Picking partners in life is a commonplace and expected action. We often take this for granted. Selecting the “right” partners is an altogether different matter that is often bungled. Whether a business partner, a spouse, a roommate, or a supplier, these decisions often seem good at the time but turn out differently than we expect. This is because of the unintended consequences and the lack of careful pre-marriage counseling left out.
Selecting a supplier in today’s car care industry is a bit like getting married or embracing a partner. If you purchase a system from a company—you are likely married to them for a while. When things don’t go well it can be a painful and extended “divorce.”  When you contemplate a software provider the “marriage” can be even more complex and stressful, and in just the first initial weeks or months of “living together” you find out you made a poor choice. If a supplier has a reputation for poor quality at a low price, or a legacy of unhappy former customers—is there not usually a good and authentic reason for the reputation?
If business owners consider a supplier who presents them with a story of having “all” solutions for their business—should they not tread very carefully? Beware of those claiming they have all solutions. This kind of relationship is one of intended dependence. If you believe it is best to purchase virtually all your needs from one source—you had better conduct effective due diligence. Your due diligence process needs to include authentic testimonials, not paid endorsements. These are best if you find the sources yourself and not depend on the supplier to present them to you. Those pre-selected testimonials are sometimes insiders with pre-set agendas that don’t match the need for objectivity.
In today’s industry, car care business owners have better choices than in the past. Better choices than ever before. More options, more flexibility and more control. Perhaps it is best to acknowledge this important reality—Owners and Operators are in control.

Members of the Thought Leadership Club were asked the following two questions.

1. Considering that there is a natural process that evolves between purchaser and supplier that can often evolve into a real partnership, how can business owners make the best choices when it comes to partners. Should they avoid putting a supplier in control of their business by depending on them for everything?

2. Partnerships are desirable. They are part of our natural human condition. How can all parties ensure that their partnerships remain mutually beneficial?  How can we ensure that partnerships evolve and flex to accommodate new realities?  Is there a way to build a client into a much larger customer without the complexities that can emerge in a dysfunctional marriage?  Is there an option to just keep on dating without taking the “plunge?”  What pre-marital steps can be taken to improve the chances for a long-lasting and productive relationship?  Should Owners insist on a “pre-nup”?

Joe Cameron

National Sales Manager, Kim Supply

jcameron@kimsupply.com

Answer Question 1:
This is actually an excellent question because it forces me to go beyond the usual propaganda about strong vendor relationships. There has been a lot made of the need for strong vendor relationships nearly to the point of becoming a platitude. It is very obvious in today’s marketplace that it is necessary and very exemplary of a new way of doing business that relies less on convention and formality in those relationships and more on a genuine regard and concern between vendor and operator for the welfare of both businesses.

For a good portion of my early career in sales and account management, while there was always a strong emphasis by my bosses on exemplary customer service and building strong relationships, I was always cautioned to refrain from going so far as to call that relationship a “partnership.” The thinking being that by calling ourselves partners, we were implying a share of our customer’s risk and liability that my previous employer’s were unwilling to share in. Certainly from a purely self-interested point of view they were right to do so but I was equally certain then and am more so now, that those employer’s did not think the equation through far enough. There most certainly is a shared risk. Market share is won or lost one customer at a time and the failure of even one customer, no matter how big the organization, diminishes market share. No business person in their right mind can ever be sanguine about losing even one customer.

In the car wash industry, this is especially true. As suppliers, we do not (currently) have an infinitely and rapidly expanding market to operate in and as an operator, you are operating in an environment of increased competition in a somewhat static marketplace. If the supplier is not actively engaged in doing everything within reason to ensure their customer’s success, they are jeopardizing the very revenue stream they rely on for their existence. Suppliers, contracts and proprietary parts notwithstanding, need their customers far worse than their customers need them, especially if that supplier is not committed to their customer’s success.

