8/6/2019 Who is Your Customer - A Channel Approach

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Moore for Your Money

Do we have a blurred image of our customers?Maybe nurturing a 'channel partner' approach can change the way we think.

By Bob MooreColumnisl

T he Inlemet has created an interestingphenomenon for inc. My columnshave a mnch longer "shelf life" thanwhen they only appeared in print. Iregularly get responses to articles thatappeared months earlier when someoneencounters them online.Some columns have continued to generateresponses fairly consistently. One in particu-lar that I wrote about 18 months ago hasdrawn rather consistent e-mail responses overthat period.In a column that appeared in April of lastyear. I suggested that many of the aftermar-ket's traditional business practices were anti-

quated and outmoded and in radical need ofre-evaluation.I pointed to manufacturer suggested pric-ing, reluctance to share business data andour hierarchical distribution structure asexamples of inhibitors that were keeping usfrom adopting more progressive practices. [admonished the aftermarket'sapproach to pricing or. morespecifically, "the deal" extra discounts, extendedterms, deferred payments,consigned stock, pay whensold, factoring or someother financial device thathas the effect of lov/er-ing price or reducinginvestment.

This increasedfocus on "thedeal" has resultedonly in movingcosts aroundrather thanremoving themaltogether.When costsare movedaround in thesupply chainfrom one partici-pant to another, themarket doesn't ben-efit. While one partymight have a short-term gain, the cost isstill there; somebodyelse is paying for it. Andwhen .someone's costgoes up, it inevitablyresults in a higher pricefor all.But in addition to ourconventional practices. Iaiso took issue with howsome of our collective

behavior propagates ourproblems. How playing thedeal game results in strange rit-

go into meetings with their roles and theirscripts predestined. The reseller, faced withshrinking margins and burgeoning inventory.bangs on the vendor for concessions. Thevendor, feeling bullied and bruised, retreats toa position that is less about doing what isright, and more about controlling how muchhe will "have to give up."Sharing the hlameSince that column appeared. I have had acouple dozen people react to my commen ts.As the responses came in. a trend began (oemerge: nearly all the responses were abouthow right I was regarding the "other guys."

A distributor 1 know that regularly buysdistressed inventory and returns it for creditthanked me for pointing out what a bunch ofreprobates manufacturers are because he isjust sure they are giving his major competitorsbetter terms than he gets. Conversely, a manu-facturer that has more "deals" than Carter haslittle pills congratulated me for pointing outhow demanding and greedy resellers are. Itseems everyone who read the piece made noteof the references to the bad behavior noted on"the other guys'" part and failed to accountfor their complicity in the situation.At first I found the whole thing amusing,but the more I thought about it. the more

concerned I became. I suppose it is humannature not to see our own flaws. I thoughtback on my past marriage. I remember beingpretty sure most ol the problems weren'tbecause of me. It was only after I got somedistance from the situation that I was able toreflect more realistically. 1 remember themantra the marriage counselor used to chant:"All problems are owned 50/50 by those inthe relationship."At the risk of turning this column intosome sort of pop psychology encountergroup, the aftermarket could use a healthydose of that advice. The pettiness that I seedisplayed in this "blame the other guy forwhat's w rong with my b usiness" attitude iskeeping us from reforming the praetices thatdesperately need reforming.If more aftermarket trading partnerswould take the 50/50 approach to resolvingsupply chain issues, we actually might getsomewhere. So let me risk overusing thetroubled marriage analogy by saying that inthose situations, there are typically otherswho need to be considered more than thequarreling p arties: those who are dependenton them, usually the kids. In contentioustrading partnership relationships, it's like-wise those who are dependent on the tradingpartners who get the short end.So I've decided to go public with a con-

cept that I share with the companies withwhom I consult. It is what appears at first tobe a small idea. But upon further considera-

transform how companies think about thsupply chain and how they need to workone another.It starts with me asking the question,"Who is your customer?" The first answget is typically whatever business writes a check. If I'm speaking to a manufacturhe says his customers are the distributorsprogram groups and retailers to whom hesells. If I'm speaking to a distributor or pgram group, they instinctively say their ctomers are the jobbers who buy from the

We should view theaftermarket as a supplychain with a singlecommon customer.

