The Mheda Journal

I was talking with Bill Ryan, vice president and general manager of LiftOne (Charlotte, NC) and a member of MHEDA’s 2011 Board of Directors, a couple days ago about a different topic when he brought up a new program LiftOne started earlier this year. The company has begun hosting what it calls “customer advocacy luncheons” at its headquarters, whereby representatives from various branches of a customer location come in and discuss equipment needs. While that’s a good idea in itself, I was most intrigued by something he said later in the conversation. I’ll let him explain:

“We got a residual benefit out of it we didn’t realize. A lot of these customers have multiple locations, and they want to bring their people together for a regional meeting. They don’t want to do it at their headquarters because it’s too distracting and people can’t get anything done. We let them meet at our dealership, so we save them the price of a conference room. We get the advantage to meet and greet up front, enjoy a mobile lunch and get to share some of our wares, so it’s worked out nicely.”

This is something that I never would have thought of. What a great way to provide value to customers. A true win-win for both parties—distributor and customer. In this day and age when distributors are trying to find new ways to prove their worth to pickier and pickier customers, this is a great way to add value to offerings and build a trusting relationship. What other ways can distributors add value?

I talked to a couple of distributors last week who are involved in conducting customer surveys at their companies. They were interesting conversations becuase I had never really taken the time to think about customer surveys before. I know I get them all the time and rarely fill them out, but beyond that, I didn’t really take the time to consider all the possible variations. Some are monthly, some are quarterly, some are annual. Some companies send them to every customer. Some companies send them only to new customers. Some companies only do it in their service department. Some do sales, parts, and service. Some are done by phone, some are done online, some are done via direct mail. Some are tabulated in-house, some are done by a third-party provider.

That’s a lot of things to consider, all of which must be ironed out ahead of time. It’s a much more involved process than I ever considered. And that’s just for the actual administration of the surveys. That doesn’t even take into account what to do with the data once they come back. Which, to a person, all the MHEDA members I spoke to on this topic all agreed was the most important thing. As one distibutor said, “If you don’t do anything with the information, then you might as well have not asked for it in the first place.”

They were pretty illuminating conversations. Take a look at the Second Quarter magazine when it’s ready to read a few specific examples from MHEDA members. In the meantime, I’m curious to know what some other companies are doing. Leave a comment to let me know!

While doing some research for an article I’m working on for the April issue of The MHEDA Journal, I stumbled across a blog entry in The New York Times that I found to be quite an interesting topic. The basis of the entry focuses on the answer to the question: Does higher pay make employees more loyal?

At least according to this writer, the answer is (as with most complex questions), “It depends.” The author, the owner of a cabinet business outside Philadelphia, describes giving his employees a pay cut in 2008 and not having any people leave. He concluded that he had been paying them all too much, and had been for a long time. While he acknowledges that there are many more factors at play than just salary and benefits, arriving at this conclusion has made him a better business owner in the long run. When it comes to offering proper compensation, he says, “There’s got to be a sweet spot in the middle where you pay enough to prevent defections but no more. Additional wages and benefits, beyond your employee’s next best choice, are paying extra for something you have already bought.”

This may seem like common sense, but what a great way of explaining it. That comment really struck me. Of course, the trick is determining what that sweet spot is and being disciplined to stick to it. I’d recommend the read in the Times’ “You’re the Boss” blog. It’s a short article, and I’d love to hear if you found it as interesting as I did!

By now, MHEDA members should have received their print copy of the First Quarter 2011 issue of The MHEDA Journal, also known as our Annual Industry Forecast. As I mentioned a few blog posts ago, there were many lessons learned by distributors in 2010 that can be applied to 2011. The same can be said of suppliers and manufacturers, who have a few overarching lessons of their own:

• Efficiency. Like distributors, manufacturers found themselves focusing on equal to greater productivity with fewer people, redesigning manufacturing process and internal procedures to maximize efficiency.
• Training. Manufacturers took advantage of the slow times by bringing their own workforces, and those of the distributors, up to speed. A more educated customer forced distributors to learn more to answer customers’ questions. Also, rapidly changing product technologies require near-constant training to keep distributors in the loop.
• Research & development. Manufacturers used slow periods to spend time developing and testing new products and technologies. Customers are more demanding, so they require more developed solutions and more product options. Manufacturers/suppliers also found ways to adapt and customize their products for new, niche markets to drum up sales any way they could.
• Maintaining service levels. Even though sales were not as high as expected, manufacturers were focused on their service. Whether that meant quicker response time, helping handle end-user issues, or offering customized solutions, manufacturer/suppliers focused on service and support.
• Patience. More than one supplier mentioned that 2010 taught “the importance of being committed for the long term.” Things were not happening quickly, so it was important to remain positive and not panic. Taking the time to cultivate partnerships with distributors and their customers was also cited as critical.

 What do you think? What other lessons did you take from the struggles of 2010? Is 2011 looking up yet?

