The answers are as numerous as those who propose the next change in the distribution pipeline or the forming of a new buying (marketing) group or the next group of consolidations, all in the name of survival.
The real reason behind most of these moves was to produce better profits for the buyer. What has happened to the seller in these situations? I do not intend to discuss or condemn any of the practices currently happening in the market because as history has shown, the market will make those corrections.
I want to discuss how we have evolved into an industry that has very little selling and has become super-conscious of pricing. There are people who feel that unless we have the "right price" we can't "sell" the product. The fact is that if you can truly sell price it becomes only an objection on the way to a closing. I have met sales managers that have questioned me about being able to sell at a higher price than the competition. "Can that be done in the real world?" they ask.
If it can't, we are in for lower bottom lines and tons of people telling us how to make corrections in the way we run our businesses so we can exist. The answer, my friend, is to learn how to sell profitably.
Bottom line crunchI think that the reasons we are having this bottom line crunch is a result of what happened during the 1950s, 60s and 70s. This was a time when making a sale at any level required very little selling skills. The demand exceeded supply and prices remained reasonable during the late 50s and early 60s.
Residential air conditioning was in its infancy and the warm air markets in many areas were growing at a very fast rate. There were more than 144 manufacturers of hvac equipment and exclusive distribution of products was available. In fact, there were more products available than distributors, so some manufacturers decided to sell from their wholly-owned warehouses directly to contractors.
Some things developed during this period that have carried over into the present:
1. The independent contractor became a "brand name dealer." Some of these dealers lost their own identity and independence. The "brand names" tried to create customer awareness and pull the product through the wholesaler's and the contractor's businesses. This didn't hurt the market at the time, because the supply could not meet the demand. Even multiple dealers competing in the same market didn't hurt pricing or anyone else.
2. Because sales were made with little effort and customers wanted to get the job done, price was not questioned - only when the job could be done.
3. For almost 20 years, contractors and wholesalers were known by the brand they sold. Selling was taught by manufacturers whose brand name or logo was a very large part of the sale. The selling of features, advantages and benefits involved the components, not the benefits of the comfort installation. The selling process taught and reinforced in contractors' minds the reason they were using this brand name.
This process continues today. Only a few weeks ago, a contractor asked me how he could switch lines when he has his company tied into the brand name he is using. Would he lose credibility with his customers, he wondered. His fear is a common one in our industry.
Those are the reasons we have many of the problems in selling today. The selling of yesterday in a growth market has changed into a mature market in this information age we live in now. The problem is we still teach selling using the old methods and systems.
My selling process involves converting the contractor from a brand name dealer to an independent indoor comfort contractor. This is not well-received by the manufacturers who offer the brand names. But if this industry is to continue to grow and prosper, we need profitable independent contractors. These contractors need to start the process of finding more bottom line profits through selling.
In part two of this column, we'll discuss further the history of our industry and what I feel we need to do in the future.
(Dave Gleason has more than 40 years of experience in contracting, engineering and wholesaling. He has put these experiences into a comprehensive consultation and training company called Systematic Selling Inc., which offers customized sales seminars and workshops. Contact him at 1165 Antioch Campground Road, Gainesville, GA 30506; phone 800-447-7355; fax 717-698-6555.)