Some take the question and run with isaying they have multiple customers, incing car owners, store managers, manufacreps. DTYers. repair shops; some even talabout "internal customers" within their ocompanies.Upon hearing these typical response

stress that there is only one true customthe person who throws away the box.Think about it. Nothing is truly "soldthe automotive aftermarket until the partbolted on the car and the box is thrownaway. And for most of us who sell replament parts, that "customer" is the repairshop. I know that there are a significantnumber of manufacturers, especially thoin the chemical, wax and lubricant businwbo sell to DIYers. and tbere are someresellers who do much of their businessthe same public. But for most of us. ourtomer is the professional technician.Inevitably I get resistance from some

who wants to argue with me that the busnesses between them and the installer aretheir customers. It usually comes in the fof a comment like. "I can tell you this. I cash any checks from Joe's Garage." Or, would hate for my jobbers to hear I don'think of them as my customers." At thatpoint. I stress the importance of viewing aftermarket as a supply chain that has a sgle common customer and multiple "chapartners" who each provide important vaadded services that bring the products thecustomer requires to him.Each of those channel partners performfunction that the others (relatively speakicannot. Manufacturers make things. R es

(distributors, jobbers and parts stores) mtain local availability on a broad range oflines, extend credit and offer delivery.

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Moore for Your Money

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represents a value for repair shops thatis unequalled.A long view of the supply chainI stress the importance of taking this"long view" of our supply chainbecause I believe that when manufac-turers and resellers think of one anoth-er as channel partners, it has the pow erto transform their way of viewingthings. If everyone in the supply chainviews "their customer" as being therepair shop, everyone benefits. Itbecomes the proverbial "gut check" formaking decisions. If we ask ourselves."Is this good for OUR customer?"more often than not. we will make theright decision.

The best example I can cite to sup-port this observation is parts consolida-tion. The practice of "consolidation." ordesigning parts to cover multiple appli-cations, was motivated by the supplychain's desire to reduce inventory andIhe expense of carrying it at the supplier,warehouse and store level. Relativelyspeaking, that is a good thing.Manufacturers, faced with ever-growingparts proliferation, worked creatively tocombine applications and reduce theamount of inventory required to coverthe pare.

Resellers accepted and encouragedthe practice by rewarding those suppli-ers who had the most consolidated lineswith more business. That's OK. too.The problem arises when consolidationbecomes universalization, when theneeds of the channel partners are putahead of the needs of the customer.When universalization results in sloppyfits, cables that are too long, boxes fullof adapters and instruction sheetsexplaining how to modify parts to makethem work, then we have lost sight ofthe needs of the technician: our com-mon customer. In essence, we havemade a self-serving decision.

Had we ever bothered to consult with"our common customers" about whatthey thought of the practice, or evenstopped to consider what they mightthink, we may well have chosen to dothings differently. Instead, we created ascenario where parts with proper "form,fit and function" that came from thenew car dealership were suddenly a bet-ter option than the "near fit" stuff wewere selling.If both suppliers and resellers vieweach other as integral steps in a supplychain that is both effective and efficientat providing the one true customer withwhat he or she needs, everyone is bet-ter served. This is a challenge of sig-nificant proportions because, as anindustry, we have not historically dis-

played the skills required to truly adopta collaborative approach to problemsolving. One might argue that we are

If you think I'm overstating the sation and our market doesn't need tevaluate how it conducts business, hare a few points to ponder: Are weswimming in profits'? Are we flush efficiencies? Are we on top of new introductions? Are we ready for reatime price adjustments? Is our invenin perfect harmony with our sales? we adopting the technology break-throughs that can improve our proceand lower our costs? Do we havereturns under control? Are we helpiour common customers get the datathey need to fix the cars?

Channel partners neeach other to serve tneeds of those whothrow away the box.

We've reached a point in our sumature industry where our collectproblems can't be solved by simplfocusing on our own needs; channpartners need each other to serve needs of the people who throw awthe boxes. It is not until we are wito get past the bias of yesterday, arealistically address our mutual colion, that we can begin to bringgreater profitability and real fun bto this business.

Never in the history of the aftermket has a collaborative approach to ness relationships been more importhan today and tomorrow. And nevehas it made more sense to step awayfrom outdated mind-sets and paradiand nurture a "channel partner"approach to solving our problems aserving our common customer.The simple truth is. each channepartner is performing critical, valueadded functions, and none of us canvive without the other. From that pespective, why would we feel tbe nee"gig the other guy" when he is so crcal to our collective success? It makno sense.Maybe it's just semantics, but trythinking about "the other guy" as yochannel partner. His success is yourcess. Just as you need to be profitabhe needs to be profitable. Your succis not dependent on squeezing him ffew more shekels; it's dependent onworking together to make sure yourcommon customers are getting whatthey need.

Bob Moore is president of Bob M ooPartners, a consuitin^firm that .speizes in the automotive aftermarket.Moore can be reached at

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