Rich’s proven tips for losing customers
BY RICH SCHMITT
Management specialist
In the wholesaling business there seem to be 2 parts of each sale: Getting the horse to water (Getting the customer to call, to stop at your store or to log into your webstore) and then getting that horse to drink (Buying something…hopefully everything from you). There is actually an important third part, if you want to consider the whole transaction, which is getting the customer to pay for the products that were sold, but that’s another column.
Over the years, a lot of my column space has been dedicated to getting the customer to your trough…(your counter, your webstore or on the phone.) I have discussed the ingredients in becoming the primary supplier. The primary supplier is the wholesaler who gets the first call, first stop, first webstore login, last look and a modicum of forgiveness when there are problems. (If you have somehow missed my discussion of this process, e-mail me for a reprint. rich@go-spi.com)
As a reminder, there are 4 things that a wholesaler must do to earn the role of primary supplier…to deserve a customer’s day-in and day-out business. 1) Be reliable, reliable, reliable in getting the product to the customer; 2) Have the products they need and make sure they know you have them; 3) Build solid personal relationships; 4) Offer fair and competitive pricing. They are simple to say but difficult to do. A small number of wholesalers excel in these things and it allows them to control their destiny better than their competition. Regrettably, this level of excellence just gets the wholesaler into the game. The game is not won until the customer completes the sale and pays you. Ideally, at the end of the transaction the customer’s “purchasing pump” is primed to call you, stop at your location or log into your webstore the next time he is ready to buy.
When the customer comes to your counter, calls you on the phone or logs onto your webstore…he is at your trough and he is thirsty. If you are like many wholesalers, a lot of hard work has gone into this moment. Your marketing and sales people have worked darn hard to make sure that the customer thinks of you when he needs a specific product. You should never underestimate the effort required to get the customer to think of you as he considers his options for a job or product supplier. At this point, you have center stage, your competitors are not in the room and while they may be in the customer’s head somewhere, you are at the front of his head. At this moment, it is your order, ready for your company and your company alone to complete the pass or fumble the ball. There are several levels of fumbles:
1. Not getting the full order: You get some of the order but cannot provide all of the products that the customer has on his purchase order (whether recorded on his computer-generated purchase order or on a 2x4).
2. Not getting the full potential of the order: You provide all that the customer requested, but failed to provide all of the products that the customer will need for the job he is doing. The customer bought the job materials but maybe forgot the supplies…flux, gas, brushes, etc. that he needs. He may buy these products from a competitor after he has started the job. He may have forgotten to put some of these items on his list AND your team didn’t remind him of the other products he might need. Hopefully, when he runs for those forgotten items, he will stop at your location or call you but the odds are high that he won’t. Why wouldn’t he stop? He might be embarrassed to admit he forgot something because he feels stupid. Even worse, your counter team might greet him with “So, dufus, what did you forget this time?” There are 2 problems with this: 1) The obvious fact that you wanted the sale of these products at a fair margin. 2) Your competition has an opportunity to convince the customer that he ought to be the customer’s first stop for the next job.
3. Not getting any part of the order: You end up with the customer having ordered nothing. Sometimes it’s your pricing or lack of stock, but the customer took the whole order to a competitor.
4. Losing your hard-earned position as the go-to, primary supplier: The customer ordered nothing and won’t try you first in the future.
5. You’re removed from the approved supplier list altogether: The customer ordered nothing and went
away mad at your company vowing to never darken your door again. The last two outcomes often involve an emotional component where the customer was offended or his feelings were hurt, but a major screw-up can get you there pretty quickly.
Some of the most popular ways to screw up are (Before you start sending me hate e-mails, these are tongue-in-cheek)
1. Treat the customer badly or disrespectfully: Let me count the ways. Remember respect is in the eye of the beholder so try to be creative in finding ways to make the disrespect as personal as possible.
a. Crack jokes at a customer’s expense.
b. If it’s his 2nd visit today, ask him what he forgot to make him feel dumb. (You could have joked that getting to see the customer twice makes your day even better but that might make him feel good.)
c. Address him by an offensive nickname so you can hurt his feelings and your relationship. If he doesn’t have an offensive nickname take time to give him one.
d. Make sure that you embarrass the customer when his peers are present or joke about a customer with his peers after he has left. Even better, do both.
e. Don’t greet each customer as a welcome friend or guest. Act like you’re annoyed that the customer is coming to you. Avoid eye contact, a friendly tone of voice or a smile, because it might welcome the customer and make him think you want his business. Remember most of the daily problems are due to customers, so fewer customers = fewer problems.
f. Ignore the customer when you are busy. Even better, ignore him when he’s the only customer at the counter because that sends the strongest message. Don’t acknowledge his presence when you are waiting on others. Make him wonder if you saw him come in. Never look up and say a quick, “I’ll be right with you, grab a cup of coffee or a soda while you wait.” He can plainly see that you are serving another customer, so why make him feel more comfortable.
