In 2012 I visited the largest auto recycling and aftermarket parts business in the world, LKQ Corporation. They said one thing that has stuck with me as we walked through the 180,000 square foot distribution centre in Santa Fe Springs California: “You know Chris, we are not a parts business… We are a logistics business that happens to sell parts”
Think about that for a moment. Ultimately, the outcome of everything you do, is the sale of a part. But what is it really that makes you successful, beyond the commodity (the parts) that you trade?
Whether the commodity is parts, stone bench tops, plumbing supplies or giftware, they are all commodities and always available from an alternative source. So, what makes your product different to anyone else’s? Why should the consumer buy it from you rather than from anyone else? Why should they buy a recycled part over an aftermarket or new OEM?
At an earlier URG conference in the USA, I presented a session which I called “We don’t sell parts”. I had so many people come up to me before the session while at the conference asking me what I was talking about – ‘Sell parts is exactly what we do!’ they said.
I remember sharing a drink with a good friend at the opening reception event who runs a great operation and very successful auto recycling facility. He wanted to understand more about what I was going to be talking about.
The discussion went something like this;
Me: “Are your parts the cheapest in the market?”
Recycler: “No of course not, I am actually more expensive most of the time.”
Me: “So why do the customers choose your parts at a higher price than your competitors' at a lower price?
Recycler: Pause… “Well, I haven’t really thought about that so much but, I deliver a high-quality part every time and have a great relationship with my customers.”
Me: Silence for at least 20 seconds while I picked up my glass of wine and took a sip, then a smile. “You see what I mean? If it was just about selling parts, you would just be competing with everyone on price and you would have no differentiating proposition. In your case, you use quality, reliability and your relationships as a point of difference, which, as a result, helps you sell parts.”
Right there, you could see the penny drop. We just looked at it from a different angle. People buy your product, because they see value in it, beyond that which they find in the alternative. It's about what you do for the customer and how they feel dealing with you. For some, the competitive value proposition will be a better delivery service, others maybe price or quality, or even a strong customer/supplier relationship.
Ultimately, people or businesses buy goods or services from those that offer them something more than a commodity, in your case, more than just a part. They buy because they trust you, because they feel better buying from you than they would off others, because of your service, quality, relationship and down and out willingness to better understand their needs as a business.
So, next time someone asks you, ‘what do you do?’, will you say, ‘I sell parts?”
Or will you say “I’m in the customer service business, that happens to sell parts”
Either way, you are right, but thinking through the customer lens gives you an edge, a reason to deal with you beyond your part.
If you start looking at your business through this lens, you will see more clearly what you need to do to achieve the result – which of course is selling more parts. The result is just that, it is an outcome, one that is achieved more consistently and with greater success if you understand why people buy off you and do more of that.
What does a business focussed on its customers actually do?
What would you do if you were really a customer focussed business?
What would the difference be with the way you answer the phones?
How would you change the way you measure your salespeople or measure success more generally?
What would you do as the owner, MD or CEO of your business next time a key customer has an issue with one of your products or services?
The customer focussed switch is not easy, nor will it happen overnight. It will require strong leadership and a commitment to changing all your people throughout your business. Everyone needs to be on the same page and working together to support one another. Ultimately it is a change in culture, which is difficult but absolutely rewarding:
“We are not parts businesses that service our customers, we are customer service businesses that sell parts”