Award-winning distributors share their secrets to success in a down year.
It’s been well-documented that 2009 was a dismal year for much of the material handling industry. Sales were a struggle, employees were let go, credit terms were tightened, and customers were shutting down. Few distributors even saw light at the end of the tunnel. But the news wasn’t all bad. It was also a year where a few strategy tweaks and a concentration on customer service made a big difference.
The MHEDA distributor members profiled here were able to make lemonade out of the lemons they were given by last year’s economy. Each was named to at least one manufacturer’s list of 2009’s Top Dealers. Some distributors were named by multiple manufacturers. While the consensus was that sales were down in 2009, the distributors in these stories remained profitable and can look back on the year with pride.
What were their secrets? Keep reading to unlock their mysteries and learn firsthand how they were able to do it.
Intense Focus on the Aftermarket
“During 2009, we did some things at E.D. Farrell Company that probably weren’t visible to our customers. All those little things that happen in the background make it seamless for the customer to receive better service. We focused internally on our parts and service operations, which is where most of our gross profit comes from. We analyzed some of the systems that we had in place and reworked a few to make them more efficient.
“For instance, we tweaked our parts inventory management system to include more cross-reference information. Some forklift parts, like oil filters, will fit a number of pieces of equipment but will be listed under a different number for each one. Our parts staff would go to look for a part under one number and not realize that we had the same item listed under a different number. Increasing the number of cross-references in our database helped us better know which items we had immediately available in stock. That not only enabled us to help customers faster, it also helped us reduce our inventory levels because we weren’t ordering parts that we already had.
“We developed what we call flash reports, which are once-a-week looks into how we’re performing toward our goals and budget. That helped us achieve one of the biggest criteria for receiving this award, which is maintaining our percentage of the marketplace. For what market was out there, we did a good job of keeping our place in that market.
“Another area where we had some good results was in rentals. I expected those to fall quickly because people could have easily returned a month-to-month rental unit to cut their costs. But that didn’t happen; our utilization stayed pretty high. I think that’s a testament to our service.”
? Ed Otis, President
E.D. Farrell Company (West Seneca, NY)
Use the Web to Drive Sales Leads
“Tri-Lift NC traditionally has concentrated on small accounts of fewer than five trucks. But when the market started dropping, our primary strategy was to go after the larger accounts in the area. We put a much stronger focus on accounts that had up to 30 trucks and were still looking to buy. We created a target list of whom we considered to be the large Class I, IV and V users out there and spent more time calling on those accounts. We were able to land one new account off that list, which really helped us.
“Another strategy we pursued was to enhance our presence on the Web. Customer research and buying habits have changed so much, and we needed to update our thinking about marketing our company. In a down market, there are fewer trucks being sold, and our sales team has to work harder to cover the same geographic territory. We wanted to make ourselves look larger on the Web than we are physically and drive more leads to us rather than trying to go out and find them ourselves. To do that, we added several pages to our website and improved our search engine optimization efforts.
“Once we drove the traffic to us, it was a matter of promoting our experience. Even though we’re a small dealer, we have some really great continuity with the people who are out in front of our customers. Most of our team has 15 years or more of experience, so they know how to analyze an application properly and determine the right piece of equipment.
“Clark took a very aggressive and supportive role in 2009, coming up with a lot of what they called stimulus programs last year involving discounting, parts and freight that really helped the dealers try to make money and move equipment. They also helped us structure deals to help us win them. Having Clark as a partner in 2009 was critical to us being successful.
“2009 was not a great year, but it was a great experience. It’s necessary to go through some tough times to re-evaluate the right way to run your business. When things are good, sometimes you can get sloppy running your business. That was not an option in 2009.”
? Bob Bond, President
Tri-Lift NC (Greensboro, NC)
Product Diversity Works for Equipco
“Thanks to some success in the aftermarket and with allied sales, we were able to turn a profit in 2009. Our product diversity helped us maintain enough revenue to offset the decline in new lift truck sales. Every Friday, we took our product and aftermarket sales teams into our territory and did sales blitzes, where we would spend all day calling on as many people as we could in that county. We had 14 people—12 salespeople and 2 managers—making calls on customers that weren’t ours. Even though we haven’t yet gotten a whole lot of business from it, it was still a worthwhile exercise because we were able to clean up our database.
