Grow Parts Sales With A TPA Program
TPA stands for Tool Purchase Assistance - it’s a method of growing your parts sales while improving the technical skills of your customer’s service technicians.
Think like the service technicians who come in to buy parts and tools from your company. There’s always a reason why they come to your store rather than going to another. It may be because they like your coffee and doughnuts, or they have a friend at the counter, or because you’re closer, or because they like your selection and prices. However, you can greatly increase their stops and their purchases by providing just a little more incentive, and that’s where the TPA comes in.
Starting such a program is like so many other great ideas; it starts off painfully. However, once it is in motion, you will quickly see the results. It requires signing up every technician who enters your store, providing them with a special account number (a card?), and creating a tool-purchase account for each one on your company computer system. This must be followed up by entering the amount of each parts purchase for each technician, setting aside 1% or 2% of each parts purchase that they make, and mailing out quarterly statements showing how much they have accrued toward the purchase of service tools (only) from your company.
The cost is low, the incentives to buy more from you are there, many people will never cash in on their remaining balances, you are helping your customers’ employees to obtain needed service tools, and these tools don’t cost you the list price. Some customers will say they want the discount given to their company, and you can do that if you have to, but it still must be redeemed in service tools only!
The program should promote parts sales, because parts generally have a better markup and the total sale is lower, but you could also include equipment sales (especially those you are trying to promote) at a lower percentage.
Some day, some “beanie weenie” will come in and explain to you that you could improve your profit margins by eliminating this costly program. If you swallow that, get ready to lose all the gains that you have made.
Remember that you should really want to give away as many tools as possible, so you have large numbers of satisfied service technicians sitting at your counters and talking to their friends about it. Therefore, resist the temptation to create a lot of rules. For example: They can use the accrued amount to pay for part of a tool, and pay with cash for the rest of the amount. In fact, that’s desirable, because you are still making some profit on the tool.
Why send out quarterly statements of accrued savings? Wouldn’t it be better to allow them to forget that they have accrued a balance that you can pocket? No, for you must constantly remind them that they have an investment in coming into your store. And even if they should quit the company they are working for, carry the balance over to the purchases made for a new employer, because you want more of their business too!
The HVACR supply house business has traditionally been slow about doing any advertising or offering incentives. However, hard times require hard choices, and “it takes money to make money.”