Integrating service as a competitive weapon …

Blogs Bill Wade October 30, 2013

… In heavy-duty truck parts and equipment distribution.

(This is part one Bill Wade’s two-part educational feature on service. Be sure to check www.truckpartsandservice.com again Friday for part two of the article.)

For distributors, especially those in the heavy-duty truck parts business, service is a vital source of revenue, customer satisfaction and competitive differentiation. Finally, heavy-duty truck parts distributors are recognizing the value of becoming service-led organizations and are re-aligning their service operations with their overall business strategies.

Heavy-duty distributor managers are looking to new customers for growth. Surprisingly, an increasing proportion of the general managers I’ve recently contacted view new customers as their most important source of revenue growth.

This is a very surprising and non-traditional direction, since driving new business traditionally falls behind growing with current customers and increasing penetration by the distributors.

According to research from The Loyalty Effect, repeat customers spend, on average, 67 percent more than new customers. It can cost 5 to 10 times more to acquire a new customer than retain an existing one; and 20 percent of customers account for 80 percent of total revenues.

Also, 1 to 5 percent of “elite” customers account for up to 40 percent or more of a company’s revenue mix. Yet very few companies even know who their top customers are, let alone treat them differently. (Contact the author about WayPoint Analytics to address this problem).

Placing equal importance on opening new accounts with generating revenue from the existing customer base could be a reflection of the current economic cycle. When customers are growing, it is easy to grow with them. When customers are struggling with business uncertainties and increasing costs of fuel, logistics and employee benefits, growth becomes difficult for everyone.

Getting the Whole Organization Involved

Increasing the role of service technicians in the sales process is a growth strategy that is gaining momentum. The importance of empowering service engineers with information to allow them to cross-sell and up-sell in the field is reaching a new peak.

Bill Wade is a partner at Wade & Partners and a heavy-duty aftermarket veteran. He is the author of Aftermarket Innovations. He can be reached at bwade@wade-partners.com.

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