This then is a good place for a wash owner to start looking at suppliers. How committed are your suppliers to your success? A good example of this is a situation where an operator called a new supplier to order all new pumps for their six bay self-serve, mentioning in passing that all six pumps started making an awful racket, all at the same time. The supplier at that point had two choices; does he go ahead and make that big sale or does he recognize that it is a very unusual thing for all six pumps to go bad all at once and start asking the customer questions perhaps finding out that the pumps didn’t need replacing at all and that there was systemic issue easily resolved with a new supply hose? I think it would be a very interesting poll to take amongst the suppliers in this industry as to what course of action they would choose. It is my sincere hope that they would uniformly choose the latter. How much trust is established and how much loyalty is earned if the supplier makes the right choice?

Another thing for the wash owner to look at is whether he feels compelled by his supplier or enticed. I am referring back to a point I made about curb appeal in an earlier round table; customers respond better when they are enticed than when they are compelled. I am sure I will not make any friends with some of my colleagues in the industry when I bring up the issue of proprietary parts. While I understand that from a purely business standpoint, manufacturing equipment made up all or partly of proprietary parts that can only be purchased in one place makes business sense after a fashion, it does not earn loyalty. It compels it. It is like the difference between a volunteer army and a conscript army. It does not take a general to figure out that the volunteer army will always be more effective. Loyalty earned is loyalty enjoyed. The investor must then ask themselves, do they want to give their loyalty freely and of their own volition or do they want to be forced into giving it? This also speaks to the issue of how much control do you give to your supplier. It really then becomes more of a question of how much control does the supplier take.

Expectations play into this relationship significantly. Suppliers have a responsibility to their customer not to oversell expectations. Customer beware; if a supplier tells you that they will never make a mistake, be prepared to be skeptical of everything else they say!  Never settle for anything less than complete honesty from a supplier. There is much anecdotal evidence of a supplier making promises they either forgot to keep or worse, never had any intention of keeping. That comes back to something even as simple as returned phone calls.

A strong line of communication is a crucial element. Evaluating whether the supplier is keeping you informed of changes, delays, etc. can be a good indicator of a supplier’s integrity. In the case of large projects or situations that require a contract, having clear, concise wording with no ambiguities regarding the scope of work is most helpful in establishing a trust relationship. If you feel like you are having your glasses fogged up, you probably are.

While there is an inherent risk for an operator to put all their eggs in one basket with a single supplier, there is a lot to be said for the efficiencies gained in being able to do so. It means fewer phone calls to make to order supplies, fewer freight bills, and an intimate knowledge by the supplier of their customer’s needs and an opportunity to demonstrate the ability to occasionally anticipate them. It is also nice to only have to hold one person or organization’s feet to the fire when things go wrong. In order for the relationship to get to that level however, the supplier must earn their customer’s trust and it is incumbent on the supplier to earn that trust through demonstrated interest in the welfare of their customer’s business and promises kept.

Answer Question 2:

Perhaps I am a bit old fashioned and more than a little naïve, but up to a certain point, the concept of “ensuring” and a “pre-nup” in an ongoing business relationship is a bit unsettling to me. How can you contractually guarantee that your vendor partner is going to continue to be invested in your success? In the case of large projects with a lot of money on the table, proceeding without legal and contractual protection of both parties is not only bad business, it is foolhardy but given the fact that this country is lawyered up to the eyeballs and our industry’s business practices as a whole are pretty solid, it is uncommon for something like this to occur. I would reiterate however, if you feel like you need a lawyer to understand the contract you are signing, pay the money and get one. When things go wrong, there is no one to blame but yourself if you sign off on something that is not in your interests or at least mutual interest.

With an ongoing relationship though, you have to fall back on trust and mutual regard. I must say that for my part, this is the part of business that I really enjoy. I am truly blessed to have a collection of customers that I have done business with for many years now, some of whom I can call friends and for whom trust is not an issue. It makes it all worthwhile. A business relationship based on mutual trust and mutual interest is its own reward.

