Good communication is essential to good business

BY RICH SCHMITT
Management specialist

Getting your year off to a focused, running start is part of the agenda for this early and often slow time of the year. In most markets, the “construction season” hasn’t really started. (As I write this there are a lot of HVAC companies wishing for some bitter cold weeks to pep up their heating business.)

You are probably tired of me saying this but the prescription for 2012 is in many ways the same as in 2011: “Keep selling!” The wholesalers who are aggressively selling seem to be doing better than the ones who are sitting and waiting/hoping for the economy to recover. Some thoughts for your consideration:

We all want to do business with people who understand us — Dave Barry the humor writer portrays the difficulties in communication between men and women in one of his books. I won’t retell the story here but as the conversation proceeds it becomes clear that the woman is thinking about relationship and commitment while the guy is thinking about changing the oil in his car. Both are trying to communicate in sincere, good faith yet they aren’t even in the same book, much less the same page. Satisfying your customers’ needs is difficult in the best case but almost impossible if you don’t take time to listen to them then act upon the insights you gain.

Getting started

It’s what the customer wants and will pay for that matters. There are a lot of ingredients in selling but the most fundamental elements of selling are understanding what the customer wants/needs and then making sure they know you can meet those needs reliably. The customers’ needs continue to evolve so what you knew last year might not apply this year.

It is easiest to sell the customer what he already wants. So the assignment this month is to spend time understanding what the customer wants and forecasting what the customer will need going forward. I said “easiest” but this is not at all easy…it’s just easier than trying to convince a trade customer that he needs or should use something new and different. Our industry is famous for its slow adopters.

If you have something in stock that the customer isn’t buying, there are three options:

• Make sure they know you have it. Sometimes the customer doesn’t buy from you simply because they just don’t know that you have it. So a lot of time is spent reminding customers about lines and items that you stock. Print catalogs are still the king in this regard. For all the power of the Internet, its strength is in finding something that the customer is already looking for. A customer can thumb through your print catalog in a matter of minutes. The same view would take hours on the Internet. While some customers might spend hours on the Internet looking at male and female fittings, they won’t spend that amount of time looking the kinds of fittings that you stock. Print catalogs allow the customer to see all the products you sell quickly and without any technical device except maybe a light bulb.

• Spend time convincing them to want what you’re selling. Getting trade guys to change has always been difficult. With that said, you can actually influence what the customer wants so they want what you are selling. Some of the “influencing” might involve the introduction of new products or just offering a new source for familiar products. Most trade customers didn't know they needed PEX, press fittings or push-fit fittings until the manufacturers, wholesalers and reps created the market for those products. Now these products are in use broadly in the industry.

• Get rid of it. If they know you have it and still cannot be convinced to want/buy it, get it out of your warehouse and use the space and dollars for products the customer cares about.

Don’t lose your role as the primary information source. For many years, trade customers have looked to their local wholesaler for product information, for industry trends/insights and for suggestions that will allow them to be competitive. The means of communication continues to evolve but need for information is basically the same. One of the major changes is a move to obtaining information from the Internet versus printed literature and through sales calls. For now, you probably need all three methods of communicating to ensure you support the preferences of your entire customer base.

You need direct contact if you really want to understand their world. One disclaimer: As I sit in St. Louis writing this column, I fully admit that I don’t know your customers or have any sense of their needs and preferences. So my suggestions may or may not apply to your target customers. With that said, it is critical that you know and understand your customers’ needs and preferences. The biggest mistake that I see wholesalers making is sitting in their ivory tower — or not so ivory tower — office thinking that they are somehow able to infer the ins and outs of contractors’ businesses and lives from their comfy chair.

Have your questions ready so you can ask them whenever you have face-time with a customer. I always recommend that the discussions center around a single question, “What do I (the wholesaler) need to do to deserve more of your business?” I always follow with the statement that we may not be able to do what they want but we do want to know what it would take to earn a greater share of their business. It tells the customer that you are willing to invest in the relationship to earn more of their business. This almost always creates a positive impression even if you do nothing more. I like to ask other open-ended questions like,

• “If we could do just one thing differently to help make you more successful, what would that be?”
• “What do we do now that makes you more successful? We want to make sure we keep doing it.”

