By Bridget McCrea
With 2,600 locations spread across the world and one of the best-performing stocks on the Standard & Poor’s 500 index, Winona, Minn.-based Fastenal has achieved stellar success distributing highly commoditized goods to customers who are known for shopping on price. Since 1967, the year founder Bob Kierlen opened the first Fastenal branch with a $30,000 personal investment, the company’s organic growth pattern has left many of its competitors in the dust.
When asked about Fastenal’s top success secrets, Lee Hein, executive vice president of sales, boils his answer down to a single statement: “Our branch managers approach their locations and regions as if they were the company owners.” And he should know—Hein started out as a branch employee with Fastenal 26 years ago. Working his way up the ladder Hein ran that branch, led an entire district, and later served as a regional vice president.
Through it all, Hein says Fastenal’s corporate culture kept him engaged and moving in an upwardly mobile direction. “I don’t mean to sound arrogant, but we’ve really got the culture part down,” says Hein. “That’s our biggest strength.” That culture is very different than the kind typically spawned by Corporate America. The firm has created an aura of ownership around its branch managers, even allowing those managers to make—and learn from—their own mistakes without fear of repercussion.
“It truly is an entrepreneurial environment and we’re very proud of it,” says Hein. “When a manager gets to the store in the morning, puts a key in the lock, and opens the front door, that location belongs to him or her.”
Fastenal has a few others things going for it. High levels of brand awareness and customer loyalty have both played a role in the company’s success. Staying physically close to the customer is another important philosophy that the distributor adheres to.
“We don’t go to the state of Nebraska and open a location in Omaha to service customers in Kearney,” says Hein. “We just go right to Kearney.” Maintaining such close proximity to the users of its wide range of industrial fasteners and supplies allows Fastenal to provide local service, quick response, and customized problem solving.
Those value-added services are critical offerings in a market where Fastenal’s commodity-based products are sold in high volumes and often to the lowest bidder. “We have to bring value to the transaction to the point where customers say, ‘You know what? We love buying from this company!” says Hein.
To electrical distributors who face a myriad challenges in today’s market—not the least of which are those customers seeking rock-bottom prices and delivery yesterday—Hein says the key to success is to determine the firm’s value proposition first and then wrap a solid market strategy around that proposition.
“You have to understand your go-to-market strategy and then charge accordingly for your products and services,” Hein advises. “Ignore this step and you’ll become an auction house that’s never able to expand its profits and gross margins.”
McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at firstname.lastname@example.org or visit her website at www.expertghostwriter.net.Tagged with tED