Canadian Electrical Wholesaler

 

Dec 5, 2018

Frank HurtteBy Frank Hurtte

In setting growth plans for the coming year, one should ask, “What percentage of my customers might go away?” Some will go out of business and they stop buying. Others might be folded into a larger organization. If that organization has a relationship with a competitor, your business could be switched to another supplier. Further, some aggressive competitor could make inroads into your account through hard work and/or better relationships, by way of a valuable new service or through jaw dropping price levels. This is hard to face, but it happens. The question is, how much would any of these affect your business?

To the best of my knowledge, the only industry to truly study this phenomenon is the HVAC/R industry. Three years ago, HARDI (Heating, Air Conditioning, and Refrigeration Distributors International) hired Mike Marks and Steve Deist of Indian River Consulting Group to conduct a study that resulted in meaningful numbers. These results, which shocked the industry, were published in a book entitled Myths & Misperceptions: How markets are really made in HVACR. I recommend the book to everyone in the HVACR business and believe the points made apply to distributors in many other lines of trade. Here are a few highlights from their work:

The average small HVACR contractor switches suppliers at a rate of 4% per year with well over half of the attrition (2.5%) tied to distributor dissatisfaction. Larger and more professional contractors switch at a rate of 11% per year, with 7.8% of that tied to distributor dissatisfaction.

Another group, which lumps commercial, institutional and industrial accounts together, switches business at a rate of 29% per year. I believe this higher attrition rate may well be tied to the point that HVACR distributors tend to be geared to better serve contractors than other types of customers. Further, if the institutional portion of the mix is higher, we might assume some of those institutions are government-run organizations that base purchasing practices on price (low bid orders).

For our discussion, there are two points to consider:

1. Even the best of customers leave the fold at a rate of 4% a year with the average nearing double that number.

2. If you are planning to grow your business by 10% next year, plan on 15% growth. Losing some of your existing customers is probably in the cards.

Retention is the opposite of attrition

Nobody starts off with a plan to lose customers, but things happen. The inside sales team gets stretched a little thin and service wanes. The warehouse gets careless and the customer finds themselves facing a box with the wrong parts. Even salespeople, charged with keeping customers, forget to cover all the bases with their customers. Your top suppliers experience delivery issues and you take the brunt of the blame. The list goes on and on.

Done properly, end of year planning allows for contemplation, reflection and plans for correction. Planning allows for an objective view of the current situation and how retention might be improved going into the next year.

Have you reviewed the (hopefully short) list of customers who have stopped buying from you? 

What happened?  

• Has anybody from management done an exit interview?

• How might the situation have been different?  

What preventive measure could avoid the problem in the future?

• Are there trends? Could it be that dealing with "Danny" is toxic to customer health?

• Are there policies or procedures impacting business?  

How long did it take for you to realize something was wrong?

• Who in your organization monitors customers for significant drops in business?

Not every ex-customer can have facial warts and a bad attitude

• Did you listen to the customer’s comments without tossing out excuses?

Are there existing customers on the cusp of leaving?

• Are there early warning systems that might point to issues?

• How might management assist the team in determining ongoing customer satisfaction?

Two important thoughts for your end of year plan

First, customers are more likely to switch distributors because the incumbent distributor did something wrong than because they were sold on the new distributor. This runs contrary to the common sales think.

Second, distributor sales teams aren’t great about staying in contact with the other guy’s customer. After a short flurry of activity, which produces little or no results, they engage with existing customers and let the potential customers fall out of their mind. Most of us understand this is a mistake, but it is the reality of the situation.

Progressive distributors have established a plan for continuing outreach to their competitors’ customers. Is this in your end-of-year plan?

Frank Hurtte is the Founding Partner of River Heights Consulting. The Distributor Channel is a service of River Heights Consulting. Find out more.

 

Rick McCartenBy Rick McCarten

What how much does the electrical industry have to improve to complete with upcoming disruptions in the supply chain?

In May of this year, the delegates at Electro-Federation Canada (EFC)’s annual conference voted on when our industry would be hit with supply chain disruption. The group collectively agreed that our industry in Canada has only three years to prepare for major disruption. We need to act fast!

 

 

Read More

 

 

 

David GordonBy David Gordon

The rep alignment dilemma… whom to align with to generate sales? End-users? National chains? Independent supportive distributors? Any distributor who will support the manufacturer? The manufacturer? But, the bottom line becomes, what will generate sales to meet manufacturer expectations?

It’s complicated, and channel consolidation and channel diversification will make this more complicated.

 

Read More

 

Stephanie MedeirosBy Blake Marchand

Stephanie Medeiros leads ABB Canada’s Electric Vehicle Charging Infrastructure team, as well as transit bus charging in the United States and Canada. She has been with ABB in various positions for 10 years, compiling a diverse skillset that includes work all over the world. 

After receiving a degree in Electrical Engineering from McGill University, Medeiros got her start in the industry by volunteering with the Canadian government as an electrical engineering intern, where she travelled to Peru to help improve their water treatment infrastructure. 

Read More

Wholesale SalesWholesale sales rose 0.6% to $64.1 billion in June, partly offsetting the 1.9% decline in May. Sales were up in four of seven subsectors, representing 54% of total wholesale sales.

In dollar terms, two subsectors — miscellaneous, and machinery, equipment and supplies — contributed the most to the increase in June, while the motor vehicle and motor vehicle parts and accessories subsector posted the largest decline.

