Supplier support can make or break a job, especially when an emergency arises. The efficiencies a wholesaler provides directly impact the bottom line and even your reputation as a contractor.
Developing a successful relationship with your distributor shouldn’t fall to the bottom of the todo list.
These seven contractor tips will help build a partnership that will benefit your business.
1. Minimize fire drills
Remember Aesop’s fable, “The boy who cried wolf”?
As a joke, the young shepherd claimed a wolf was eating his sheep. After sounding the false alarm one too many times the villagers ignored his plea for help. When the wolf actually appeared, no one responded to his call for help.
“Even though it might be an emergency, try not to expect same- or next-day service all the time,” Tom Dudich says. He is the service manager at Chapel Valley Landscape Company based in Woodbine, Maryland. “There are times I need to cash in a favor but don’t do it often.”
Suppliers, like the villagers in the fable, are juggling a lot of priorities. The reality is they service hundreds of customers and interface with manufacturers to have the stock you need. There will be times when you need to call in a favor to fix a problem for a customer. But you can’t make everything a rush request.
2. Meet in person
Even as COVID has proven it’s possible to conduct sales transactions virtually, face-to-face meetings still cultivate long-lasting, mutually beneficial relationships.
“You have to show your face more than once a year,” says Scott Todd. The Rochester, New Yorkbased contractor operates Innovative Irrigation Solutions. “Some guys place one big order at the beginning of the year but you need to stop in a few times throughout the year.”
Stopping by the distributor periodically gives them a chance to make a personal connection. They may know you by name, phone number or email, but meeting in person supports the development of trusting relationships. Showing up also sends a clear message that the relationship matters to your business.
3. Create a value exchange
As a contractor, you want the best price, the materials and support to get any job done. Distributors benefit from the revenue of each sale, but meaningful relationships are deeper than dollars and cents.
Another way to encourage stronger connections is by creating a value exchange. That may look like encouraging peers to bring their business to your store of choice. That also means making the most of additional benefits like design services.
“They’ll often do the design for free if you buy the product from them, so taking advantage of that benefit adds value to their visibility in the industry too,” Todd says.
4. Stay in touch
Suppliers order inventory and hire staff based on their customer volume. Those decisions are made on historical purchases but also through ongoing conversations while being open, honest and in frequent communication. Candid conversations help them better plan for materials and services for you and their other customers.
“I work with our distributor on a daily basis,” Dudich says. He has five technician teams on the road each day and maximizes their time on the job site by making sure they have the materials needed. “I’ll text, call or email orders and schedule deliveries. All that helps develop trust.”
Technology makes it easier than ever to communicate needs but can quickly get out of hand without a process, leading to misunderstandings, headaches and frustrations. Establish a communication plan with your sales rep so that it supports an effective business partnership, one with fewer shortages, more on-time deliveries, fewer rush shipping costs and best of all, fewer problems for you.
5. Negotiate fair pricing and terms
Every penny matters to the bottom line. You have employees to pay and overhead to cover; distributors also have to generate revenue to stay in business. Understanding how suppliers set price points is key to negotiating fair prices and terms that benefit both parties.
The best pricing is a bit difficult to negotiate, especially given the high level of support that Robert Kerns, CID, CIC, CLIA, looks for. As the president of Custom Turf Inc., Finleyville, Pennsylvania, he recognizes that no business can have all three legs of the stool: best quality, best service and best price. He relies on purchase volume and leaning on distributors accordingly and negotiates mutually beneficial pricing.
“We do purchase some ‘safer items’ online and enjoy the cost savings,” says Kerns. “We do not, however, overlook the necessity for strong distributor support. In the long run, these relationships have made us a more efficient operation.”
In wholesale price negotiations, the volume speaks. The more you buy the increased opportunity for leveraging steeper discounts and more generous payable policies. Pricing matters but added perks like cash discounts and special account terms arguably provide greater opportunities to developing a win-win relationship between contractors and suppliers.
“We have a very strict accounts payable policy of paying on time or even ahead, taking advantage of payment discounts offered,” he adds. “With this policy, we command the best terms.”
Smaller contractors do not have the buying power to leverage steep product discounts on their own.
Teaming up with a like-minded business owner to jointly plan and order stocking inventory can give both a leg up in achieving a sales volume that qualifies for a discount.
6. Establish expectations
No one is a mind reader and every person brings a different approach to the business table. It’s easy to take for granted or assume everyone is on the same page. Without establishing a clear set of expectations from the start, it means things can quickly go awry.
Be honest with suppliers about the size of your business and discuss how frequently you need materials, what matters most to you in a business relationship and the support you need to do the work, says Dudich. Over- or under-selling the size of your business to a sales representative can erode relationships.
Talk with distributors about what is most important to you and your business model. In the Maryland/metro D.C. area, Dudich has two main concerns, and the price isn’t one of them. Location and inventory levels are the two most important wholesaler attributes. Even if a sprinkler head is 5 cents more at one supplier than another, he will opt for the closest store to save as little as 15 minutes of drive time to pick up parts. He works with multiple distributors in the area, and he is candid when they ask about purchases.
“Pricing tends to work itself out. One might charge a few cents more for a head and a few cents less for a valve, so it offsets it,” he says. “You’ll find out quickly if the price is lopsided.”
In some markets, price might be a moot point. In Todd’s area there is only one irrigation distributor with a storefront. With only one gig in town it’s tough to negotiate on pricing alone. It’s either buy it there or pay exorbitant shipping fees from out-of-town suppliers.
“I’ve been there so long I just go with the flow and trust they are treating me fairly,” Todd says. “I’ve done some comparative shopping and they are within reason in the past, so I trust them.”
7. Ask for product help
Distributors have incentives for stocking and promoting specific items. Many products are well-engineered and time-tested.
However, redesigns and new releases are common as the industry strives to improve efficiencies. Even the most reputable brands can experience hiccups with production that lead to failure in the field.
“Distributors will of course offer up the lines they carry and support. We tend to have better relationships with distributors who are stubborn enough to only support the best industry products,” Kerns says. “We lost a distributor relationship when they wouldn’t go to bat for us with a manufacturer issue. And it was an issue the industry was well aware of.”
Todd considers input from his suppliers but experiments with new products on his lawn before installing them on the job. It’s not a lack of trust, but as an industry veteran with more than three decades of experience, he has more technical experience than any of the distributor staff.
“I do my own research before I pursue anything or buy something I’m not familiar with. It’s too expensive if it doesn’t work,” Todd says.
Neither contractors nor distributors would be in business without one another, and their interconnectedness is essential for survival. Contractors look to their suppliers to give them a heads up on trends, cycles and when a good deal is being promoted to help them maximize their investment. Professionalism is contagious and respect grows from it.
“Act the part and a good distributor will follow. So will customers, employees and anyone we associate with in our lives,” Kerns says.
It boils down to integrity, honesty, reputation and professionalism on both sides of the counter, he says. Both parties understand and appreciate the mutual benefit of working together. Both entities are in business to earn a living and so what truly makes a great relationship goes well beyond pricing.
“Working in the industry, we all have an understanding of the regional distributors and their reputations,” Kerns says. “We enter these relationships carefully knowing they need to be a reflection of the way we conduct business and our reputation. We nurture these relationships to be long term with mutual respect and loyalty.”
The author is a freelance writer in Mechanicville, New York, and can be reached at email@example.com.