I think the dysfunctional marriage analogy is an apt one because like marriages, there are business relationships that can be very dysfunctional. Also, like a marriage, the dysfunction usually comes about due to a lack of two-way communication. While the vendor is obligated to communicate status’ etc. the customer is also obligated to communicate their expectations and requirements to their vendor. It is a bit like tying one of their vendor’s arms behind their back and expecting them to perform to expectations that were never communicated. Ultimately, it is in the operator’s best interest to do so and it will give the partnership its best chance to flourish.

Ryan Beaty

Vice President of Sales, Mark VII Equipment Inc.

rbeaty@markvii.net

Answer Question 1:

Successful car wash partnerships are really what have allowed many manufacturers and distributors to survive and in some cases thrive in this economic climate we have been experiencing for the last three years. On the flip side, those who did not manage relationships/partnerships correctly have wound up out of business or struggling for survival. It’s true, partnerships are a natural process, but like anything they require much thought and homework. From time to time you see lists floated around about the top 10 or top 25 questions you should ask your provider before making a partnership decision. I think these are good starting points, but so much should go in to such a decision in my opinion.

Different operators will look for different levels of partnership. Many operators are hands on and don’t require the kind of intensive support an investor group might look for. That said, top manufacturers have really stepped up in the past couple of years to provide an array of services to meet the needs of both the hands on and hands off operators. No doubt, some have done a better job than others and it’s easy to identify those who are helping. Large oil companies have also come knocking and are embracing the idea of “category captains” in which a sole person or small team manages nearly all aspects of their car wash program. Truth be told, that’s the word I hear most often these days from operators … “program.”

I also can’t stress the importance of thinking global but acting local. Local distributors are often the real unsung heroes, making it happen on the ground every day. There is comfort in a positive local relationship in which operators can rely on these outfits for service, chemicals, equipment, marketing, advertising and the like. It’s not hard to find these guys. In most markets there seem to be anywhere from one to three top players and depending on your business model, it makes identifying the logical choice that much easier. Chances are, if they have survived this long they are worth their salt and are doing business the “right” way.

It’s difficult for an operator to put a supplier or provider in total control of the operation. I think most healthy partnerships provide an atmosphere that allows for open communication, even the occasional disagreement that morphs into brain storming sessions, which produce new ideas. It requires trust and buy in on both ends, but in the end, great partnerships usually provide the best profits and products. Customers take notice, and in the end, that’s what we’re all really after. Putting out a great product with a profit and driving customer loyalty.

Answer Question 2:

It’s true, starting a relationship with a manufacturer or distributor is a marriage, no doubt about it. However, in this kind of marriage, it’s a bit different and really must be carefully thought out. Successful partnerships take many different forms, but in the end they also have a few things in common no matter what the dynamic.

First things first, do you believe the partner you are looking at is sound financially and will continue to be. We’ve recently seen too many stories of operators who ended up being left at the dance without a partner. Talk about a potentially deadly blow to a business, especially to a hands off operator who heavily relies on a supplier. Don’t be afraid to ask about financials and trust your gut. There are lots of rumors out there, many not true about the financial condition of companies, but do your best to figure this part out.

Second, do your homework with references. Anybody worth partnering with should have a good reputation and local or national references. Researching a partner top to bottom is worth the effort. How long have they been in business, what is their install base, technical capabilities, number and quality of staff are all important. Here again, it’s important to make sure that it’s not smoke and mirrors and you are comfortable with the level of service and support you expect to get.

Third, do you communicate well with the provider?  We all communicate differently and in order to have a successful partnership, quality communication is a must. Not only must we feel comfortable communicating, but we need to understand the personalities involved as well. Too many times we see personality conflicts, which often end these relationships in an unhealthy way. Take the time to interview and really get to know a potential provider before “taking the plunge.”  Understand how they react under pressure, their highs and low’s and the consistency in which they follow up.