“One attribute that Equipco has that most other dealers don’t have is well-seasoned employees. The majority of our managers and salespeople have been with us for at least 10 years, some have more than 30. That longevity throughout the whole organization helps us get through difficult times because we’ve seen it before. I just try to be the cheerleader and keep our guys pumped up. If you don’t, you lose them.
“This is the third year we have been a dealer of distinction for Hyster, and it always comes back to just taking care of customers. They are the ones who pay our bills so we do everything we can to do what they want. If you take care of the customers, they’ll take care of you. That philosophy has never changed at Equipco.”
? Carl Swanson, President
Equipco Division Phillips Corp. (Bridgeville, PA)
More Customer Visits Spur Sales
“At Toyota Material Handling Northern California, we earned the President’s Award from Toyota for the 10th time in 11 years, but it wasn’t easy. Dealer recognition was not even a priority for us; we were just trying to survive the year. We went back to the basics and tried to service customers at the highest level possible. In this environment, customers are willing to jump ship for better prices and better service. We were determined not to let that happen.
“A big part of our strategy was for our salespeople and managers, including me, to visit customers in person more frequently. We wanted to be proactive with customers—we wanted to see their issues before they needed to call us.
“Once we were on site, it came down to value. There are a lot of forklifts out there that are priced lower than a Toyota, so it was up to us to sell added value. We did that through more maintenance packages. We sold a three-year all-in contract for new equipment, whereby the customer’s costs are fixed for three years. We basically said, ‘Mr. Customer, we’re going to take you out of the forklift business for three years.’ We wanted to spread our offering across the whole dealership, including parts and service, rather than just focusing on the truck itself. By doing so, we sold more parts, sold more service and had higher customer satisfaction.
“By having our focus less about awards and more about surviving and thriving in an economy that threw us all for a loop, we met the criteria without having an award as the goal.”
? Mark Andres, Vice President of Sales
Toyota Material Handling Northern California (Hayward, CA)
Concentrate on Allied Products
“Our lift truck sales were down last year at Delta Materials Handling, so our salespeople put a big focus on allied lines. In one of our monthly sales meetings last year, a representative from Bluff Manufacturing came in to talk about their product lines, and hearing that presentation really renewed our salespeople’s focus on Bluff products.
“Allied products also allow us to demonstrate our technical expertise. A dock board is not a dock board is not a dock board; not every door and truck use the same type of dock equipment. Our salespeople are knowledgeable enough that they can spec out an application and tell customers exactly what they need. If a customer needs something special beyond the typical 48 in. x 48 in. dock board, many of our competitors can’t help. We can.
To view more comments and strategies from 2010 Top Dealer honorees click here.
“The knowledge and service of the manufacturer’s reps was a big help. A company can build the best product in the world, but if the people dealing with it can’t help customers, it won’t sell. The fact that Bluff is a member of MHEDA adds some credibility to them as a manufacturer, which also helps our sales. It shows that they’re committed to the business, to the distributors and to the end-user. The combination of all those factors led to us being named a Top Dealer for 2009.”
? Jim Colloredo, Senior Vice President
Delta Materials Handling (Memphis, TN)
Fleet Management Locks In Customers
“I may be unusual in that I look back at 2009 with more affection than any other year I’ve owned MH Equipment Company besides my first year. Two of our six divisions earned Dealer of Distinction awards, which is partially a testament to how well we’ve performed in those regions. Our market share has always been strong in Illinois and Iowa. What made this year a little different for us was the company’s overall financial performance. Our revenue was down 29 percent in 2009, but we still found a way to be reasonably profitable. I’m pretty proud of that.
“We really focus on fleet management. We tell the customer that we will take care of their entire fleet for X number of years for a fixed number of dollars. By having a lot of those contracts in place, it helps us communicate with and remain partners with the customers. They have an agreement in place already so we know they’re not going to leave us. They may want to adjust the terms, and that’s okay, but the fleet management accounts keep the long-term relationships intact.
