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The consumer market is forever changing in our economy today. In order to keep up with these changes companies are forced to implement new ways of reaching and dealing with potential, and existing, customers. Many companies have changed with the times and transitioned smoothly and effectively to present-day markets from their old ways. There have also been many companies that have suffered greatly due to poor management or poor implementation of the project. Often times the project itself was just ineffective as a whole and would have failed no matter how the process was managed. One company that failed to implement a new process of customer relations was Snap-on Inc. In 1997 Snap-on tried to keep up with the ever-changing ways of the consumer. In turn they suffered greatly due to the poor project itself as well as implementation of it. While the overall project was not a terrible idea there were many other routes that could have been taken. Along with other routes being taken there were many variables that could have made the unsuccessful project very successful instead. Snap-On Inc is a leading U.S. designer, manufacturer and marketer of high-end tools and equipment to professional tool users. It was founded in 1920 by Joseph Johnson and William Seidemann and was originally branded the “Snap-On Wrench Company.” It was founded in Kenosha, Wisconsin and currently employs about 11,500 people worldwide. It is presently worth just over $2.4 billion. Snap-on is a very solid company financially and in recent years Snap-On’s stock has soared to new highs. The company, however, has not always been on the up and up. They suffered greatly due to a project that they thought would launch the company to new levels. They expected huge gains due to the new project but instead almost put themselves out of business (Yahoo, Summary) Before the internet era Snap-On was extremely successful from face-to-face selling. Many licensed franchisees drove large trucks into customers’ shops on a weekly basis. This method proved to be very successful to Snap-On. During the internet years Snap-On Inc decided it wanted to shift with the changing times and implement an online customer interface. They converted to a new online order system instead of the previous methods of selling. They predicted that being available to customers 24 hours a day, and on weekends as well, would increase sales drastically. They foresaw an increase of about $1 - $2 billion in revenues. Due to the fact that the industry is a very hands on industry this method turned out to be extremely unsuccessful. Many shops are simply not open other than regular business hours. This meant that there was little need for 24 hour ordering. Due to the low demand for this, the company was not seeing increased gains from the extended hours, making the investment obsolete (“The Best and Worst…”). Snap-On did not necessarily have a bad idea; they just did not completely understand the nature of their customer base. Looking back on the project it is easy to say what was wrong with the project. In the midst of things however the company needed to be able to see how their consumers behaved and what was important to them. It was not important to be accessible for parts 24 hours a day. Many shops do not operate more than the traditional business hours. If Snap-On had seen this from the beginning they would have known that there are other reasons that the customers stay loyal. The main reason was the fact that Snap-On was reliable and the franchisees created a relationship with their customer. This relationship was created through the face-to-face sales method previously in place. Following the implementation of the new order method Snap-On had many extremely negative results. The main result on the company was strictly financial. The project cost for the company was just around $54 Million. If the project led to the increased revenue that they had predicted than it would have been well worth the investment. Snap-On’s sales did not increase, however. Instead, the project cost the company over $50 million in lost sales in the first half of 1998. This was detrimental to Snap-On’s success and the stock prices plummeted as the company hemorrhaged money, and the opportunity costs that they were giving up due to the project being a fail. The company’s profits sank drastically as well. The profits went down an astounding 22% for the year. On top of this the operating costs reached an all time high and there were many expenses they acquired due to the new system being put in place. Due to extra freight costs as well as the need for temporary workers the operating costs increased over 40% There were also many negative results that were not directly related, yet affected, the financials of the company. The storefronts became extremely unorganized. This would in turn lead to frustration from the customer. Orders were delayed, inventory was miscounted and the franchisees had a very hard time using the new software implemented. Customers became frustrated and turned to competing brands, even though the product was not as good as Snap-On’s products. This showed that they valued reliability and also the ease of buying a product. Many licensed franchisees turned to competitors as well due to frustration of the new order process (“The Best and Worst…”). Snap-On Inc learned a lot about their customer base as a whole and why the project to convert the order system was such a failure. The early days of the company focused largely on the relationship with the customer due to face-to-face sales. Due to the shift in the consumers Snap-On felt that it was a company that would benefit greatly from internet revolution. This proved just the opposite and they in turn suffered greatly from this assumption. They learned that their customers valued the face-to-face customer relationship and also how important reliability was to the customer. The 24-hour interface was much less efficient than the traditional method. If orders were delayed then it did not matter what time the customer was able to order them. It seemed that the face-to-face method was the key to Snap-On’s early success and could weather the consumer trends to continue to be a successful method of selling. There are many things that the company could have done differently throughout this shift to prevent failure and make the project a success. (Forbes, “It’s a Snap). If the project had not failed the company would have been on the rise to one of the most successful tool companies not just in the domestic U.S., but worldwide as well. Snap-on expected to see revenue soar to all-time highs. They predicted that the new order process would boost sales revenue about $1 - $2 billion annually. These gains would make the company a powerhouse in the industry and one of the sector’s leaders. On top of this gain man-hours were cut back as well. This would lead to a reduction in labor costs. Snap-On estimated it could save 12 hours of paperwork each week with the new system at each storefront. This would add up to some serious savings in payroll expenses. This fact, coupled with the increase in revenue, would lead to extreme success for the company as a whole. There are many solutions that the company could have turned to in order to reverse the damages or implemented prior to the negative results. (Forbes, “It’s a Snap”)
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If Snap-On had better management skills in place then they would have been able to overcome the hardships put in place by the new order system. One possible solution for the problems they had was simple training. The franchisees became extremely frustrated due to the fact that they were unable to effectively operate the system. If Snap-On paid more attention to training of their franchisees and employees the process could have been a more fluent and enjoyable one for all involved. If the process was more understood by the franchisees the delayed orders and inventory mishaps would not have been an issue. This would have caused customers to be happy with the company as a whole and not forced the customers, or franchisees to turn to competitors. Another option that the company could have done was make a subtle shift to this process, or made it optional. Due to the company’s previous success coming from face-to-face sales the company should have used discretion and realized when it would be more beneficial to use the traditional method compared to the new process of ordering. The method in which companies reach their consumers has changed vastly throughout the years. Especially in the recent times with the switch to an internet community companies have leaned more towards online interfaces rather than the traditional storefronts. Snap-On Inc is one company that made this switch. Their switch to this proved to be a very bad decision and showed that there are certain instances when the traditional method of selling proved to be much more effective that new methods. The switch to this online interface cost Snap-On millions of dollars along with many lost customers as well. It was a perfect example where a company should have used discretion in order to make a decision effective to their customers, not just what the rest of the economy was doing. It shows that every industry is different and companies must know their customers and what is important to them. For Snap-On Inc the customers heavily favored reliability and quickness of delivery over being able to order 24 hours a day. Snap-On learned a valuable lesson during this period and has since bounced back to resume power as a leader in the tool and die industry.

Work Cited

Copple, Brandon. "It's a Snap." Forbes. Forbes Magazine, 17 July 2000. Web. 12 Oct. 2012. .

"SNA: Summary for Snap-On Incorporated Common Sto- Yahoo! Finance." Yahoo! Finance. N.p., 12 Oct. 2012. Web. 14 Oct. 2012. .

"The Best and the Worst." Computerworld. N.p., 30 Sept. 2002. Web. 12 Oct. 2012. .