What new standards might a manufacturer’s representative agency adopt to remain a viable resource in the auto care industry? As a former buyer and category manager who has been exposed to the wholesale and retail segments, no perfect formula comes to mind; but a string of observations deserve consideration for further discussion.
A customer-centric approach rather than a product-centric attitude is fundamental for generating superior business outcomes for the retailer and WD selling to the DIYer, commercial and jobber segments.
Why a product centric approach is wrong
Selling stuff, passing out pamphlets, negotiating price discounts and optimizing product coverage is not enough. Vendor websites and training clinics are common. Sophisticated customers may value these attributes as a commodity that can be easily replaced. Well intentioned sales reps look to their accounts as “partners,” but that strategy can also backfire.
One morning, an account manager and her local rep pushed hard to add more SKUs to a hand cleaner assortment, promising healthier profit margins, and yet the competitors stocked the same thing. “What about meeting the needs of the walk-in customer and balancing it against those of the commercial repair shop who would be paying less on wholesale purchases?”
The manufacturer’s rep replied that promoting the items all year round would cultivate brand loyalty. And that reducing the alternative brand presence would boost sales. My reaction to that specious presentation was to clarify the sales rep’s understanding of the difference between the divergent needs of these two customer segments.
Another time, a manufacturer’s rep dropped off a seasonal price sheet for winter chemicals in which discounted pricing for starting fluid was higher than its competitors. I showed him the other brand’s price advantage with a lower minimum purchase order requirement. To demonstrate my need for competitive pricing, I shared a unit sales forecast for the upcoming 14-week peak cycle. He replied that the vendor wouldn’t budge on their pricing.
Whose interests are being served? I resented that this one way “partnership” revolved around the vendor’s quest to sell product. When trust between the buyer and the agency breaks down, communication and collaboration falls to the side. Internally, management pondered aloud whether rep agencies are honest brokers. Many times they discussed dropping one rep agency, pocket the commission difference and manage the product line themselves. But punishing a rep agency is a zero sum option when there are smarter, open-ended, long-term solutions.
Why a customer centric approach makes sense
Customer-centric innovation revolves around customers and their needs. The process starts with insights on customer needs, with the goal of designing a new product or service that delivers on these needs in a way that is intuitive and accessible across the supply chain. WD and retail customers may be involved in various ways for ideas generation, market research and at-home testing. So while a supplier and a rep agency must understandingly grow their businesses, it is imperative that they align themselves with their WD and retailer’s business model that weaves in their customer values.
Instead of offering a generic “we will build it, and they will come” mantra, become a dedicated resource for each account by being their eyes and ears in the market place by offering credible facts and evidence based on data. This call to action requires that the vendor partner with the rep agency to help develop each account’s business plan to reach their DIY and repair shop base. Ultimately they too want be a dedicated resource for their customers, grow market share and build a healthy margin.
Developing a resource-based consultation team should become your rep agency’s value proposition. In other words, what can you do to make the stake holders’ lives easier by becoming a reliable source of information that translates into measureable revenue improvement and cost savings?
Becoming customer-centric
Emerging technologies, shifting demographics and evolving purchasing habits to better connect with the DIYer and installer are three attributes that I value. The biggest challenge is making sense of this inflow. But the broader point here is to jointly tease out issues that your account base values or what keeps them up at night. In some cases, consider introducing best practices to their tool box or raise a new topic relevant to their business model.
An acquaintance mused aloud about why the younger repair techs work less hours than the old school veterans who ignore the 9 a.m. to 5 p.m. mentality. Millennials do see things so much differently than their older counter parts; and their work ethics may certainly shape the way how a parts store goes to market or even hosts simple value-added services such as an on-site product training clinic.
Historically trade magazines ruled as opinion leaders who determined which articles to publish, and that medium served as one venue to research product information until the rise of online platforms that opened up the gates for interactive connections. Now everyone can share their opinions and blog about their experiences through social media.
A global supplier rationalized this trend by promoting their website replete with product information, and most importantly with product installation videos. Some of that makes sense, but how does that resonate with the millennials? According to the 2016 Aftermarket Business World survey, 73 percent of repair shop owners and techs said that they used their tablets and smart phones more frequently than last year. They found it easy to compare prices, check availability and read peer product reviews.
Where I challenged this supplier is how often is that user going direct to their website versus doing a search on Bing or Google? Shops and DIYers research products primarily through search engines using key words.
Most people under 25 grew up with mobile devices and tablets to connect themselves to products and services. Small retailers in other industries recognized the value in search engine optimization, and crafted content rich websites that guide their visitors’ questions to solutions that included YouTube videos, a convenience for self-training at any point.
Digitally savvy retailers are embedding key words rather than generic words so that their website appears at the top of a search engine result. Rather than talking about themselves, the retailers are willing to give away information so that they are viewed as a trusted resource at any given point of this online relationship.
Larger parts retailers are integrating search engine optimization technology into their content rich websites. They know which keywords to steer the consumer to their e-commerce site that includes pricing, visual product attributes, and related products to buy. But I argue that many WDs, jobbers and smaller retailers are equally positioned to create their own blogs, videos and eBooks that engage their customers by what their products and services can do for them.
Best practices to improve any business function are ubiquitous but not often enough shared across lines. Data and factual based evidence are the decision making tools to identify new revenue opportunities and eliminate avoidable costs. Introducing external information to complement internal point of sale history helped narrow the product coverage gap. In one instance, a rep agency category captain exposed me to a garden variety of metrics to spot additional profit revenue and product share insights. What I valued was our collaboration with an impartial fresh set of eyes to determine what to add, hold or remove from an assortment during an annual line review.
A master purchase order workbook containing account numbers, contact names and order requirements was created to assist the buying and special order process when a buyer was out. Tracking customer back orders became more manageable when I persuaded one vendor to coincide their open order reports with mine, which included shipping date and product disposition. In all, these examples improved fill rates and reduced wasted time.
Resistance may arise from WDs, retailers or even suppliers who may perceive their businesses to be stronger than it truly stands. Some accounts may not give a rational reason why management opposes close collaboration with a rep agency, and yet they bemoan a shrinking customer base. When offering assistance, they reply all is “OK” when in fact a department is spread too thin. Consider how your rep agency balances multiple rival accounts in the same territory. An obvious barrier is a lack of communication or candor, but I suspect other reasons are there; so I encourage management to further explore ways to define what trust means to each account.
Obviously these observations are neither the end nor a final prescription, but a start to spark lively debate as to what are a viable set of standards for a rep agency in the auto care industry. “What can I do better?” was a question that one rep had always asked me after each meeting. He was genuinely invested in candid feedback for continual improvement. This small gesture went a long way because he wanted to transform into a consultant to help grow both the supplier side and the WD/retailer.
Working with a manufacturer’s rep agency is a never ending journey, but I am convinced that self-reinvention is one way to rise to the top.
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