“We teamed up with Hyster’s national accounts team to take advantage of some great opportunities in our territory to have some large transactions. Agriculture, which makes up a huge portion of the economy in the states where we earned awards, lagged the general economy a bit, so we had some success focusing on that segment of the marketplace. There are three large companies in particular with whom we’ve developed relationships and all of them made purchases last year. That’s a culmination of years of being partners and working together. Those kind of relationships aren’t created overnight.
“The thing that makes MH Equipment successful is the leadership team. We reorganized our structure last year to streamline our operations. We put one of the owners, Darrell Randall, in charge of our marketing, and another owner, Fred Metzger, in charge of all unit sales for the company. Having top-level executives in those roles helped us be more strategic and efficient with our limited resources.”
? John Wieland, CEO
MH Equipment Company (Mossville, IL)
It Still Comes Down to Service
“The focus at Miami Industrial Trucks was to maximize the sales opportunities across our current customer base and add more customers by eliminating the number of vendors providing products and services to their facilities. Part of earning the Quest for Excellence award from Cat Lift Trucks is a positive score on a customer service index. Every time we sell a forklift, Cat follows up to see how satisfied the customer is. Winning this award is a result of our service-oriented culture.
“Even in tough times, we have to look at where our customer is and determine how we can help them improve their operations. Can we save them money? Can we make their operations more efficient? Can we make their employees more productive? If the answer to at least one of these questions is yes, they will spend money if we show them the right return on investment. We focused hard on the industries that weren’t in the tank. Despite the economy, we were able to execute that business plan, which allowed us to be successful.
“No matter the industry, success boils down to adding value, solving problems and providing world-class service. Those are the three things that we do very well on a daily basis. Regardless of the economic conditions, if we add value and solve problems and save customers dollars, they’re still very interested in expending some capital.
“This is our 16th out of 17 years being a Caterpillar dealer that we’ve earned recognition. By sticking to our principles, we were able to turn 2009 into a decent year.”
? Mark Jones, President/CEO
Miami Industrial Trucks (Dayton, OH)
The Power of Demonstration
“The strategy for us at Springer Equipment Company was to identify customers who were still busy moving their inventories at a reasonable pace. We talked to those customers about enhancing their efficiencies and reducing their overall operational expenses. For example, some customers were using cranes and needed a crane operator, a rigger and a forklift operator to perform one task. We showed the cost justification of replacing the three operators and two pieces of equipment—the forklift and the crane—with one Combilift and one operator.
“A Combilift is an expensive unit, so showing the cost justification was important. Quite a few customers had old, worn-out equipment that they knew needed replaced, but were reluctant to spend the money. In many cases, a demonstration of the unit sealed the deal. One particular pipe company challenged us to take a nearly 100-foot-long pipe and carry it around their facility. I did so, and when they saw that, they were sold.
“We put most of our Combilift customers on 60-month leases to keep the monthly costs down. A lease works better with this kind of higher-priced, niche product because the customer doesn’t need to invest as much of the initial acquisition price. Leasing has proven to be the most effective way for us to market high-priced products in the current economy. Of course, the support we received from the manufacturer was a great benefit to us as well.
“Overall, I would say 2009 was a down year but a good year. We were able to produce enough that the ink was black at the end of the year. I am proud that we were able to turn in a small profit in spite of the challenges.”
? Ted Springer, President
Springer Equipment Company (Birmingham, AL)
In-Stock Inventory Helps Raise Company Stock
“There are a few reasons why Stein Service & Supply was able to take some positives from 2009. First, we’re a wholesaler, so we’re a little bit different from a traditional MHEDA member. That unique niche helps us. No matter what your business, though, the key still is service. Customers who call us won’t get frustrated by automated telephone answering systems that they often get by calling a bigger company.
“Our success with allied products was largely driven by the fact that we had the product in stock. Dock equipment is frequently needed at the last minute because customers rarely plan ahead for it. It’s more like: ‘The truck is coming tomorrow and we don’t have a dock board.’ So the fact that they are able to get it from us immediately and not have to wait for shipping was a huge benefit.
“Another key to being a top performer is loyalty to the manufacturer. We’re one of Bluff Manufacturing’s Top Dealers because they’re an easy vendor to work with. They do what they’re supposed to do in terms of reliability and responsiveness. Because we enjoy working with them, they get all of our business for their types of products, which makes us a better performer in their eyes. The fact that we sell a lot just means that Bluff is doing a good job for us.
