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Six Lessons from Santa for Distributors

By Frank Hurtte

Frank HurtteFor those of you who don’t know, Santa Claus and I have a special relationship. It began way back when I was still knee high to a short elf. It seems my grandfather, who was a jolly sort of guy himself, somehow connected with Mr. Claus. Imagine being 3 or 4 years old and learning Grandpa and Santa were buddies. Special feeling? You bet. I knew it was real when Santa greeted my Grandpa with, “Hey Red (my Grandpa’s nickname), how late did you stay down at the Eagles’ Club last night? If they weren’t pals, how in the world could this jolly red suited man know these details?

Santa knew me by name too. Really! And from that day back in the early 60s on, Old Santa and I have enjoyed a close and special friendship. According to Santa, yours truly has managed to make the “nice” list for five of my 59 years, but this story is not about me. It’s about distributors.

During a slow point down at the local mall, I managed to grab a few minutes of the jolly old elf’s time. After our normal greeting and a few “Ho, Ho, Ho’s," Santa took me aside and asked me to share a few pointers with my distributor friends. It was an “everything important in distribution can be learned from Santa” sort of moment. Rather than blast out with bloviating reindeer breath, let me pass on six of Santa’s lessons.

Lesson 1: Segment your Customers
Santa said he learned this lesson some 500 or so years ago. Once he started segmenting his customers into naughty and nice groups, business picked up. Today, Santa’s North Pole organization carefully tracks customer behavior and provides services accordingly.

Santa believes distributors must understand customer demographics, too. The customers who value your service, buy in the right quantities, display the right kind of buying behaviors and allow you to make a profit deserve extra nice treatment. Santa and his team of elves carefully insure the “nice” boys and girls get better treatment than the rest. Simply put, distributors can derive more profitable business if they target the right customers.

Lesson 2: Build your own unique brand
The red suit and eight tiny reindeer shtick is part of the whole North Pole Brand. Flash a picture of a slightly overweight guy dressed in a red suit with white fur trim and kids anywhere immediately recognize the brand.

Santa and his team of marketing elves first came up with this whole branding deal back in the 1600s. Since then, dozens of marketing gurus came knocking on the North Pole door, each proposing a different strategy. On a side note, you can only imagine what would have happened if Santa would have taken on that Paisley Nehru Jacket pitched sometime in the 1960s. Thankfully, Mr. Claus avoided the temptation of flipping his branding message.

For distributors, this means understanding what you’re known for in the marketplace and carefully advancing the message. Are you known for having a larger stock of hard-to-find items than your competitors? Is your team more tuned to technical support? Are you good at solving logistics issues? Is your counter more knowledgeable than those you compete against? It’s time for distributors to stop relying on their supply partners for branding. In the future, distributors must understand what they’re known for and advance the message. It develops a strong and loyal following of customers who are willing to partner.

Lesson 3: Adapt to changing customer styles
When Santa first started up, things were different. Boys and girls were known to whisper their Christmas wishes up the open chimney hearth. Santa had thousands of elves employed at listening posts. It was mostly tedious and time consuming work. Later, the kids wrote their wish list on a piece of paper and tossed it in to the fire with the hopes that Good Saint Nicholas would somehow read their smoke signals.

For most of us, an annual letter to Santa was something of a tradition. But today, Santa receives requests via email, instant message, phone calls, and the traditional “snail mail.” Along the way, Santa has constantly upgraded the way he monitors and processes these incoming orders. He had to shell out some big bucks on technology and training.

Today, distributor customers communicate in ways unheard of just a decade ago. Inside sales teams receive faxes, emails, and EDI communications at the speed of light.

Santa, who keeps abreast of the younger generation, believes some distributors have missed out on the trend toward communications via instant messaging. Applications currently exist which allow customer instant messages to appear on the inside sales team’s computer screens. This gives customers a new way to communicate with the team and allows inside salespeople to handle multiple customer requests simultaneously. Further, as customers move toward faster and more sophisticated devices, the jolly old elf believes the trend will grow.

While we’re on the subject of mobile devices, distributors need to evaluate some of the applications designed for speeding up customer selection of products. Santa tells me that he is working on a new “app” for Christmas 2014.

Lesson 4: Don’t forget your warehouse
It’s no secret that Santa operates from a single central distribution facility located in a remote part of the world. One would expect that this could be a disadvantage to the fat man and his organization. However, over the years, Santa has refined his delivery mechanism in order to meet customer needs. His North Pole warehouse is equipped with all the modern material handling and tracking tools. Each year, literally millions of Red Rider BB guns, electric trains, Easy Bake Ovens and dolls are delivered accurately and on time.

Santa asks distributors to take time to ask how their warehouse today differs from the warehouses of 1983. Does your system employ barcoding, part location, wave picking, or any of the tools which allow you easier throughput and cheaper warehouse operations?

Lesson 5: Never say no
Santa has developed a customer service plan second to none. He has trained his team of salespeople (dressed in red down at the mall) to never say no. Instead, they say, “Santa will have to check.” There’s a big difference.

One of Santa’s distributor friends once told me this: “I never say no, I just ask; how much would you be willing to pay to make it happen?” Distributor sales and customer service people need to be trained to offer options when the customer’s original request can’t be met.

For instance, if a customer asks for a part that’s not on your line card, do your customer service reps say, “We don’t have it”? Would it be better if they asked if a substitution can be made? While this doesn’t seem like “reindeer science,” it does provide your organization with additional sales opportunities.

Further, if the customer would like to have something sold by a competitor, do you have a plan? Some customers want you to take ownership of the issue, regardless of cost. Santa thinks that’s a cool concept.

Lesson 6: Understand the cost of services
Finally, Santa wanted to point out the rising cost of value-add services. For eons, he assembled dollhouses, set up elaborate train sets and put together backyard swings. It was pretty cheap to do this back in the 1960s. Even though the elves and reindeer work for carrots and peanuts, he has been more reluctant to put things together in today’s business environment. Health care benefits are spiraling out of control up north too. Instead, Santa pushed the work off to the moms and dads of generally good girls and boys.

He will still set things up for the really, really nice kids; the ones who never (ever) pout or cry. The medium nice kids have to pay for services. And, he’s thinking more about cash than cookies.

Santa thinks distributors, now more than ever, need to understand the cost of the value-add stuff they provide. As a matter of fact, Santa took time to make one last point. The great bearded one strongly recommends that distributors everywhere read Frank Hurtte’s The Distributor’s Fee-Based Manifesto. He won’t be placing this book under your tree because he still remembers that incident at the golf outing last summer (Santa really does keep track of these things). Naughty and nice applies to everyone.

But, even the naughtiest distributor can order the book in time for Christmas. It’s on Amazon.

Now a word from Santa’s longtime friend and veteran of five seasons of niceness;
December is a joyous time of year. Whether you celebrate Christmas (I do), Hanukkah’s Festival of Lights (many of my friends do) or anything else, I hope you are blessed with time for friends, family and fun.

And, my Grandpa and Santa really were close friends.

In addition to being close pals with Santa, Frank Hurtte provides Strategic Insight for New Times. He speaks, writes and consults on the new reality facing distribution in a post-recession world. He has a new book called “The Distributor’s Fee-Based Services Manifesto.” Contact Frank at River Heights Consulting via email at frank@riverheightsconsulting.com or via phone at (563) 514-1104.

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