This new group, HARDI, combines the membership of both NHRAW and the Airconditioning and Refrigeration Wholesalers. HARDI represents 450 wholesale companies, including 17 international companies, plus over 300 manufacturing associates and nearly 140 manufacturer representatives.
According to outgoing President Jim Truesdell, the Orlando meeting was one of the best-attended in recent years as members assembled to see what changes were in store.
Representatives of many other organizations, including the Air-conditioning and Refrigeration Wholesalers International, attended the event and were recognized from the podium. NHRAW also honored "guest educators" in attendance, including: Steve Berkovitz, Massosoit Community College, Canton, Mass.; Phil Breuker, Careerline Tech Center, Holland, Mich.; Thomas H. Greiner, Iowa State University, Ames, Iowa; John Tomczyk, Ferris State University, Big Rapids, Mich.
Although the hvacr industry has not completely sidestepped the effects of the national recession, it remains in fairly good condition and the wholesaler segment reflects this. Through November 2002, NHRAW members reported that sales were up an average of almost 4% over the previous year, and receivables had dropped by more than one day, to 45.17 days.
(The Air-Conditioning and Refrigeration Institute reported that, through last November, factory shipments of unitary air conditioners and heat pumps were up 7% compared to the previous year.)
NHRAW members reported that the industry is still affected by steel tariffs. They agreed that price increases on sheet metal have not yet been enough to overcome the additional tariff costs.
NATE going strongAt NHRAW's Hvac Equipment Council meeting, Rex Boynton of the North American Technician Excellence organization reported that test sales were up 124%. He projected sales of more than 5,000 tests by end of 2002, and estimated that there would be total of 12,000 NATE-certified techs by year's end.
"The passing rate on tests is now 66%, compared with 59% in 2001," Boynton said. "Wholesalers are leaders in this process. Fifty-six wholesalers are set up as testing organizations, and offer training."
Now that the NATE certification program has been in place for several years, those who passed the original tests are now coming due for recertification. Boynton said a campaign is under way to re-certify 1,600 technicians by the end of 2003. NATE is beginning a pilot program to allow electronic testing. The organization is also launching tests on energy efficiency and hydronics.
E-commerce catching onAt the Supply Chain Technology meeting, representatives of software manufacturers spoke to NHRAW members about the benefits of electronic commerce and the ways that it can be accomplished.
Mike McHugh, of J&M Industries, Shawnee Mission, Kan., said customers do not use e-commerce a few times and then just stop. They continue to use it, even when they are busy. Of course, some customers use online ordering and then call the wholesaler anyway with questions or to confirm that the transaction went through.
According to McHugh, even if you are not sold on the benefits of e-commerce, you should consider it anyway. "If you don't do this and your competitor does, he will hurt you," McHugh said.
A study of wholesalers' use of e-commerce showed that phone calls from customers dropped off dramatically. Most customers still do not use electronic methods to place orders but they like the convenience of the system for such tasks as looking up invoices and making copies, and looking up item availability and pricing.
Mike Orso, of General Data Systems Inc., St. Louis, incorporated in 1974, said most wholesalers have a Web site, a high-speed Internet connection and a printed catalog.
"But Web sites are static. Changing them is labor-intensive, like changing a catalog. E-commerce is dynamic; it's not just a static site. Customers have reason to visit and to keep coming back," Orso said.
Many wholesalers believe that they need a custom e-commerce package, but that usually is not necessary, according to Orso. A packaged system is usually adequate for their needs and is certainly more cost effective.
Gene Roman, of Systems Design Inc., South Holland, Ill., told wholesalers that they have a lot of data not being used that can be valuable in e-commerce.
He cited the example of an hvac distributor in Michigan who is getting $300,000 in new business revenue through e-commerce, at the rate 30 to 40 orders per day.
"It's another effective selling medium, and not just a Web site," Roman said. "It offers increased productivity and greater sales because it's open after-hours."
Customers using personal data assistants or PDAs, can get prices, item availability, invoices, proof of delivery, credit balance, status of orders, and sales data, without leaving the job site.
"You can eliminate dead inventory by working with other distributors using our Trading Partner Connect Sourcing," said Doug Levin of Prophet 21 Inc., Yardley, Pa.
Prophet 21 has been in business for 35 years, and Levin said the company has 2,000 customers and 70,000 users.
According to Levin, machine-to-machine trading is the preferred method. You can use your existing item codes and part numbers, and don't need to establish new standard codes.
"You need to guarantee security, to guarantee message delivery, and only once, and the system must be easy to use and integrate with existing business processes," Levin said.
Jason Oeltjen, of Intuit Eclipse, Huntington, Conn., said e-commerce could offer inventory automation throughout the entire supply chain.
By using vendor-managed inventory, wholesalers can obtain stock without even placing specific orders. The manufacturers keep track of inventory levels on distributors' shelves and replenish when necessary.
"You need a good working relationship with your VMI vendors," Oeltjen said. "You must be willing to accept their shipments when they arrive, and you must resolve pricing issues ahead of time.
"For distributor-to-distributor trading, there is real-time inventory sharing with a network of distributor partners. You need to determine pricing with your partners, and don't allow them to drain your inventory of "A" items.
In a distributor-to-customer model, a wholesaler manages customers' inventory, store their part numbers, minimum and maximum inventory needs, and location information.
"The system must be very easy to use," Oeltjen said. "Before you begin, determine if your system pricing and system inventory are correct. You must have a personal relationship with the customer."
According to Oeltjen, e-commerce is best used by focusing on the biggest value for your company. "Implement it with your best business partners. See one method of automation through to success before you begin your next project," he said.