g. Move slowly in serving the customer, especially when he can observe you. Act like it’s a pain to fill his order. Waste some of his billable day. If he acts like he is in a hurry, assert your power by moving even slower.
h. Enter the wrong products into the order. Don’t double check the order with the customer since it is best when he doesn’t catch the error until he is back to the job site. If he catches it before he leaves, blame the problem on the customer and try to start an argument about who is to blame. In some computer systems, you may be able to post the order so the customer must resolve the problem with your credit department.
i. Make sure to allow interruptions or distractions several times while you’re taking and filling the order. Be sure to answer the phone and preempt the counter customer’s order to take a phone order. If the interrupting phone order is from the counter customer’s competitor, make sure he knows it. ?j. Finally, interrupt the customer by chatting with other employees, other customers or your spouse on your cell phone to make the process as excruciating as possible for the customer. Don’t forget to send a couple text messages for good measure.
If you are an owner you can encourage continuing disrespect by making excuses for your team, “Well
Tom is not a people person or Dick is not a morning person or Harry is kinda rough but the customers love him.” (Don’t worry, customers would love a chimp as long as the chimp keeps giving away your money in discounts and free products like Harry does.) Try to find erratic, moody people for all customer-contact roles in your company so customers get to experience the full spectrum of moods and treatment.
2. You don’t have the product that the customer needs:
a. Don’t worry if you’re out of the bread and butter items, they are so common your competition will probably have some.
i. While an inexperienced customer may expect you to have these items in stock, why not teach him to call ahead to make sure you have 3/4" 90s in stock.
ii. Only an idiot would expect a wholesaler to reliably stock common sizes of copper fittings.
iii. Don’t establish these as special items in your computer or build processes to prevent this kind of surprising stock out because contractors like surprises. While some systems have specific options to help manage these core items, don’t use them.
iv. Don’t increase the safety stock for these items because the small additional cost might reduce the surprises.
v. Whatever you do, don’t have a human process to double-check these products to make double-sure that you never, ever run out.
b. When you don’t have some of the products that the customer needs, don’t suggest an acceptable alternative. When you go the extra mile, some contractors may come back thinking they can count on you or expect you to go the extra mile in the future.
c. When you are out, send them to a competitor.
d. Don’t try to be a one-stop-shop for target customers. Contractors like to drive around to visit wholesalers…the more the better.
e. When the customer wants more than you have, don’t go the extra mile to solve the customer’s problem. Don’t offer potential solutions to the customer. Don’t gather additional information from the customer so you can propose a solution that meets his needs.
f. If possible, suggest a substitute product that does not meet his needs then argue with him about it. For example, if you are stocked out of right-hand tubs, suggest a left-hand tub and further suggest that real plumbers can use either interchangeably.
g. Remember, when your team doesn’t go the extra mile, you lose the present sale but may also lose future sales and that means fewer problems.
3. Your pricing is from left field – Somehow, everything is going great. Your team is treating the customer well. You have the product in stock. Your last opportunity for fewer problems is to offer crazy pricing.
a. Ideally, your prices are so ridiculously high that the customer thinks that you are trying to gouge him.
b. Don’t establish a fair, market-based price for every product.
c. Be sure to give your crew the authority to use the Turkish-bazaar method of product pricing.
d. So in a single transaction:
i. Your customer will distrust your system price
ii. Your customer will feel the need to negotiate every price
iii. Your team can trash your margins
…In hockey they call that a hat-trick!
4. Your webstore is dysfunctional:
a. First of all, you don’t want progressive customers. Real contractors don’t use computers or smartphones, they use hammers and wrenches.
b. Make the customer regret that he came to your site first.
c. When a customer is using your webstore make sure he cannot find the product that he needs.
d. Why not make him memorize your 6 digit internal part number as the only way to find a product? It’s most fun when he knows that you sell the product but you won’t allow him to order it without your 6-digit number.
e. Don’t allow searching by description, the specifications or other fields.
f. Make it slow.
g. Don’t show him accurate availability when he is picking up the order so he can drive to your location and be surprised when you short him.
h. Don’t allow the customer to access information about his account, he might use it to bill his customers or to pay down his account.
i. Don’t provide a phone number for webstore support. Make sure their only option is to use your competitor’s webstore for the purchase. If they call your main number for help, make sure to route them to several numbers before you disconnect them or connect them with a person who has lots of time to chat and absolutely no knowledge.
j. Don’t allow your counter, inside and outside people to be trained in your webstore’s use. That way, they can’t possibly answer the common questions that arise. Plus, if trained, they might be able to help a customer find a product and then order it.
I don’t have any statistics but I’ll bet an amazing number of orders are lost in the closing seconds of the sale by doing some of the stupid things that I described above… “To snatch defeat from the jaws of victory.” If you see your company in any of these ways that result in orders getting lost, get them fixed so that when customers come to you first, you don’t fumble the ball.
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.