a positive impact on your business. The second slice of it is that,
because of product lines and expertise, there are probably some
customers who have to buy from us. Maybe it’s because you have
a nearly exclusive line or because you stock [certain products]. My
recommendation is to start with those customers first and see how
it goes. Every distributor has a fear of what’s going to happen.
If you get a year under your belt with these people, it’s going to
improve your confidence and it’s going to provide a flow of cash
that you currently don’t have. I
also believe that when you charge
people, your level of professionalism goes up. When people pay you
for your service, their perception of
the quality of your service goes up.
When I wrote my first book, it
cost me a lot to have it printed and
I gave it away to people like crazy.
And I discovered that when you
give away a free book, there is no
value. Later on, I ran across someone who had a similar book, and
they charged $50 a copy. Some people paid $50, but for other people this consultant was able to say, ‘Here’s my $50 book and I’m
giving it to you for free.’ When you do have good customers and
you do open the doors for those good customers and say ‘you’re
one of our top notch customers and this service I normally charge
for I’m giving to you for free,’ it has more value than if you do
it for everyone. One thing I think distributors absolutely need to
start charging for is training. Back in the 1980s when I was doing
training, I had to sign up 20 people so 12 would show up. And as
soon as we started charging for it, we’d sign up 12 and sometimes
13 would show.
ID: Tell us a little about the Margin Recovery Model and why you
recommend it as the next step for distributors looking to begin
charging for services.
FH: I believe that one of the land mines that lays out there in
front of distributors is that if you say, ‘I’m going to get into the
service business,’ it’s a whole different skill set in management.
Because if you talk to distributors about the products they worry
about the most, it’s the ones that they’re afraid will go bad on the
shelves or go obsolete. But when you’re selling a person’s time,
there is no shelf life. So managing the stable of people against
the ebbs and flows of business is probably more than the average
distributor can or should take on. What I am instead suggesting is
that we already have people on our staff – 84 percent of industrial distributors have some sort of product specialist on staff – and
these are people that are there for one purpose: to be customer
champions and to create value for their customers. The problem is
now it’s not that much of a differentiator, and we’ve gotten into
this arms race with specialists. I believe that the average specialist
should be charging for their time in a whole lot of instances. If
there is a value placed on their time, their time will be more wisely
invested with the right customers. That’s really what the Margin
Recovery Model is about. How can we use the same people that
we’ve already got to recover some of the margins that we’ve lost
based on technology or price drop?
To take it one step further: A real issue that distributors face
is the fact that they are entering
into selling services in a place
where, in some cases, they have
customers that are selling services.
So they need to have a way of
explaining their strategy and how
they’re not going to become a
competitor to a customer who is
in the business of selling services.
If you sell services in this industry
and I sell products, and in order to
sell products I’ve been forced to give away services that you could
maybe do — as long as I’m giving it away, it’s taking business away
from you. When I start charging for it, it’s probably going to drive
some more business to you, and it’s going to make it so the cus-
tomer doesn’t have a way to milk the distributor for services that
could be charged for by some contractor or engineering company.
It also opens the doors and makes the manufacturers feel more
comfortable. In some instances, the manufacturers don’t want you
to be a value-added reseller, they want you to be a distributor. If
we say, we’re going to put a real life value on the things that we
do and start charging some customers, to improve everything that
we do, then it becomes easier for everyone to swallow.
Frank Hurtte’s book is available on Amazon at
I believe that the average specialist
should be charging for their time in a
whole lot of instances. If there is a val-
ue placed on their time, their time will
be more wisely invested with the right