (with updates) are still the foundation and cannot be ignored. If you cannot fulfill them without fail, you cannot become valuable to your customers; so they don’t use you as their primary supplier.
Future, high performing wholesalers will seek to become invaluable to their customers. They will work to establish a relationship wherein the customer feels that they cannot live without the wholesaler's participation in their business. When you are invaluable, you get close to becoming a necessity like food and water. They may resent it, and they may reject it because it makes them uncomfortable, but if they reject it they will be giving up something that they really need and want in the process.
We think the heart of invaluable will be providing contractor/customer-centric services that reduce their operating costs, increase their sales or build their competitiveness in a very competitive arena.
This involves the operational tools that support the guts of their operation. Some examples are tools that support:
(You’ll note this list did NOT include spending $1.5 million over the next three years or any attempt to out-Amazon Amazon.)
Gratuitous plug: For information on how Schmitt ProfiTools Inc. can help you with these tools email us at Jen@go-spi.com.
You must remind them, not in their face so as to offend them, but you need to make sure they understand and internalize that they need you. If you flaunt it, many will be offended and dump you on principle, but if you humbly remind them how much you mean to them you may have a long-term relationship that is good for both parties.