The wholesaler’s keys to success
9 (or 10) ways to help build relationships with customers in order to help grow your business.
As we have worked with wholesalers in a consultative role over the years, and as we have provided ideas to readers through this column, we have always admitted that most of the best ideas we offer have been gleaned from our observations of the best and brightest wholesalers in our industry. We also acknowledge that many of the warnings and bad examples we have provided were also gathered from adventures in wholesaling stories that were provided by real wholesalers. We have never used a real wholesaler’s name in any of the negative examples, and have worked to obfuscate or disguise the players in a story so as not to embarrass or disclose the identity of an example. When we have provided wholesalers as positive examples, we have always done so with their explicit permission.
While we have formal business training, we feel our most important skills are to listen to clients, software users, industry gurus, and to then provide some pragmatic, organized ideas that will prod, coerce or remind you of things, many of which you already know, in a way that helps you to make some real progress in your businesses and lives.
Over the years, we have developed some simple ideas specific to customers as we watch the highest performing wholesalers do business in a way that builds loyal, long-term, profitable, win/win relationships with customers. Some observations for your consideration:
Success is seldom a series of one-night stands
While this may not be the future of the industry, we still see the best wholesalers of today building relationships with their customers to promote a series of ongoing, repeat sales. This is akin to having a life partner or friend versus a continuing stream of relationship adventures, with all the good and bad things that these adventures bring.
Earn the role of primary supplier
We see that the most dominant wholesalers have earned the role of primary supplier with a group of their customers. We have written about this often over the years, as we feel it is the most successful approach that we have observed. This is where you get the first call, the first stop at your store or the first visit to your web site; the online purchasing is done through your store, and you are often offered a last look. They are a dependable, regular customer who uses your services as a habit or a default supplier. As one of our millennials observed as we described it, “So, it’s the wholesaling equivalent of becoming Starbucks.”
Focus on the Big 4 of earning the primary supplier role
- Be dependable, convenient and easy to do business with.
- Stock the products your target customers need to complete their jobs. Make sure you never short them on the bread-and-butter items. They drove to your store knowing they can count on you to never, ever be out of 1/2-inch 90s.
- Build real respectful relationships with them
- Offer them fair and competitive pricing. (Note: Always fair to the customer and fair to yourself)
Focus on the Big 4 of earning the primary supplier role
Not a typo, this is repeated for emphasis. You are doing things to encourage your target customers to visit you and buy from you on a regular basis while allowing you to make a fair profit. You may not like our time-tested Big 4, and that’s fine, but create your own list of activities and services that produce business flow as regular as clockwork.
When you are honored with getting the nod, don’t mess up
So you did a good job of earning the first call or first stop; many times it is now your business unless you somehow, as they say, “snatch defeat from the jaws of victory.” You have probably done hundreds of big and small things right in order to earn this opportunity, you are in the red zone and you want to do everything possible to score. Here are the most likely “fumbles”:
1. Poor responsiveness — Huge line at the counter so it’s faster to drive to a competitor, or on-hold forever because your counter team is overwhelmed and also responsible for handling the phones.
2. Not having or being willing to get the product — The customer thought you would have the product, so they came to you first and you don’t have it. One great wholesaler we know would rather send a runner to a big box for an item than tell a regular customer they are out; huge transaction cost, but better than a primary supplier fumble. Some lesser wholesalers we know would simply point the customer at a competitor or a big box - that’s not a fumble, that’s a pass to the other team.
Reconsider your relationship with customers who are unethical and mean-spirited
This is a tough topic, but these pigs seem to get mud on everyone that they touch. They can discredit you and the brands that you sell as they conduct their business in your area. They have a way of somehow infecting or sometimes teaching your team bad practices. Like teaching your sales team how to give them material at low prices or for free where the employee gets a nice kickback. Your good solid customers also resent that the pigs seem to get treated pretty much the same as they do. One key phrase that you should listen for as a suspected pig talks about himself: “Let me tell you how I cheated/screwed/hurt this: a) customer, b) employee, c) other wholesaler, d) puppy dog.” Guess what? You can rest assured that you are somewhere on their list, past, present, future or all of the above for the same treatment.