 

 

 

Read More

 

Investment In Building ConstructionTotal investment in building construction decreased 0.9% in June to $15.1 billion, the first decline in eight months. A slight increase in non-residential investment (+1.0% to $4.8 billion) was offset by a decrease in the residential sector (-1.8% to $10.3 billion). On a constant dollar basis (2012=100), investment in building construction decreased 1.1% to $12.7 billion. Despite the monthly decrease, total investment grew 1.6% year over year in the second quarter.

 

 

 

Read More

Changing Scene

  • Prev
Sonepar Canada has announced the launch of new mobile applications for Gescan Vallen, Sesco and ...
From September 11th to 13th, close to 150 senior executives from IMARK Canada member distributors ...
The electrical market continues to change and NEMRA is preparing its members to meet the challenge. ...
The Canadian Apprenticeship Forum-Forum Canadien sur l’Apprentissage (CAF-FCA) has announced ...
EFC and Kerrwil Publications have partnered again this year to bring you the annual ...
Service Wire Co. is pleased to announce that Charles F. (Chuck) Oldaker, Jr. has been elevated to ...
Electricity Human Resources Canada (EHRC) has issued a call for nominations for the 2019 Awards of ...
  Omni Cable Corporation, headquartered in West Chester, PA, hs announced that it has ...
Hammond Power Solutions, a manufacturer of dry-type and cast resin transformers and related ...
Phoenix Contact Canada is pleased to announce that Roger Hallett has accepted the position of ...

ImarkDuring the recently held IMARK Canada 2019 meeting in Niagara Falls, executives from 14 of the leading manufacturers in the Canadian electrical and lighting industry participated in the IMARK Canada Product Stampede on September 13th.

Select manufacturer executives had precisely five minutes to present a key product with superior growth potential to the members of IMARK Canada. Distributor member executives then rated each supplier based on the quality of the presentation and the perceived sales potential of the product being demonstrated.

 

Read More

 

 

Endress+HauserEndress+Hauser has broken ground for its new $28 million Customer Experience Centre for Central and Eastern Canada. When construction of the approximately 47,000 sq ft facility in Burlington is completed late next year, it will provide customers from Manitoba to Atlantic Canada with a generously equipped, state-of-the-art training and support hub for selecting and familiarizing themselves with the company’s latest innovations for process automation.

Last week’s official groundbreaking included a traditional Land Acknowledgment Ceremony performed by Chief R. Stacey Laforme of the Mississaugas of the Credit First Nations.

 

Read More

 

Ariel Technology Inc.Heritage Sales and Marketing Group was created in late 2015 by Jack Eva, the former owner and operator of Electra Supply Inc., a four-branch independent distributor in South Western Ontario, which he sold in 2012 to the Franklin Empire organization based in Quebec Canada. Heritage Sales is an active member at Electro Federation Canada (EFC) & Canadian Electrical Manufacturers’ Representatives Association (CEMRA).

 

 

 

Read More

 

 

Peers & Profiles

  • Prev
Jon Llewellyn is the Branch Manager City Electric Supply’s Nanaimo, BC location. “I've worn many ...
Stephanie Medeiros leads ABB Canada’s Electric Vehicle Charging Infrastructure team, as well as ...
Earlier this month Canadian Electrical Wholesaler had the pleasure of tabling a few questions to ...
Canadian Electrical Wholesaler was able to catch up with Sonepar Canada’s Stacey Corley, which was ...
OmniCable was founded in 1977 by partners with deep experience in the US electrical marketplace. ...
On a regular basis, our publications profile members of our industry through their responses to a ...
First and foremost, sitting down with Susan Uthayakumar feels more like sitting down and conversing ...
Sales of electrical supplies from full-line electrical distributors capture the geographic ...
Laura Dempsey has been working as an outside sales representative for E.B. Horsman & Son for ...
Michael Gentile, President and CEO of Philips Lighting Canada, has had a long and distinguished ...

 

Lori BagazzoliBy Blake Marchand

Lori Bagazzoli, Regional Sales Manager for Viscor, is a 20-year industry veteran that has built an interesting career from the bottom up. Beginning as a 19-year old just out of college in customer service with EXM, she gained an intimate knowledge of the electrical and lighting supply business by working her way through various organizational levels.

“I was definitely able to learn the different roles, and understand all the different aspects of the business,” she said, “starting so young, I really had to put in my time to be able to move up.”

 

Read More

 

 

 

Louis BeaulieuBy Line Goyette

Neither a Millennial nor a Baby Boomer, Louis Beaulieu embraces new technologies and new markets, but remains faithful to family traditions. He holds a bachelor’s degree in finance and a master’s degree in management from Laval University and is the General Manager of Ouellet Canada. A perfect profile for a career in the family business.

When I ask him if, as is often the case in a family business, he had always known that he was going to join the company, he replied, “Not at all. When I was young, I spent my school holidays at my older brother’s farm at Ile d’Orléans.

Read More

 

Looking Back

  • Prev
The best memory I keep from CEDA is the way that they accepted me when I came into the business. ...
In the 1930s to 1940s, CEDA’s Western Canada membership was very stable with old line independent ...
Prior to the late 1950s there was little if any involvement in CEDA by the so-called “national ...
  As 2017 marks the 150th anniversary of Confederation, we take a look back at an aspect of ...

Copper $US Dollar price per pound

Kerrwil Publications

538 Elizabeth Street, Midland,Ontario, Canada L4R2A3 +1 705 527 7666
©2019 All rights reserved

Use of this Site constitutes acceptance of our Privacy Policy (effective 1.1.2016)
The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Kerrwil