Now that our Annual Industry Forecast is out of the way for 2011, I’ve turned my attention to the Second Quarter magazine. This one is all about customers. Customer service. Customer experiences. Customer complaints. Customer engagement. Et al. These articles are meant to be a complement to MHEDA’s Convention theme, “The Customer Convention.”

As part of this series of articles, I spoke to John Wrobbel at Power Sources, Inc., a relatively new MHEDA member based in Lee’s Summit, Missouri. He started off our interview by saying, “The way we look at customer service is that customer service is half of a sale. If we don’t back up our products with exemplary service, they would push us down the road.” Now in theory, of course, this is not exactly a new sentiment. But I really appreciated Mr. Wrobbel’s phrasing that “customer service is half the sale.” That was a perspective that I’d never heard before, and it got me to thinking.

In an economic environment where customers often rely on price and price only to make their purchasing decision, it can be debated what role customer service still plays in an end-user’s mind. Ideally, of course, it should still play a major role. In practice, however, I wonder how much extra service end-users are willing to leave on the table in exchange for lower up-front cost. It’s a battle being waged daily in material handling distributorships (and those in other industries, surely) every day. Is a little bit of service worth a little bit of expense? Or is it more of a we-need-the-product-cheap-and-now mentality that is willing to forgo after-the-sale service down the road? I’m curious to know what MHEDA members think of this. Are you facing this conundrum from your customers? How are you dealing with it? Let a comment to let me know.

I’m starting to dive into the 2q issue of The MHEDA Journal, which is all about the customer. As part of my research, I came across what I thought was an interesting article about new customers. Or more accurately, when a buiness should pass on an opportunity to find a new customer. The article, appeared in the “Business Resources” section of nfib.com, the website for the National Federation of Independent Business.

Here’s a link to the full article, but I’ll hit the highlights here. The gist of the article is “knowing when to say no without burning bridges.” It’s a skill that many businesspeople often talk about but few execute properly. According to the article, there are five reasons a company should turn down a new business opportunity:

• The reward isn’t worth the effort.
• The opportunity doesn’t fill any gaps in your business plan.
• You don’t have the human resources.
• It’s not your area of expertise.
• The new opportunity presents an ethical dilemma.

Of course, there’s more to each of these topics, but those are the main points. What got me thinking was, how to execute “saying no” in practice. When the economy was good a few years ago, I often used to hear from MHEDA members how they were looking to grow but how they also wouldn’t just go after any business. “Some business is better for us not to get,” the line would go, or some similar variation thereof. Now, however,  with customers and sales harder to come by, I wonder how many of those people would relax their standards to get a sale. Is some business still better not to get, or is any business good business? When survival is on the line, I’m sure that line gets blurred from time to time.

What do you think? As a practical matter, how difficult is it to pass up business opportunities, even if it falls into one of the five categories outlined above? Is it worth the risk?

Before the new year gets too far along to still call it the “new year” (did we pass that point yet?) I wanted to address a major talking point that we at The MHEDA Journal spent a year addressing. As one of the main purposes of MHEDA membership is getting advice from industry peers, it’s important to reflect back on what, for many, was one of the most difficult years in recent memory. But there’s silver lining in every dark cloud, and we can take heart in knowing that there was a lot of learning to be done from the trials of 2010. What did you learn in 2010? The answers are many.

• Efficiency. While distributors hated to cut personnel, they often found themselves surprised at how productive they were able to remain even with fewer people. Some took the opportunity to upgrade internal computer systems to help employees perform. “Doing more with less” is a bit of a cliché, but it sums up how distributors are approached 2010 and will continue to operate in 2011. However, many cautioned that they must remain strict about their procedures and processes, even when the economy rebounds, to avoid the excess personnel issues that were a problem during the downturn.
• The importance of training. Distributors found that by having better educated personnel, they were able to meet customers’ needs more completely. Customers were asking more questions than ever, so a better trained workforce was needed to respond. Also, as staffs got smaller, it was important to cross-train employees to fill knowledge gaps and be able to achieve the productivity and efficiency gains mentioned above.
• Marketing/social media. Competition is fierce, and the companies that customers know the best are the ones they will call on. More often than I can remember, distributors are looking at improved marketing techniques, dedicated website redevelopment, e-commerce, social media tools, etc.
• Customers want more for less. While distributors are cutting back, their customers are doing the same thing. They want to cut costs anywhere possible, thus there was a big push to electric trucks to cut energy costs and lower cost-of-ownership products. Distributors are diversifying their services to be able to provide more for customers, including consulting, installation, maintenance and contractor services.

How about you? What did you learn?

For my last blog entry of 2010, let me say a quick thank you to all of you who have contributed material to The MHEDA Journal throughout the year. As we like to say around here, it’s your publication and we couldn’t do it without the input of all you out there in the material handling industry every day. Thank you for your ideas, contributions, feedback and support. We appreciate it.

