Progressive Distributor

Partner up

Pssst! It's not too late for distributors and manufacturers to rethink their budgets for cooperative marketing and advertising.

by Cathy Veri

You’re the marketing and advertising director for an industrial distributor. Last year’s sales were down from the previous year, and you’re feeling pressure to come up with programs to boost sales.

Pull out your 2000 marketing/advertising budget and plan. What’s missing? Money, right? There’s not enough to do the things you need to do to increase sales this year.

What else is missing? Look hard. See any “co-marketing” plans or funds with your manufacturers? If the answer is no, you didn’t do your job last year pitching marketing concepts to your manufacturers. As one of their marketing arms, it’s up to you to sell them on ideas you think will help sell their products. One of those ideas is cooperative marketing and advertising.

This article offers guidelines that distributors can use to develop cooperative marketing programs with manufacturers. It also includes a brief case history explaining how one distributor shared the cost to develop a targeted direct mail campaign with a manufacturer, with impressive results.

First, you need a plan
Co-marketing and advertising means donating your time, ideas, knowledge and pocketbook to make sales happen through a joint marketing or advertising campaign. It means becoming a marketing partner with your vendors and asking your vendors to do the same. It also means more than simply invoicing your manufacturers for space in a catalog (co-op advertising) or charging them to sponsor a golf hole at your annual customer event.

While those efforts are nice and sometimes yield sales, pooling your time, people, ideas and money can be much more powerful and rewarding (and a much better bet for a return on your money). Co-marketing and advertising programs are more than one-time events; rather, they should be planned for one- and two-year time periods, with a commitment for time and money attached.

Most manufacturers pay close attention to three of the “four p’s” of marketing: product, place and price. Manufacturers spend time in meetings discussing product features, new products, competitor products, pricing strategies, local and regional sales infrastructures, etc. The fourth “p” — promotion — usually doesn’t get the attention it deserves. Shrinking marketing budgets; a limited number of usable, measurable marketing tools; and pressures on gross margins are blamed. Manufacturers assume their distributors will take care of this “p.”

They’re partly right. Today’s industrial distributor is a much-needed marketing arm for manufacturers. But distributors need help from manufacturers to promote products. They need more than the usual co-op funds, a concept dreamed up long ago that is often under-used or used poorly.

Direct mail can be a powerful co-marketing tool for distributors and manufacturers. It’s especially powerful for distributors that maintain a contact name and address database of customer and prospect accounts (even better if the distributor captures information such as contact title, department, brand preferences, etc.).

Working together, distributors and manufacturers can work wonders to increase the likelihood of creating successful selling campaigns.

Case study: Selling more
band saw blades
You’re a distributor. Customer buys X from you. He should buy Y from you, too, but doesn’t. The manufacturer of Y wants to know why. Now what?

Partner on a co-marketing program. That’s what one manufacturer and distributor did in the following case study.

In the spring of 1999, a well-known distributor of metalworking and industrial supplies noticed that many customers bought band saw machines from them, but not the blades. Its blade sales grew slightly every year, but didn’t reflect the potential of the distributor’s customer base.

The distributor carries three lines of band saw blades: one private label and two brand names. One of the saw blade lines, a well-respected brand, was added to the distributor’s offering in early 1999. Let’s call this new brand Vendor A.

The distributor pitched a co-marketing campaign to Vendor A targeting customers who bought a band saw during the past six to 12 months, but did not buy blades. The campaign would offer a free blade from Vendor A, custom-cut to the length specified by the customer. When the blade was shipped to the customer, it included an offer for a 20 percent discount on the customer’s next saw blade order within a specified time.

The distributor mailed a direct mail piece, made to look like a band saw blade, to nearly 2,000 customers. In order to receive the free blade, customers had to fill out an information card and fax or mail it back to Vendor A. Questions included information about the customer’s need for blades, the number of band saws, blade specification and the size of the shop. The card also asked if the customer would like Vendor A’s technical representative to contact them.

Vendor A shipped the blades direct to the customer and sent the card to the distributor’s sales department for a follow-up call. Both companies captured the information from the cards in their respective customer databases.

Within 30 days of the mailing, nearly 20 percent of the customers requested the free blade. Nearly 50 percent of the customers who received the promotional piece also took advantage of the 20 percent discount included in the follow-up mailing.

Vendor A’s contribution included the cost to manufacture the blade and the shipping charges; the cost to print the direct-mail piece (75 cents each); a customized box for the blade; and a special pricing arrangement for the distributor’s follow-up offer.