One of our smartest clients decided, after regrettably years of problems, to not sell to a plumber in his area. The plumber confronted him as he was refused service at their counter, saying that he was a long-time customer and didn’t understood that his account was on hold. He was reminded that his account was long-time, permanently past due at least 90 days and that he never made-good on any of his commitments. The plumber stated that he would write a check for the amount of the sale right now. He was reminded that most of his checks had bounced, and, as an additional insult, his bank, for processing each of the bounced checks, charged the wholesaler.
The plumber pulled out his wallet and said, “OK, I will pay you cash.”
The wholesaler replied, “You know I won’t ever accept your cash. I know that you are much smarter than me based upon the number of ways you have found to take advantage of our relationship over the years. I just know that you will figure out a way to take advantage of me even if you pay cash so we will not be selling you anything today or ever.” (As with all recommendations, please check with your attorney. We are sure in some states you are not allowed to refuse to sell to someone even when they are a known cheat, crook and swindler.)
Insist that your team treat each customer with respect to his face and behind his back
As we observe wholesale companies in operation, the very best are staffed, at all levels, with people who understand that we are in a service industry. The main differentiator for companies selling what are largely commodity products is the service that they offer around those products. Their teams may be worthy of Academy Awards for their performances, but we think they actually like and respect the customers that they serve.
This is one of those paparazzi moments for managers throughout wholesale companies. When you make off-handed, negative comments about customers, your team is making a mental video that will shape how they treat customers. Actually, they might be taking a video with their cell phone to post online, which is even worse. In any event, there has always been a theme within some wholesale companies that trade customers are not worthy of their respect when, in fact, they are the ones who provide the cash to pay the bills. As the diversity throughout the industry increases, it will continue to be an imperative for wholesalers to insist on respect.
Don’t forget the folks in the yard and your drivers. These team members often have more casual customer contact with customers than any of your team, and often the least experience and guidance in customer relations, a deadly mix.
Be sensitive to the customer’s business
Sell him goods that you believe will make him profit. When things go wrong for a customer on a job, in his business or in his life, try to be the one who helps to solve his problem, and often just as important, to save face. As you know, we are active proponents of price management by wholesalers, but we always lead our discussions with the objective of fair pricing (to both parties, this is not to be confused with the lowest price) and never to gouge or take advantage of customers. This hurts their competitiveness and often your relationship in the process. With all the other things we have to do in our lives, take time to ask your customers if they made money on the jobs they did. When he didn’t make money, try to determine what needs to be different on the next job so he can, and we are reluctant to mention this, but some wholesalers actually help out retrospectively when there are extenuating circumstances. (Warning: this is a tough one since you don’t want to end up renegotiating every job a customer does, after the fact.)”
Insist that your team respects the products they sell physically and verbally
We know this may seem like we are going too far, but we see wholesale company employees physically throwing, dropping, chucking, slamming and, otherwise, distressing product as they warehouse it, deliver it at the counter or in the yard. Customers may feel less interested in paying top price for product that is mistreated in this way. Even worse is when it is mistreated as it is delivered to the customer’s shop or the end-user job site.
We were watching a wholesaler’s truck deliver finish materials to a jobsite while the homeowner happened to be present. The driver was dropping and slamming the china and fiberglass around in a way that upset the homeowners, as they watched the bathroom of their dreams get manhandled and brutalized. To the driver, it was just a load of stuff to get off his truck, but to the homeowners, it was personal. In addition, the conversation between the driver and tech belittled the “builder-grade” materials that were being used on the project. (For some reason they seemed to want to offend the homeowners in as many ways as were possible.) While they were, in fact, builder-grade materials, they were the best the homeowners could afford for their dream home’s bathrooms.
Take time to thank your customers for their business AND to ask them how you can earn more of their business
In few cases, a plumber will buy all his materials from a single wholesaler so it is unlikely that you will ever get it all. The plumber does, however, adjust the proportion of business that comes to you based upon a variety of factors. One of those factors is the feeling that you appreciate his business and that you care. The single best thing you can say is, “Thanks. We appreciate your business.” The single best question you can ask is, “What do we need to do to earn more of your business?” So far, I have never had a customer resent the question. Sometimes, it doesn’t result in more business because the cost to earn it was too high, but most will appreciate the question if offered sincerely.
As we said at the beginning, there are a lot of wholesalers doing a really great job out there but as Yogi Berra once said, “You can observe a lot by just watching.” Hope some of our observations energize your thought processes.