Once you get to the point where you feel comfortable that your car wash provider is financially sound, come highly recommended, have positive personality, communication on follow up traits, it’s time to make sure you also have a parachute to get out of the plane should it go down for some reason. You can call it pre-nup or by any other term, but you need to have something in place that gives you piece of mind should something change down the road. This can usually be added in to documentation giving each party some kind of out, with a certain amount of notice and penalties, if applicable.

It’s important that we enter into these partnerships with the best intentions, and like any relationship, work from both sides to a successful end. It’s not a matter of if there are going to be bumps in the road it’s a matter of when, and how they are handled. A successful partnership with your provider will bring value to your own business, which will drive growth, loyalty, profits and overall image. Take as much time as you need to make the right decision. Five to 10 years doesn’t seem like a long time but it can be an eternity with the wrong partner.

Dean Cheramie

Vice President of Sales & Marketing

DCheramie@RYKO.com

Answer Questions 1 & 2

Not all partnerships are the same.

Suppliers that sell to businesses often segment, or characterize, their business customers into two groups—those that want to do it themselves, and those that want it done for them. Nearly all suppliers sell to both kinds of customers, and have different programs for each.

A chemical supplier, for example, will sell many products by the gallon, with the customer placing orders by part numbers, and using common carriers for delivery. But for some customers, the supplier will schedule deliveries, deliver the chemical into the equipment room and into the tanks, make wash quality adjustments, maintain signage, and provide a run out guarantee.

The car wash service company or distributor is available to some customers for an hourly rate and trip charge when called out, and for other customers often provides a regular inspection, and charges a flat per-month or per-wash fee for all normal repairs and maintenance, covering everything except a vehicle strike.

Customers that have it done for them do not necessarily pay a higher price. The benefit to the supplier might be higher volume, the ability to do work or make deliveries when convenient, or the belief that the customer is less likely to bring in a competitor.

For some large customers, the do-it-for-me service goes far beyond a convenience. It will allow them to remove substantial organizational cost and complexity, or to implement important performance standards.

One large convenience store chain, for example, receives one monthly invoice for all service work performed at nearly 400 car wash locations, and then uses another do-it-for-me service to review, approve and pay that invoice. The same customer receives from the supplier a detailed report of downtime by site by day. The partnership agreement is that the supplier will keep all of the sites running, for a fixed price, meet clear and specific downtime objectives, and report that downtime to a third party for validation.

The execution of different services for different customers can be confusing to the salesperson, to the customer and to the employees that deliver the service. A suggestion that “we take care of that for our customers,” can lead to a lot of confusion and disappointment down the road.

Every customer-supplier contract is a partnership, but if additional services are an important part of the relationship, then they should be identified, clearly negotiated and consistently delivered.

The car wash operator should take the time to identify the services that are important and expected, because most services do cost money and may affect pricing. The savings or benefits should be clear, and communicated to the supplier. The supplier does not need to know the dollar value of the services, but does need to know that they are valued. It should be communicated to the supplier that they are being relied on to deliver the service.

The services should be a clear part of the contract negotiation. Ideally these would be listed as part of the purchase agreement. But often it can just be as effective to hold a meeting to discuss clearly how and when these services are going to be delivered, and exchange notes on the agreements made. But it is important to clearly separate these discussions from statements by the supplier about the capabilities they have and services they offer.

These services should be evaluated in a manner similar to the product that is being purchased. Does the supplier deliver these services to other customers in the area?  Who, in the supplier organization, is going to deliver the service?  Does the supplier have a mechanism to continue to deliver the service when employees change or are reassigned?  Are the services delivered automatically, or do they need to be requested when needed.

Finally the services should be consistently delivered. Don’t wait for a complaint from your team or employees. Let them know what is expected of the supplier. Go out and validate immediately that the services are being delivered. Build a mechanism to know immediately if the services are not delivered. Remember, what gets measured gets done.

A solid partnership is based on real value and a real need within the customer organization. The benefit can only be realized if the customer relies on the supplier, and the supplier consistently delivers.