Atlanta Distributor Finds Way To Succeed
In Changing Market

Is this “new way” of doing business really that new?

By B. J. Benton

The petroleum equipment market in Atlanta, Georgia, has undergone a marked change in recent years. Exxon pulled out. Shell finished divesting its stores in 2006, and BP currently has all of its locations for sale. Many jobbers who had built stores sold them. C-store chains, including 7-11 (Southland), Stop N Go (NCS) and Magic Market (formerly Munford) have either sold off or shut down many of their locations. The result is that the Atlanta region has had a large inventory of stores for sale. Whatever the reason for all the divestiture, the stores have become attractive purchases for many Asian American buyers, many of whom are looking to buy a single store.

The official term “Asian American” refers to individuals who have immigrated to the United States from the Far East, Southeast Asia, the Pacific Islands and the Indian subcontinent. Another term used to describe these U.S. citizens is “New Americans.”

According to the last census, Asian Americans make up about three percent of the population of metro Atlanta. This number, however, is not an accurate reflection, according to the Georgia Asian Times, whose editor says the percentage does not include a large number of immigrants who were not counted in the census. At a recent meeting in Atlanta conducted by the company contracted to sell off BP's stations, 400 Asian Americans were in attendance. The Atlanta Retailers Association (ARA) has 900 Asian-American members who own and operate local gas stations and c-stores. Statewide, more than 60 percent of c-stores that also contain gas pumps are one-store operations.

Market Change Requires New Way of Selling
United Pump and Controls has been selling, servicing and installing equipment in the Atlanta region since 1984 to a customer base made up primarily of major oil companies, jobbers and c-store chains. The changing ownership of Atlanta stores brought with it a new way—to us—of doing business. And judging by the comments of many PEI members, to others too.

These new, independent business owners, mostly Asian Americans, come from a culture where bartering is the norm. They are skilled negotiators, who continue to negotiate the sale even after we think the deal is done. They are operating with a tight budget, most of which is provided by a Small Business loan. They don't want any surprises. The owner does not know me, he's never done business with my company, and I don't know him. There is a huge trust gap on both sides.

Using the traditional model, a new customer filled out a credit application, their credit references were checked, an account was opened, and we started doing business with 30-day terms. Well, now this new station owner doesn't want to give me any credit history, because he doesn't have any. He just purchased the station, and the only credit references he can offer are his fuel supplier and his grocery supplier. I know that he is going to pay them, as they provide his core business.

The Bottom Line
Demographics show that the New American station owner is quickly becoming the largest percentage of the market in Atlanta. As I listened to colleagues across the industry express frustration about doing business with this entrepreneur, I kept thinking that there had to be a way to overcome the challenges and to learn how to do business together. As I saw my market changing—and shrinking—I kept trying to find a way to reinvent my business and sustain what I've worked hard to build all these years. I wanted to find a profitable way to do business in this new market—independent Asian American owners of single-store locations.

I went back to the basics. I wanted to build the relationships with customers that made us successful in the past. I learned more about the customer's needs and how to be an asset to his business. I helped him avoid mistakes. Customers started to appreciate this approach because no one else was taking it. Everyone else was asking them, “How am I going to get paid?” instead of “How can I help you put in the best system for your needs?”

While this approach was garnering trust with my new customers, it still came down to price. When handed a quote, the customer still flipped to the very last page to see what the bottom line was.

Manu Patel (r) and Parul Patel make the selling of dispensers a priority for United Pump and Controls.

One day, the solution to the challenge of penetrating Atlanta's redesigned petroleum equipment market came in the form of a phone call from a gentleman who was working for one of my customers. Manu Patel came to America from India to study electrical engineering and computer science. After graduating, Manu worked in Silicon Valley but returned to India after the dot-com crash a few years ago. He recently returned to the United States where he found his skills out of date with newer technology. When he called, he was helping with back office accounting and POS systems at his friend's c-store in Atlanta.

We talked several times, and at the urging of my 10-Group, I hired Manu as an outside salesperson. While I had to spend a large amount of time teaching him about our product line and how the equipment worked together, Manu proved to be an eager learner. There was a long list of potential customers I wanted to do business with, and I knew they would be comfortable with Manu. He could help my company overcome the cross-cultural gap and build relationships with new customers. Manu agreed to the challenge.

The Word Goes Out
Manu and I began to call on customers in October 2006. The first thing we did was connect with the Atlanta Retailers Association (ARA). We wanted people to know that Manu Patel was now working for United. For $250, we created and printed a flyer. We paid ARA $350 to insert it into their monthly newsletter. A vendor's co-op dollars defrayed our expenses. The day the newsletter hit the streets, we were flooded with phone calls and so many leads we could not keep up with them. So we hired Manu's wife, Parul, who had just moved to the United States to be with her husband. We taught her how to do our quotes, and we quickly found out that negotiating is one of her top skills. From Parul's background in electronics, she knows how to develop procedures and organize systems, skills put to good use in the now-growing sales department.

Manu and Parul work together as a team. Manu goes out and looks at the site, meets with the owners, takes measurements and photographs, and determines exactly what the customer is looking for. He brings this information back to the office and Parul takes over. She uploads pictures, does the sketches, creates the drawings and sends this information to the bidding contractors.

The volume of quoting we do has always been a good indicator of our sales volume. The volume of quotes we did from January through July 2007 is 51 percent higher than those same months during the previous year. In fact, the dollar volume through July 2007 is more than what we did in all of 2006! I expect a double-digit increase in sales by the end of 2007.

How did we do it? We are getting more opportunities to quote because the Asian American market knows that Manu and Parul are at United working to develop trusting relationships with new customers. The word is out and the phone has not stopped ringing!

It's Never in the Bag
This higher number of quoting opportunities does not translate into a higher profit margin on a job. We still have to be competitive. But there is better communication and more trust with potential customers. We get excellent feedback on how we look and where we need to be to win the job. At that point, it's ours to lose.

There are some challenges to this new way of doing business. Additional negotiating has created a longer sales cycle. Negotiations can go five or six rounds. Often when the contract is ready to be signed, the customer has something else to negotiate and, in some cases, even after we've signed a contract and deposited the check, there is more negotiation.

It's important to anticipate that the negotiation will take longer than you might be used to. We learned to take small steps and not to give away as much each time we came to the table.

Written contracts go into detail about how we expect to be paid: a deposit at the signing of the contract and before any equipment is ordered, progress payments at pre-determined milestones in the project, i.e., when the tanks are buried and backfilled to grade, the dispensers shipped, the concrete's poured, the canopy is erected, and then the final balance prior to start up.

It used to take newly hired salespeople 12 to 18 months to develop good relationships, the kind where customers know their names when they walk in the door. It took Manu only six months, and the intense training that started last October began to pay off in March.

As business owners, we all know that we can never stand still. Markets change, and our businesses must evolve. What has not changed in our business is the importance of developing a relationship with our customers, one where both sides trust each other and help each other achieve their mutual goals. Developing those relationships sometimes requires an old way of looking at a new challenge. It's worth the risk.

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The PEI Journal • Fourth Quarter 2007 • Volume 1, No. 4 • Contents are Copyright © Data Key Communications, Inc.
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