Better than Best?

Primo Industrial Supply sales manager Kevin Fitzpatrick recently faced a tough business decision. The fictitious distribution business has been an authorized distributor for the Best Cutting Tool line of products for more than 20 years. Two months ago, one of its customers allowed Primo and Best Cutting Tool to conduct a product trial on a new indexable milling cutter.

The tool performed well, and the customer agreed to place a large order. But this win-win quickly turned into a no-win situation.

After the customer placed the order, he learned of a newer product introduced by a competing supplier that performs better than the Best Cutting Tool brand and is competitively priced.

Fitzpatrick needed to decide whether his long-term relationship with Best Cutting Tool should trump his relationship with his customer. When asked, distributors and suppliers from all over the U.S. knew exactly what to do. Unfortunately for our fictitious Fitzpatrick, few agreed on a solution.

Trust in the customer
The issue of trust quickly rose to the surface as the No. 1 determining factor for most distributors and suppliers. Stacy Stateham, supplier partnership manager for Illinois-based distributor Steiner Electric Co., said Primo should let the customer know that a better product may be available, run a test on the competing tool, then let the customer decide which tool he prefers to buy.

“If the competing product is the choice, Primo can easily explain to Best Cutting Tool based on the test results,” says Stateham. “Any good tooling manufacturer should realize that both the distributor and the manufacturer must keep the customer’s best interest at heart. The trust of the end-users is what keeps them both in business.”

Brian Woodworth, who is in government sales for Fastenal Inc., says it takes a very long time to earn the trust of a customer.

“When the customer sees the fact that you are looking out for him, he may very well stay with the existing order,” he says. “They may work together with the trusted supplier to jointly find an even better product. This method results in maintained trust and a renewed sense of the supplier looking out for their customer.”

Dave Wolfe, general manager of Virginia-based distributor Industrial Supply Corp., looked at the problem from an activity-based perspective. He says Fitzpatrick needs to determine if the customer is a large account or on his top 10 largest accounts list.

“If so, then he obviously has an obligation to them to share the knowledge of the better products,” he says. “His current supplier should understand completely. His relationship with his customer will solidify into a true partnership.”

Don't throw it all away
Fitzpatrick understands customer relationships need to be nurtured to grow. But, on the other side of the equation, he has a tooling supplier that has done business with him for 20 years, through up and down times.

Jerrold Weissman, president of National General Supply Co. Inc., a purchasing contractor for the U.S. Air Force, says the answer is obvious. Primo has a long relationship with Best Cutting Tool; Primo should put the entire problem in Best’s lap first.

“Best should know that the competitor’s product will soon become public knowledge and when Best has their strategy lined up, Primo and Best should go to the customer and discuss the situation,” he says.

Weissman says no secrets should be kept from the customer. If the customer decides to go with the new product, then Primo should assist him. If Best wants to give the customer added incentives while it catches up or surpasses the new product engineering, that would be fine.

“In any case, the customer will realize that Primo and Best are shooting straight and they are honorable companies,” says Weissman. “Best Tool will realize that Primo is honoring their long relationship and not throwing them overboard for a pretty face.”

Cathy Jones, purchasing manager for safety product and service provider Safeware Inc., says Fitzpatrick should first talk with his vendor about the dilemma to see what options they could come up with together. Then, they could present those options to the customer.

“Hopefully, this could be a win-win situation for everyone and keep the relationship longstanding,” she says. “Communication is the key to keeping good customers and vendors, even when it’s bad.”

Chad Stocking, inside sales manager for industrial distributor R.S. Hughes, took a more logistical look at the problem. At this stage in the game, it is too late to start testing another product, he says. The Best Cutting Tool product has been tested and the customer agreed that was the cutting tool to go with.

This article was prepared exclusively for ValueAddedPartners.org. Copyright 2005.

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