It’s a constant in the jobber business: 20% of your total customer base produces 80% of total company profits.
That being said, as you start another year, perhaps it is appropriate to consider how much quality time you are spending with your best customers. Is it really worth it in the long run?
The fact is that as a successful jobber you must be very client-driven. You must realize that our industry is in a transition; not everyone likes that, but it is a fact. You have to deal with the world the way it is, and not the way you wish it was.
In business today, you must focus on items which you can control. There are four things that fit into this category:
2. Cash generation
3. Productivity gains
4. Attainable client share gains
The jobbers who don’t focus on these will lose their business.
Consider that the delivering-value business is far from saturated in our industry. Bringing true value to a client’s business is leading-edge type thinking, when it comes to building service provider client satisfaction and their total loyalty to you. To do that you must listen to your client. You must spend one-on-one time with your client. You must get out of your office and be face-to-face with your client.
A successful jobber must go where the market is going and form long-term relationships, and then work with those clients to assist them to achieve their goals. In turn, the jobber will end up achieving his own goals. This partnering strategy rings in enhanced gross profits and rewarding net profits.
Successful service provider shops are very smart individuals. They recognize what is happening within our industry and the fundamental change that is taking place. They recognize that their primary product–their knowledge–does have commodity-type trends and that they must move in new ways to build effective client relationships and educate their customer base in order to increase their labour-revenue component. If they don’t do this, then they will have to become dramatically more operationally efficient. Who better to partner with than their chosen jobber to accomplish all three?
The future success of the jobbing business will be based on those companies that know how to partner strategically.
You can argue all you want whether our industry consolidation is good or bad, but the fact is that it will continue to happen. Shops will continue to close. Jobber stores will continue to disappear. Warehouse distributors will continue to be bought out or merge. You, as a jobber, must make the decision to become part of that or you will get left behind. It is wise, therefore, to be very open with the desired service shops you wish to partner with.
Make no secret that you would like to partner with their business by delivering true value that will enhance their business and their bottom line. Open, frank, honest discussion does build trust. Once again, though, the time must be taken to achieve this.
The very best service providers are seeking these types of relationships. They are seeking true value from their jobber, a jobber with a partnering mindset, because they have too much on their plate as it is in running a successful enterprise.
Consider the amount of time a service provider can save by picking up the telephone and making one and only one phone call to their chosen jobber, instead of three or four calls around town. Consider a minimum of 10 minutes per order times a minimum average of five orders per day times five days a week times 52 weeks a year. Do the math. That equals 13,000 minutes per year, or 216.67 hours per year.
More volume from one shop makes more financial sense than pounding the beat trying to get into every shop in town.
A shop’s time is worth their labour rate. At a low of $70 per hour, that works out to $15,166 in savings per year to the shop. I have always counselled my clients that the right relationship with their jobber pays, but that they and their chosen supplier must invest the time to set the relationship up. The math proves that this business strategy for a shop works.
From a jobber perspective, more volume from one shop (more client share gain) makes more financial sense than pounding the beat trying to get into every shop in town, and have them cherry-pick you. Consider that slowing it down, building the relationship, bringing in the value equation, and moving from a $4,000 per month shop to a $10,000 per month shop brings in a minimum of $1,800 additional gross profit per month per shop ($6,000 X 30% GP).
Do your own math because I’m confident you are higher in your GP return. Some $1,800 additional gross profit per month leads to $21,600 additional gross profit per year. I’m also confident you can figure how much of that would go to your bottom line, and this is per client!
Choose your clients wisely, then focus on them with all your effort. In a very reasonable amount of time, I am confident it will reap significant dividends to your business, not to mention less stress to you personally.
The 20% of your clientele do deserve more of your time. In today’s crazy economic ups and downs, you really cannot afford to ignore this.
Robert (Bob) Greenwood is president and CEO of E. K. Williams & Co. (Ontario) Ltd. and Automotive Aftermarket E-Learning Centre Ltd. Bob has more than 27 years of business management experience within the automotive industry, counseling individual shops in Ontario, and has developed business management courses for the independent maintenance and service sector proven to enhance the shops’ profitability and grow the business. Bob has also worked with wholesale jobbers on how to do a better job for the service provider by providing valuable insight as to the real challenges faced by the retailer today.
E. K. Williams & Co. (Ontario) Ltd. offices specialize in the independent sector of the automotive industry, preparing analytical operating statements, personal and corporate tax return completion, business management consultation and employee development. Automotive Aftermarket E-Learning Centre Ltd. is devoted to developing automotive shop business management skills through the e-learning environment of the Internet at www.aaec.ca.
Bob can be reached by e-mail at email@example.com or firstname.lastname@example.org.