Fastenal Investor Day Slide – March 13, 2025
It is unusual for a large B2B publicly traded distributor to share details at the level Fastenal did on their Customer Segmentation metrics recently. In this analysis of Fastenal’s Investor Day presentation, I wanted to focus on the customer segmentation part of the presentation and on the very large end of the distribution demographic landscape, as perhaps no company exemplifies long-term, wholesale change than Fastenal.
This week at ISA25 I have a session I am presenting on customer segmentation and scorecards, so the timing of Fastenal publicly sharing a look at their segmentation was very timely and helpful to review.
The close to 6-hour Fastenal Investor Day presentation that shared a ton of compelling data and information. They have been very open sharing their goals and strategy in the industrial channel, and I think channel leaders can learn much from the Fastenal story.
The 80/20 Rule – Does n0t apply to Fastenal
I am sure you have heard the phrase that 80% of Sales come from 20% of your customers, and that phrase is used often in B2B Distribution. The actual numbers or more like 85ish% of B2B Distributors business coming from 10% of their customer base (Channel Marketing Group Research)
Fastenal shared on Investor Day that 87% of Fastenal Sales from 10% Fastenal customers.
The focus of specific account selling and the openness of Fastenal is unusual and refreshing. Much of what Fastenal has done when you look at on paper makes you think they are struggling.
Closing branches and reducing active customer counts – “We closed 40% of our locations and lost 43% of our account base over the last 17 years” Dan Florness, Fastenal CEO shared.
Those two actions seem counter intuitive to some as Fastenal Sales Volume has more than doubled, GM% decreased, but the company’s profitability has reached record levels. They have focused their business on building relationships and providing value – vending, on-site personnel, inventory management, sales specialists and more
Fastenal has a clear focus on becoming more important to larger customers. Once of my first distributor mentors Carl Otterness used the phrase often that these type of key accounts are “Must Have” customers.
Fastenal’s focus on how to get their “Must Have” customers to spend $5,000 of more a month is driving their impressive growth.
What can you learn from Fastenal’s customer focus as a channel leader?
Do you have a strong Gap Analysis program – What are these targeted customers buying elsewhere that they can buy from me? What product gpas do they have and what services can we bring to them to get the customer to move business to us?
I would surmise that Fastenal likely has date or a process that helps them determine Potential Sales available by Customer. Do you understand your share at the customer level with your key accounts?
Fastenal is investing in Customers that they can gain share – with Onsite service, Vending, Sales Specialists, sales focus, and much more.
It seems simple enough to do, but it is not easy. As I watched the investor day presentations…one thing kept going through my mind. Fastenal is maniacally focused on their end customers and how they can help them grow.
Bonus Additional Fastenal Content from Industrial Supply Trends.
Over the past year, Modern Distribution Management (MDM) published a three-part article series and extensive special report that I wrote on Fastenal about what I called Fastenal’s “Big Pivot”, which referred to the distributor’s decade-long transformation from a company largely reliant on a nationwide network of branch locations — still the business model for many top distributors — to a company driven by embedding inventory and supply chain solutions within customer facilities. They have many other key strategy and tactical moves which we wrote about extensively (the links to the series are below.
You can see the full MDM Fastenal series here: Part 1, Part 2, Part 3 and we did a podcast that dove deep into the big moves Fastenal has made over the past decade to transform their business.
Every distributor is going through or has gone through business transformation over the past decade — and that accelerated after COVID. While much of the industry has focused on scaling their eCommerce solutions, Fastenal has been focused on giving their customers tools to better manage their inventory to become more important and strengthen relationships with their core customers.
Our “Pivot” series viewed Fastenal’s through a detective lens and as a case study, examining what happened over the past decade that led to the company’s strong growth and performance that has made them one of the Distribution Darlings of Wall Street.
MDM Podcast: A Breakdown of Fastenal’s Decade-Long “Big Pivot” – Modern Distribution Management
If you would like to listen to our overview on Fastenal versus reading the series the link to the companion MDM podcast is above.
If you have thoughts or comments on Fastenal to share, please feel free to reach out. There is much to learn as an Industrial Distribution Channel leader from the Fastenal story that may apply to your unique distribution business.
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