Written by David Tebbutt, PC Dealer 01/87 item 01 - scanned
Dealers and suppliers can be partners in profit
Are you frustrated with your hardware supplier? If the answer is 'no' then stick with him and keep quiet about it, otherwise everyone will want to do business with him. And, unless he's very careful, the dilution of his energy will result in a poorer relationship with you.
To take a more typical case - you are unhappy with some or all aspects of your supplier's performance. Perhaps he never returns your calls. Perhaps he doesn't keep delivery promises. Perhaps he competes directly at prices you can't match.
Or maybe he gets you to buy a lot of stuff at a special price then announces a new version of what is now your out-of-date stock. One manufacturer in the US even publicised an end user price reduction, taking the entire cut out of the dealer's margin.
If you had a customer and you didn't return his calls or didn't deliver when you promised to, how do you think he'd feel about doing business with you a second time? Pretty uneasy I would imagine. Yet that's how some manufacturers and distributors carry on.
Over the past few months I have noticed a trend which can best be given the label of 'partnership selling'. The fundamental reasoning goes like this: We can't sell our equipment by ourselves therefore we need a mechanism which will commit itself to our products. We haven't got a particularly big name so we can't rely on fear and insecurity to drive customers into our dealers' arms. What we have got is good products and good people so how can we turn this to our advantage?
The answer? Make our relationship with our distribution channels more of a business partnership than a simple trading relationship. Listen to the needs of the channel and satisfy those needs. All the time, of course, keeping an eye on the bottom line to make sure everyone still makes sensible margins.
Most manufacturers will claim to have jumped on this particular bandwagon. Although they probably wouldn't like it to be called a bandwagon. The acid test for your supplier is how much money and resource he has directed at your support needs. If you get lots of mugs, pens, notepads, brochures and so on, it is very nice but it hardly solves any problems.
The services offered need to go far beyond that. They need to involve people and that's when things start to get expensive. How many technical support staff are available to answer your questions? Your supplier should have enough people on duty at any time to give an adequate answer to your problem in real time - that is, while the information is still useful.
Next in terms of expense comes sales support. Many good VARs are stronger on technical skills than on selling. Some suppliers, recognising this, send their own staff out to help with sales presentations and seminars.
I went to the opening of an Apple Centre recently and there must have been at least half a dozen Apple employees helping out. All these things reinforce the supplier's commitment to you and lead to a much stronger partnership between the two companies.
Of course, there's more. Help with exhibitions, sales training, co-operative advertising, direct mail assistance and so on. Some companies levy a charge on their dealers for some or all of these activities.
Whether charged or not, what you need to do is assess what you get from your supplier against the sorts of things mentioned above. Weigh up what the services cost you, if anything, against your margin and sales volume. Take the irritations into account and ask yourself whether your manufacturer looks truly committed to the third party channel.
Now ask whether your relationship is an adversarial one, whether you're always trying to outsmart each other, or whether it's more like a business partnership, based on trust, openness and the recognition that you can achieve more through harmony than you can through conflict.
Unless we move from the first position to the second in all our dealings, with suppliers and clients alike, then we may never shake off our 'cowboy' image and achieve the results we deserve.
For your part, the nearer the box shifting end of the market you are, the higher the pressure on your margins and the more temptation there is to cut corners and skimp on costly support. This forces you into the adversarial position with your own customers. There's never enough money to allow you to develop the deeper relationships with your clients which lead to profitable further business.
If your customers trust you to do a conscientious job and believe you will still be in business in a few years, then you are guaranteed a more or less continuous future income as they return again and again with their computer-related problems.