The distributor paid for the in-house design of the direct-mail piece; postage (about 39 cents each); and for printing of the simple follow-up offer that accompanied the blade.

This case study demonstrates how a distributor and manufacturer both benefited from a joint cooperative marketing program that neither could have accomplished without the other.

Did the manufacturer give more? Sure. Was the program targeted? Yes. Will the distributor and manufacturer benefit from the program this year and in the future? Definitely. Could either have done this alone? Not likely.

You, too, can rethink your marketing and advertising plans to make room in your budget for co-marketing and advertising. Partner together and create this new “p” for your business: Power.

Where to begin
Distributors should partner with manufacturers that can make the biggest impact on their sales and bottom line. Pitch the concept using written proposals and presentations. Convince them that you are a capable marketer. If you don’t have the expertise in-house, farm it out. Invite the manufacturer’s sales and marketing management, even the director or president, to a meeting to brainstorm ideas and talk budgets.

It’s important to have marketing, sales and product management people involved in the idea process, development and rollout of your marketing program. It’s important also not to try everything under the sun. You don’t have many chances, so go with best practices and time-tested formats.

Here are ideas to get you started.

• Develop a direct-mail or telemarketing program to promote and sell a specific product or product line to a target customer list within the distributor’s customer base.

Perhaps target customers who buy a competing brand from the distributor (a “steal market share” campaign), or whose purchases of your product line are decreasing (a “win back” campaign). The distributor and manufacturer should work together on the message and design of the program. Perhaps it’s a direct-mail letter, followed by a phone call. Together, decide on the program frequency (three times per year) and devise a way to share the costs.

• For distributors with a customer contact name database, direct mail can be a powerful way to subsidize the efforts of the field sales team.

For example, you might send a direct-mail piece promoting a product’s features and benefits, followed by an in-person visit or phone call from the salesperson. Or, send a piece to those customer accounts not serviced by a field salesperson but with potential to buy the product. It’s cheaper and faster to use direct mail to get the word out to a customer base you can’t easily or economically cover on foot. Use direct mail for a target list of 200 or 2,000. And don’t think large companies like Hewlett-Packard and General Motors don’t buy from direct mail; their plants do.

• For distributors using direct mail as their primary sales channel, invite the manufacturer to start a direct mail program with you.

Instead of asking for co-op money for X number of pages every three months, ask the manufacturer to “co-op” the whole mailer, or a business letter, sent a few times during the year. The distributor could provide the design and writing of the piece, and perhaps share the cost of printing and postage. The manufacturer would extend a special discount on some or all of the products during the promotion.

Distributor do’s:
Design a 12-month or 24-month co-marketing and advertising program with your top manufacturers.

Do your homework on the type of customers in your database to target with your manufacturers.

Pitch your ideas to manufacturers in a formal setting: invite the sales and marketing executives — even the president or owner — to a presentation using PowerPoint or overheads, with handouts. Explain what you can bring to the table, and what you’d like the manufacturer to do. Invite brainstorming.

Give the manufacturer adequate time to digest your proposal and respond. Don’t pitch an idea for a program that you want to start in two weeks.

Don’t give up if the first answer is no. Put on your sales and marketing hat and learn how to sell to your manufacturer.

The secret is not to make the program a one-time event. Put together a formal proposal and ask the manufacturer to develop a promotion calendar and budget with you for the year. Target your top manufacturers for “premier marketing programs” or whatever you choose to call them.

• Manufacturers want to know when a new customer buys a product, or if that customer already buys it frequently.

Team up with these manufacturers to start “new customer” or “frequent buyer” programs, offering frequent communication, product information and promotional discounts on these products, using mail, phone, fax, Web site, in-person promotions, etc. If discounting is not an option because of the manufacturer’s suggested retail price guidelines, the frequency of contact will contribute to “top of mind” for the customer. Such programs foster product loyalty and retention, not just customer satisfaction.

• Think outside the box: how about a billboard?

Who hasn’t seen Grainger’s billboards lately? Depending on the city and highway, billboards can be as low as $800 to $1,000 per month for a decent location. Put your billboard across the street from the local competition. Or, put it next to a popular billboard or building. When you share the cost with a manufacturer, it doesn’t seem like very much money for the exposure.

Cathy Veri of Marketecture can be reached at cathyveri@hotmail.com.