Identify How Your Customer Does Business to Maximize Profits

 

• Cash/Counter
  • A customer at the counter that does not have an account and pays by cash or credit card
    
  • Usually is NOT price sensitive. Good customer service and proper inventory should give high margins.
    
  • Make sure to demand higher profits the smaller the order. Consider a minimum threshold.
    

 

• Small MRO
  • Typically purchases from 1-25K per year.
  • Perhaps does much of their purchasing from retail distribution.
  • Usually does not have a storeroom or purchasing agent. Buys what they need when they need it
  • Less sensitive to price. Relies on our inventory, expertise, and relationships
    
  • Examples could include:
    • Small construction companies
    • A truck repair shop
    • A roof cleaning company

 

• Large MRO
  • Typically purchases 50-500K per year
  • Typically has a purchasing department.
  • Typically manages their MRO supplies using a business replenishment system and has a storeroom or warehouse dedicated to their MRO inventory
  • Typically is more sensitive to price. Has time to shop
    
  • Typically has a higher level of sophistication around our products; not so reliant on our inventory or expertise
  • Examples could include:
    • A sawmill
    • A mine
    • An aluminum manufacturing plant
    • A refinery

 

• Reseller
  • Typically fulfills a channel that is more specific to a market or location.
  • Typically resells our product without altering its form or function.
  • Typically is more sensitive to price.
    
  • Examples could include:
    • An air nailing and stapling distributor who purchases hose and quick couplings from us (Market driven)
    • A food processing and equipment distributor who buys food grade hose and sanitary fittings from us (Market driven)
    • A small town hardware soup to nuts supplier who buys adapters, brass fittings, sanitary fittings etc. Meets his customer’s need relying on our inventory and expertise (Location)

 
 

• Associate Distributor
  • Typically a reseller who fulfills a need in the marketplace, either by location or channel, and purchases/is loaned/is given Fabrication equipment (Krimper(s), Tube Fabrication Equipment, flanging equipment) to resell primarily hydraulic hoses, fittings, tubes, and perhaps other related equipment
  • Typically is more sensitive to price
    
  • Examples could include:
    • A hydraulic repair shop (Location)
    • A mobile marine repair truck (Location and Market)
    • An agricultural equipment distributor (Location and Market)

 

• OEM
  • Typically a manufacturer whose end product being sold in the marketplace contains a component or components that we sell them to allow their product to function
  • Typically has a purchasing department
  • Typically manages their OEM supplies using a business replenishment system and has a storeroom or warehouse dedicated to their MRO inventory
  • Typically is more sensitive to price. Has time to shop
    
  • Typically has a higher level of sophistication around our products; not so reliant on our inventory or expertise
  • Examples could include:
    • A donut machine manufacturer who buys pneumatic tubing and fittings that help his equipment work
    • A tunnel boring machine manufacturer who buys hydraulic hoses, fittings, and components that provide fluid power to his equipment
    • A carpet cleaning machine manufacturer who buys brass fittings and valves, quick couplers, and hoses as components of his machine
    • Channel Partner
    • Typically a customer buying inventory from distribution that is posted on Distranet or Warehouse Two
      
    • Price is prearranged so not an issue
    • Examples could include:
      • Another Distributor also posting their inventory on Distranet

 

• Government
  • Army, Navy, Airforce, Marines
  • Municipal
  • State, City, County, Utilities, Water Districts, Army Corps of Engineers
  • Power Plants, Dams
  • Anything procured and paid for with bond, city, state, or federal funds

 
 

• Project
  • A customer whose business is PREDOMINANTLY one off significant orders that are unlikely to repeat on a regular basis. Examples of project work would be Transair installations, dam builds, semi-conductor fabs, hydraulic systems built to solve a specific application etc. There will be times when an OEM or MRO customer whose business will significantly impact sales, but will not repeat. When segmenting these customers we need to determine the overall impact on sales and which classification is most appropriate for that customer. A Mechanical Contractor is a good example of a projects customer.