Success Stories

Do you know who your best customers are? We're not talking about the ones you like the most. Or even the ones who spend the most money with you. We're talking about the ones who generate the most profit. Can you name them?

Joel Becker can. As CEO of Torrington Supply Co., he can tell you exactly which of his customers are the most profitable - and how he makes sure they stay that way. "It's all right there in the numbers," he explains. "Activant Eclipse gives us all the data we need to run just about any kind of sales report you can imagine."

"We were able to develop a profile of the perfect customer," Becker adds. "Now, once we know which of our customers fit the profile, we can target them with whatever strategies it takes to keep them profitable."

Growing Business - Without Growing Staff

It was 1995 when Torrington Supply made the switch to Activant Eclipse(tm). Over the next seven years, the company saw its gross margins grow by 74 percent and its revenues rise by 67 percent. At the same time, sales per employee increased by 46 percent and gross profit per employee went up 53 percent - while the actual number of employees grew by only 14 percent.

Headquartered in Waterbury, CT, Torrington Supply is the largest Connecticut-based wholesale distributor of residential, commercial, and industrial plumbing, heating and air conditioning equipment, pumps, and industrial piping supplies. Serving contractors, industry, and institutions throughout Connecticut, the company was established in 1917, and today employs over 100 people in seven locations.

Turning Productivity into Profitability

Becker says he owes much of the credit for the company's recent success to the Eclipse RF Warehouse Management Solution. "The most important thing we did was put Eclipse RF in our warehouse," he explains. "The benefits are enormous. Having the technology in place set the stage for making some really big changes, and it got us thinking about productivity as being a key to profitability."

Eclipse RF Warehouse is a fully integrated, real-time solution that uses radio-frequency (RF) technology to automate warehouse operations. The solution makes use of handheld RF data collection devices, which eliminate picking errors and keep inventory variances to less than one percent. That makes for more accurate purchasing, higher order fill rates, and happier customers, all through dramatically improved accuracy in the warehouse.

"The data we get with our RF solution allows us to know what's going on with both our employees and our customers," says Becker. For example, Torrington Supply pays its warehouse employees a picking incentive based on a formula that took into account only the number of lines picked.

"We discovered in some cases that the people earning the incentive week after week were not the most productive, but the ones working the most overtime," he says. "To help us get the incentive to reward picking productivity in addition to volume, Eclipse now tracks the amount of time a picker picks, meaning we track both the gross number of picks and the rate of picking."

To no one's surprise, the change had an immediate effect. "It took about a week for everyone to catch on to the idea that the goal was productivity and not endurance. Now, if I go out to the warehouse and try to strike up a conversation, they say they don't have time to talk to me," Becker recalls.

Finding Profit Leaks

But what about those "perfect customer" profiles? Torrington Supply turned once again to the data. "One of the great things about Eclipse is that there's almost no limit to the number of ways you can slice the data," Becker explains. "The data allowed us to begin tracking areas where we were providing unprofitable services to unprofitable customers - and to make immediate changes in the kinds of services we provided, based on a customer's profitability.

"Our mantra became, 'only provide unprofitable services for profitable customers,'" Becker adds. "This way, we can reward our most profitable customers with things like pricing discounts, return processing, and special delivery arrangements, while continuing to provide standard services to everyone else."

In keeping with that model, the company has developed a systemized way to adjust prices for its most profitable customers without changing prices for unprofitable ones. "Eclipse gives us unbeatable flexibility in terms of pricing," Becker says. "The pricing matrices let us apply product velocity and box-quantity pricing to individual products or groups of products."

Reducing Inside Sales Costs

While Activant Eclipse gives Torrington Supply the data it needs to target their most profitable customers, the solution also provides valuable information on the company's unprofitable customers.

"We realized that the greatest opportunity for improving our bottom line was going to come from turning our unprofitable customers into profitable ones," explains Becker. "So when we realized that we had a number of customers whose inside sales expense was making them unprofitable, we strongly encouraged them to place their own orders by remote or Web order entry."

The result? Becker says that for customers who enter their own orders, the inside sales cost is ten percent of what it once was. And for Torrington Supply, those customers are on their way to joining the ranks of the "perfect customers."

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