Wheeler on HVACR: When you lose an equipment line
Oh, he did pick up the rights to sell someone else's equipment, an off-brand line of residential and access to a partial line of commercial systems. But, he knew that it would affect his business in a major way and he wanted to know if I knew anyone who had filed a successful lawsuit in such a case. Unfortunately I don't, at least not in recent years.
I don't really know what happened, just that the manufacturer must have thought it had a pretty good reason to pull the line. The distributor had carried it for many years and it was quite well known. So, look at it from the manufacturer's viewpoint for a minute. It had a distributor it knew, and all of the dealers in that area of the country were the distributor's customers, not the manufacturer's. It awarded the line to a growing supply house out of another city that had been doing well selling one of the "big three" company's off-brands.
Now, the questions for the manufacturer would be:
1. How many of the new wholesaler's customers will pick up the line?
2. How many of the old wholesaler's customers will drop the line?
3. Will the result be a net gain or loss in sales?
Pretty scary stuff!
What about my friend? There's no question that he will lose customers and sales. There are dealers who are entrenched in the old brand's programs and incentives, and they are known among their customers for selling that line. Why, there are the letterheads, the truck and building signs, the Yellow Pages ads, etc. However, if he and his salespeople have been doing a good job by building relationships, they may still hang on to some of their customers' business. This is where building friendships with customers comes in and really makes a difference. The question is: Was he doing that? Time will tell.
There are always a lot of problems associated with losing a major equipment line, especially if you've been selling it for years. And this is especially true if the brand was a full line of residential and commercial systems, since picking up another similar line is pretty hard to do. So, scaling back your range of offerings also costs money.
Will the new supply house convert all its dealers to the line? I doubt it; they have the same loyalties, programs and advertising. But friendships mean a lot here too. Undoubtedly there will be a lot of shuffling going on.
Consumer loyalty?However, when it comes to brands, the interesting thing is that it has been proven time and again that among the general public, there is very little recognition of even the best of brand names, despite all our advertising efforts. Most wholesalers and their dealers should be able to change brands with little effect on their sales. It appears that brand names are more important to us than they are to consumers.
Consider this pie chart, developed by a Texas contractor who polled 1,000 potential replacement customers. His salespeople simply asked what brand the consumers preferred. Carrier Corp. did the same thing many years ago and found that most homeowners selected Honeywell (the thermostat manufacturer).
The most popular response in this contractor's poll was Lennox, with 4.17%. It was followed by Trane (2.87%), then Carrier (2.61%), and little Amana (2.66%). My friend's old brand was barely recognized and his new brand wasn't even on the list. As you can see, the vast majority of consumers (84.88%) didn't have a preference.
What do we learn from this? That the business of attachment to a brand is badly overrated. However, I think that Nordyne's idea of buying such well-recognized brands as Frigidaire, Tappan, and Philco to use with their lines is a good idea, since the Amana white-goods trade name had some recognition.
The fact is, such appliance trade names are probably better known and trusted than even the most recognized of our industry's lines. So, perhaps we need to re-think the matter of brand names, and we need to work harder on educating - and instilling loyalty to our companies - in our dealer base. Because we don't know what the future holds.