A common mistake is to miss both the obvious and subtle warning signs that may indicate a defecting parts department account or one that is possibly at risk.
Knowing the warning signs can aid in creating policies and procedures that allow you to avoid situations leading to a wholesale parts client considering a competitor.
Here are three red flags indicating a wholesale account may be thinking about dumping you as its parts supplier:
- Declining sales
The most obvious: when sales to a long-time wholesale customer start to drop off.
- You become a second-call source
Example: an independent installer buys a secondary part from you but not the main items needed to complete a big job.
- A souring relationship
When transactions lose humor and vigor, the relationship usually chills. It becomes strictly business. Your account loses enthusiasm for doing business with you. The attitude may be: “I'm buying parts from you only because my new source doesn't carry them.”
Recognizing warning signs is important. Identifying the causes is more important. Then you can make changes that prevent future wholesale account defections.
Four main causes of customer defection:
Pricing conflicts
If the wholesale customer has been an active account for years and suddenly considers your prices too high, there may be other problems behind it.
It might be attributed to underlying reasons such as a decline in revenue at the client's facility caused by poor marketing or poor service. Or it could be the quality of customers the account is servicing.
Sudden price sensitivity usually indicates either your customer is catering to price-sensitive customers or experiencing profitability problems of his or her own.
Delivery conflicts
Your parts department staff, particularly counter and delivery people, must know that if your wholesale account has a customer-wait situation, the part must be delivered immediately.
Labor is one of the most important commodities your wholesale accounts sell. The more customers serviced in their shop, the more revenue. So timely deliveries of key parts are essential. On the other hand, heavy-duty parts can generally be routinely delivered.
Many conflicts can be avoided or resolved by prioritizing scheduled deliveries, not by increasing the number of deliveries.
Inventory deficiencies
Do you frequently find your parts department scrambling to order parts to meet customer demands?
If you haven't been building range in your inventory or effectively phasing in parts based on tracked demand, your wholesale accounts may start perceiving you as an unreliable source, and decide to move on or make you a second-call source.
Account conflicts
The best way to deal with account conflicts is not to let them become issues.
Past-due accounts, excessive parts returns, unrealistic delivery demands and pricing are best addressed by having written policies that proactively ward off potential conflicts.
Written policies are simple statements that inform everyone involved what your parts department's basic procedures are and how they are applied to all wholesale accounts.
Gary Naples is a parts consultant to dealers and manufacturers. He's authored two books on parts management. He's at 570-824-1528/[email protected].