• “What do we do now that makes you less successful? We want to try to stop doing these things.”

• “What problems do you have that we can’t help you to fix?”

Sometimes in knowing this you may actually be able to help in ways that neither you nor the customer envisioned.

• “Who else do you buy from? Why do you buy from them over us?”

Talk to lots of customers and lots of types of customers. Diversity is critical. When you only talk to customers who like you, you can get a cheery sense of your situation. When you only talk to customers who are mad at you, you may learn more about yourself but you can also get depressed. When you talk to contractors who aren’t buying from you, you can get important insights. The mix will give you a more well-rounded view of the situation.

Keep good notes. If you talk to a lot of customers you can get confused without detailed accurate notes. Your notes will help you to quantify and process the data months after a conversation. Plus, the customer will be impressed that you are recording what they tell you.

Quality time is the best. Ideally, the discussions are conducted in their place of business at a time when they can talk without interruptions.

Work to stay neutral as you listen. If a contractor tells you that you suck, don’t argue, ask for examples. When a customer tells you are great, don’t bask in your wonderfulness, ask for examples…then ask him to tell you where you can improve. Most customers will not tell you the bad and the ugly unless you show an openness to criticism and a sincere desire to learn and improve.

Surveys are a poor substitute for direct customer contact. I don’t think most surveys really help to bore into the customers head and fully understand their situation. Surveys have the advantage of efficiency but the often lack the ability to follow the customers’ thought processes wherever they might lead. If you ask questions about your customer service when his beef is with your sales team, you aren’t capturing his overall impressions of your company or their needs in general.

Even worse, national surveys conducted by vendors or associations might not have any bearing on the niche and customers that you serve. Some of these surveys could have a hidden agenda so it is important to really understand the details before you use the data for more than casual reference. (In a past life in academia, I became aware of a doctoral thesis that was submitted after the raw data had been edited to filter out (shred) the data that didn’t support the desired conclusion.) Understanding the customers’ needs through this kind of sterile, objective, distant approach is an almost impossible feat of magic.

Be open to the changes in the industry and in your customers. There is one factor, that you must consider, it’s not what you want the industry to be, it is what the customers want it to be.

You may not want the internet to change the industry but the internet is changing how a rapidly growing number of trade customers, not just the young techies, obtain information and operate their businesses. You can fight it or you can benefit from it.

Even last year, as I talked with owners of wholesaling businesses, I heard a surprising number of them saying that the internet had not yet arrived in their market. Maybe there were some young trade guys who wanted it but not the heart of their customer base. My gut screamed that they were wrong but as the disclaimer says, “I don’t know their customers.”

As it turns out, I may be underestimating the impact of the internet in our industry. We had a customer in town this week to discuss the 2012 upgrade to their webstore. They launched their webstore in 2011 and are already planning an update and upgrade to it after less than a year in service. Why? Because they are committed to keeping it a best webstore in the markets they serve. Our customer said, “We’ve been surprised by the acceptance of our webstore. There were some guys who we knew were going to be all over it from the start. What has surprised us is how some of the non-technical guys have adopted it and made it a fundamental part of their operation. They love it and because our webstore is the best and easiest in our market, they have shifted more business to us.”

The good wholesalers are great at fulfilling their customers’ needs. The best wholesalers go beyond that and work to define and serve needs even before the customer understands the need himself. Taking time to identify the customers’ needs positions you to best serve them and to become their primary supplier.

Rich Schmitt is president of Schmitt Consulting Group Inc., a management consulting firm focused on improving the profitability of distribution and manufacturing clients. Rich is also the co-owner of Schmitt ProfitTools Inc. (SPI), a business producing print, CD-ROM, web and palm-based catalogs as well as pricing management and analysis software for wholesalers. Go to www.go-spi.com for more information.