Why public sector shop sales make sense for distributors

Tool distributors are quick to grasp the importance of having a diverse mix of customers. But in considering customer mix, one group often gets insufficient consideration: government accounts – military, postal, safety, health care, utility, state and municipal facilities. Many distributors go to government garages to sell tools to the techs, but they often shy away from going after the shop purchases.

Mobile tool distributors, when asked, tend to view shop sales at government accounts as not worth the time and trouble they require.

Distributors offer a host of objections to shop business at government accounts: they all buy direct from suppliers, the sales are highly price-driven and therefore less profitable, they require burdensome paperwork (bid documents, shipping forms, bills of lading, etc.), they involve lengthy approval time, and they are based on “political” considerations.

These objections all have merit. But they are generalizations, and such assumptions can prevent distributors from maximizing sales.


The playing field shifts

In a free market, the playing field constantly changes. Customer needs change. Decision makers change. The competition changes.

In assessing sales opportunities, distributors must consider all opportunities if they want to maximize their sales.

Yes, government accounts have special requirements. But that’s no reason to ignore them when considering sales opportunities. Government represents a major segment of the nation’s economy.

While shop management at governments can be hard to deal with, they have advantages for a mobile distributor: the orders, while less consistent, can be big; payment is usually made in full; credit risk is minimal; warehousing costs are less for shipped orders; and the business is less dependent on the general economy (government employment has not suffered as much as overall employment during the Great Recession.)


All it takes is networking

One problem with government accounts is that it’s often hard to know who the decision makers are for shop purchases. This is where networking comes in.

Dave Putits, a Cornwell Tools dealer in Temecula, CA, landed a bid request from the U.S. Border Patrol after he networked with government decision makers. He has since sold thousands of dollars’ worth of tools to the border patrol. Once a bid is accepted, he has the tool shipped. He doesn’t have to inventory anything and he gets paid in full. “When you get a big one, it’s great,” he says.

The city of Tampa, FL, has become one of the best customers this past year for Hal Cochrane, a Cornwell Tools dealer. He deals separately with the city’s police, fire and sanitation departments. He knows from past experience that he could eventually lose this business, but this year, he expects to double or triple his local government sales.


Rewards can be big

Kraig Thoreson, a Matco Tools distributor in Owatonna, MN, gets called for quotes from cities and counties regularly. He doesn’t find it too much trouble to give a quote over the phone, and he likes getting paid in full in 30 to 60 days. “If you know the right people, there’s good money there,” he says.

Rushton DeMars, a Mac Tools distributor near Greenville, SC, does close to 17 percent of his business with National Guard armories who qualify for federal Government Services Administration (GSA) pricing. As with other accounts, DeMars has found persistence pays when trying to win government business. He visited a public utility account monthly for nearly a year before he got any business. One day, the manager handed him an order totaling $6,000. “I was beside myself,” he says.

“It’s just a matter of getting to know these people (decision makers),” observes Terry Larkin, a Mac Tools distributor in Palm Coast, FL who sells to U.S. Customs facilities as well as city and county facilities. “It’s an ever-changing thing.”

Tim Biranowski, an independent distributor in Grafton, OH, characterizes city and county garages as “no-nonsense” customers. Unlike the typical repair shop, the government customer is not going to buy a tool because it captures his or her fancy. They buy it because they need it and the purchase makes good business sense.

One thing’s for sure: the public sector is not going away. Hence, it makes sense for mobile distributors to research opportunities in the public sector. To succeed, distributors need an open mind.