“Our involvement with MHEDA certainly helps us connect with both our manufacturers and our customers, who are largely other dealers. Going to MHEDA events allows us to network with both sides at the same time. In our business, solidifying those relationships and establishing new ones is critical to our success.”
? Steve Stein, President
Stein Service & Supply (Charlotte, NC)
Moving to Account Management
“As the result of several strategic focuses in 2009, Wisconsin Lift Truck was named the Most Valuable Distributor of 2009 for Steel King after we were able to increase our sales volume of most Steel King product lines. Our mission—as it is every year, in good times and bad—is ‘to enable our customers’ success through value-added solutions, supported by superior service and quality products professionally delivered with a sense of urgency.’ The key to achieving that mission is to know our customers and provide solutions to the customers who are in the market.
“In any market, there are customers making changes and improvements to their material handling fleets and storage & handling systems. In this market, for instance, food and beverage companies, companies making products for the defense industry, and companies manufacturing products for mining and other related warehousing operations continued to grow. The best strategy for success is to know who is in the market for our products.
“In order to determine that, our strategy was to change our sales structure to account management, and each sales representative was assigned a minimum of 150 customers and target accounts. For each account, the salesperson was responsible for establishing a strategy to best serve and support it. Management provided incentives for doing new business, including both equipment and aftermarket sales. We also provided special service packages to our customers to assist them during these recessionary times.
“In addition to the growing markets, we also worked with those customers who faced economic pressure from the recession with the goal of reducing their material handling costs. We try to provide value-added solutions to meet customers’ needs. For storage & handling, that means studying the application and collaborating with the customer to provide the most efficient solution. The key is to provide advice and cost-effective solutions for the specific needs of the customers. We work closely with our suppliers to provide the best solution.”
? Jerry Weidmann, President
Wisconsin Lift Truck Corp. (Brookfield, WI)
Revamping the Sales Team
“We had booked enough orders in 2008 that warehouse1 didn’t really start to see the effects of the downturn until after the First Quarter of 2009. Sales training is what helped us weather the storm; we held regular product sales meetings along with our manufacturers, who came into our facility to offer face-to-face education on many of our product lines. That really helped our sales force become more skilled and professional on what they were selling.
“We dissolved the sales, marketing and purchasing departments and combined them into what we’re calling our business development group. All three of those entities supported each other, but they weren’t working together as well as they should have. Now when everyone in the business development group comes to meetings for product training, they all understand the customer and the equipment better. We can focus our branding and marketing materials toward the customer instead of doing it just for the sake of doing it. Purchasing tells marketing what we have to sell, and marketing promotes it to make it easier for the sales department to sell. Everyone is together now in their focus, which has been a big help.
“Part of that initiative was to improve our e-mail marketing. We created a planned, systematic and routine e-mail newsletter as a marketing tool. Our efforts previously hadn’t been systematic and orderly. We concentrated on developing a plan and delivering an enhanced newsletter in 2009.
“We also diversified our product offerings into high-efficiency lighting, rack repair and equipment reconditioning. This gave us more avenues to talk to customers and sell new products into new and existing accounts.”
? Mary Lou Jacoby, Owner
warehouse1 (Kansas City, MO)
Emphasize Your Financial Strength
“Going into 2009, we knew it was going to be a very difficult year for the industry and for Babush Material Handling Systems. Our strategy was to do whatever we could do to manage our costs in order to withstand the drop-off in sales. We used our relative financial strength to our advantage by emphasizing to our customers that they could be certain we would survive the downturn and be around long enough to service their products down the road.
“We are also fortunate to have a very loyal customer base. They understand the quality of our service and our products, and they know the integration capabilities that we have. We’ve been around for a long time, and we’ve proven to them that we are able to meet their needs. Hytrol Conveyor Company has a good product with strong brand recognition too, so that certainly helps. That reputation, coupled with our history of quality service, keeps our customers coming back. We also utilize some of MHEDA’s training opportunities to help ourselves become a better distributor”
? Chris Shult, President
Babush Material Handling Systems (Sussex, WI)