2010 was a busy year in material handling, despite the economic slowdown that was still lingering for many throughout the year. In the first quarter, we published our annual industry forecast issue, featuring commentary from distributors, suppliers and other industry associations about their expectations for 2010. This special “10 issue” for 2010 also featured a series of Top 10 Lists to bring in the new year.

That cautiously optimistic outlook from most MHEDA distributors at the start of the year had most of you adjusting as you found out the hard way that The Rules Had Changed in the business world. Success depended on mastering new strategies and new ways of doing business. In the 2nd Quarter issue, learn how M & G Materials Handling (East Providence, RI) President Ken MacDonald has improved productivity by implementing 5s procedures, how Bill Rowan, president of Sunbelt Industrial Trucks (Dallas, TX), instituted more strict credit policies to ensure better cash flow and what Ted Springer, president of Springer Equipment Company (Birmingham, AL), did to diversify his product mix.

Of course, MHEDA Members responded to the challenges and were still able to succeed in the downturn using various strategies. As in years past, we used our Summer issue to salute those MHEDA Members who received recognition from manufacturers. This year, though, we took it a step further by actually interviewing 12 of those dealers and finding out how they were able to achieve such lofty goals despite what we all know was an economic stinker of a year in 2009. While all admitted that the revenue wasn’t as high as years past, they still were able to make some sales and maintain profitability. Also in that issue were two safety articles about the inner workings of making a company-wide safety policy.

By the fourth quarter, sales were still out there, and many distributors and manufacturers strengthened their partnerships with each other and wrote their own Sales Success Stories. In addition, this issue also tackled other sales and marketing topics of interest to material handling companies, including using vehicle wraps as a marketing tool, the importance of proper pricing strategies, identifying the personality of top salespeople and how to achieve sales success on the Internet.  This issue also features a section devoted to forklift tires. Distributors and manufacturers discuss the complexities of the tire market and the impact of new competition. Learn how one distributor uses tires as a way to break into previously unaccessible accounts. If that wasn’t enough for one issue, MHEDA members also explain how to create an effective social media policy at one’s company and discuss how to implement culture change after an acquisition.

It was certainly a busy year, and 2011 promises more of the same. Have a happy New Year and celebrate responsibly. See you in 2011!

As I mentioned in my last post, we at The MHEDA Journal have been talking to members over the past few weeks to try to develop some articles for next year. As part of this process, I spoke last week to Terry Wickman at Keytroller. He brought up an interesting topic for distributors to consider: How do you break into a new account? “One of the ways to break into a new account is to solve a problem that they have. Even if a customer is using a competitive brand of forklifts, solving a problem that they have related to those forklifts is a good way to get your foot in the door without talking about new trucks. You’re solving their problem even though he or she may not have your equipment,” he said.

Safety products are one way, aftermarket parts are another and attachments would be a third. That’s just what I can think of off the top of my head, and I’m certain there are others. (Anyone care to share any more examples? Leave a comment to let me know!)

So as you’re making plans for recovery in 2011, take into consideration these and other ways to break into new accounts. That market share growth that seemingly everyone is planning on has to come from somewhere. Speaking of which, congratulations to everyone who weathered the storm of past couple of years and is still around to take on 2011. Happy holidays to everyone, and best of luck next year!

As 2010 comes to a close, we at The MHEDA Journal are already trying to get a head start on 2011. We’re brainstorming article ideas and calling members to find out the hot topics that are out in our industry that we should be writing articles about. (The list isn’t complete yet and we’re updating it all the time, so if you have any topics that you think MHEDA Members would gain value in reading about, let me know by leaving a comment below.)

One idea I did find intriguing came from a manufacturer of overhead cranes who I spoke with last week. (I’ll withhold the name for now since he doesn’t know I’m talking about him.) The topic was also broached my some distributors in our 2011 Industry Forecast (coming soon – look for it in January!), so I’m pretty sure it’s worth discussing in further detail.

The gist of the topic is this: How has the role of a distributor changed in the end-user’s eyes as a result of the downturn? As the manufacturer I spoke with said, “From an end-user’s perspective, they’ve hired distributors to do stuff, but my observation is what they hire them for is different now than it was five or six years ago. I think distributors are getting sharper and clearer about what exactly their customers are hiring them for.

He continues, “If I’m a distributor salesperson, I am a consultant. If I called myself a consultant, you’d pay me an hourly fee. But I don’t get paid an hourly fee, what I get is a commission basically if you buy my idea. I see end-users that don’t really recognize it for that. They put mileage on distributors for ideas and then they take those ideas and shop them all over the place. It’s gotten to the point where some distributors say, ‘I’m not going to go out to XYZ customer and specify all the equipment and then get my price hammered down because it’s not worth my time.’ But I think the issue there is what an end-customer is really hiring a distributor to do and I think it’s different than before. I think that end-users are hiring distributors to do way more things than just sell equipment these days.”

What do you think? Has a distributor’s role changed? If so, in what way? As I mentioned, we touch on this topic in our upcoming Industry Forecast, but if I get some feedback, then maybe we can turn it into a longer article. Any help you can give is appreciated!