Bald expert promotes salesAsk anyone who attended the "Sales Mastery" seminar at the NHRAW convention this question: "How's business?" There is only one appropriate answer, according to Jeffrey Gitomer, shameless self-promoter and excellent sales motivator: "Cashin' checks!" The response will please your friends, present the image of success you need to succeed, and, most importantly, cause your competitors to chew their livers into rags.
Gitomer, president of BuyGitomer, Inc., is the author of The Sales Bible, now in its 18th printing, and Customer Satisfaction is Worthless - Customer Loyalty is Priceless. He gives an average of 115 seminars a year to corporate clients (Coca-Cola, Hyatt Hotels, IBM), writes a weekly syndicated column published in 85 newspapers, and uses the Internet extensively to promote his business and his message.
In addition to his "Sales Caffeine" e-mail newsletter, which he said has 60,000 subscribers, Gitomer has three Web sites - www.gitomer.com, www.trainone.com, and www.knowsuccess.com.
In his presentation, Gitomer drops irreverent, bombshell "truths" on his audience, and then laughs at the reactions. Here is some of what landed on his appreciative NHRAW audience.
- People don't like to be sold, but they love to buy.
- Rededicate yourself to personal excellence daily. Your attitude is fully under your control.
- Predetermine your outcomes with preparation.
- What are you doing of value to stay in front of customers and prospects? Give value first to the people who can say yes to you.
- People want to do business with their friends; Billy Bob is not selling on price. If there are customers you don't have, it's because someone else has a better relationship with them.
- Why do customers leave? You screwed up. You are the main barrier to customer acquisition and retention.
- Act professional but talk friendly. If you talk professional, no one listens. You need the ability to speak and be compelling. Use the principle of leaning forward.
- A boring, irrelevant voice-mail greeting ("I'm away from my phone right now? like that isn't obvious") is telling your customer to drop dead. You're just puking on them. Tell them something useful, such as how they can reach you, right now.
- Company brochures are practically useless. No one reads them. Instead of spending the time and money creating and distributing them, do this: Ask the customer to hand you a copy of your competitor's brochure. Then cross out your competitor's name and write yours in crayon.
- Value creativity. Study it.
- Why have a boring business card? It should be good enough to show someone else.
- What happens when you lose your customer? Your kids eat less.
- Appreciate the value of a short mission statement. I tell my employees, "Sell Jeffrey. Kiss Ass." Then I give them a tube of Chap Stick to make sure they get the message.
How to succeed in family businessYou've heard the statistics before: Even though 90% of U.S. businesses are family owned or family controlled, only 30% of them make it to the second generation, and a mere 10% survive to the third generation.
Why such a miserable survival rate? It's because families don't plan adequately for the succession by the next generation according to Bernard Kliska, a Ph.D. and senior associate with The Family Business Consulting Group Inc., Marietta, Ga.
This lack of planning is hardly surprising, Kliska said. "It's in everyone's interest to avoid succession planning. The older generation doesn't want to leave, and the younger generation doesn't want to kick them out or doesn't know how. But succession is inevitable and the sooner planning starts, the better it works."
Dr. Kliska cited some of the reasons that aging ceo's have for resisting or refusing to let go of the business:
"Too many people I've known have died soon after they retired."
"Without me, the business is nothing."
"Without the business, I am nothing."
"The kids want to change the way the business is run. If I'm not there, they will."
"I don't want to choose between my kids to name a successor."
"The business is my major source of income. I have to stay to protect it."
"Nobody can run the business as well as I can."
"Even though it is hard to admit it, somebody may run the business better than I do."
There are four main retirement styles, representing the personalities of most older CEOs, Kliska said.
"The 'Monarch' rules until his death or forcible removal, or until the firm is sold. He dislikes delegating authority or sharing information, but wants to control every decision in the lives of family members.
"To get his way, he offers or withdraws benefits, such as money, the use of vacation home, automobiles or stock.
"The 'General' is willing to surrender some power, but chooses a weak successor who lacks training and development," Kliska said. "As soon as there is a crisis, he is back to rescue the company because only he is capable of doing the job as it should be done.
"The 'Ambassador' turns over managerial authority to his successors and understands that they should think and act for themselves."
According to Kliska, the Ambassador becomes enchanted with his new lifestyle after 13 to 18 months and then loves his newfound freedom. "He wants to retain a connection to the company without returning to power."
In contrast, " 'Governors' make a clean break with the past," Kliska said. "He leaves for other ventures and is the least concerned of all those involved about severing his ties with the family business. This business usually has a board with independent directors."
Kliska said there are 10 basic steps in the planning process:
1. Establish family participation policy.
2. Provide excellent work experience.
3. Commit to family business continuity via family mission statement.
4. Design leadership development plan
5. Have an active board of directors containing experienced non-family business leaders and use your board.
6. Clarify business strategic plan.
7. Fund parent's personal financial security.
8. Identify successor or successor selection process.
9. Empower organizational succession transition team.
10. Complete transfer of ownership control.
The needs of the senior generation need to be met to make them comfortable with leaving the business, Kliska said. Their assets must be protected, they need to feel fulfillment through tangible, accomplished tasks, they need to stay connected with what they built, and retain their dignity.
Appropriate roles for the senior, from the next generation's perspective, could include the following: advisor, company representative, member of board of directors, and someone who thoughtfully listens and give insights about issues, when asked.
Parents cannot impose the leadership of one sibling over the others. The lead sibling has to emerge. The other siblings must feel that they are better off under his or her leadership.
What does a successful succession looks like? According to Kliska, it's a non-event. If planned properly, you don't notice the transitions occurring.
"Succession is multi-faceted," he said. "It includes all of the family roles, privileges and responsibilities. The career path to general management should be defined and the process of succession should be identified. Establish a date to determine whether the presidency has been earned.
Commitment to proceed takes place when the successor is about 30, to be resolved by the time he or she is 35, and usually concludes before they reach 40.