We get a lot of questions from dealers who are changing their product lines. They might be looking for a new niche product but most of the time they switch for other reasons. And their #1 question seems to always be:
Who’s the easiest to do business with?
Over the years, we’ve worked with hundreds of dealers. We find it interesting to track the reasons why dealers switch lines. It’s not a comprehensive study by any stretch of the imagination, but it is very telling. Here’s a summary of the results.
|Too expensive to do business with||48%|
|Too difficult to do business with/Don’t like them||23%|
|Not selling enough / poor price / poor quality||12%|
|Manufacturer went direct/setup dealer in my area||9%|
|Other (market shift, closing location, etc)||8%|
70% of the dealers switched lines for reasons the manufacturer could have avoided. Below is a summary of the common complaints in each area.
Too expensive to do business with, common complaints in this area are:
- Manufacturer makes me do their data entry/I have too much cost in my purchasing department
- The manufacturer‘s credit/refund process is too painful or time consuming
- I get billed incorrectly too many times
- The manufacturer tries to get me to pay for mistakes that THEY make, including ordering and quality issues
- My salespeople make too many pricing mistakes because their pricing is too complex/doesn’t make sense
- Their catalogs have too many errors which cost me money
Too difficult to do business with/don’t like them, common complaints in this area are:
- Manufacturer grew too fast and lost the personal touch.
- You can’t talk to a decision maker anymore
- It takes too much effort to solve simple issues
- Reps are poor quality or simply not available
- Manufacturer is too internally focused
- They give me too much stress/too many headaches
It’s Not Just About Quality & Price
When you sit back and look at what is really happening, it’s easy to see that a dealer predominately drops a manufacturer line because:
- The processes between the dealer & manufacturer create extra costs
- Emotionally the dealer feels neglected in some way
While quality and cost will always remain a factor when a dealer drops a line, it pales in comparison to the many other reasons dealers drop lines.
There’s an important point to drive home here. It’s not the cost & quality of the product which predominantly makes the dealer unhappy over time. Remember, they would not have added the line to begin with if the price/cost wasn’t a fit. In addition to this, the dealer has spent time and money on their showroom to add the new line, as well as a new process (or two) to keep operations running smoothly. Overall, the act of switching a line is a hard emotional hurdle to get over for a dealer.
But if the manufacturer erodes the profitability of the dealership (i.e. ordering mistakes, pricing mistakes, excess rush fees, incorrect billing, etc.) dealers leave for greener pastures.
So if a dealer rarely drops a line because of product or price, isn’t it strange that a manufacturer’s primary focus is their product? Now obviously the product is important – after all it’s what is being sold to the consumer. So it has to deliver on its promise. But the dealer isn’t ultimately buying the manufacturer’s product – the consumer is.
What a Dealer is Really Buying
The dealer is predominantly buying the manufacturer’s ability to:
- Solve issues
- Help the dealer make a profit
- Make the overall experience of doing business with them incredibly easy, enjoyable & rewarding for the dealer – both emotionally and financially.
How Manufacturers Can Distinguish Themselves in the “Sea of Sameness”
I’m sure we’ve all heard dealers at some point say “A cabinet is a cabinet is a cabinet”, right? It’s no exaggeration that many cabinet dealers describe a cabinet as a commodity — a product that every cabinet manufacturer thinks is different but in reality is relatively the same in the dealer’s eyes (except for that silly product code thing). Why? Because each manufacturer’s process is just about as painful as the next, and this “pain” steals the thunder away from any truly unique product attribute. You can have the snazziest looking product of them all, but if you’re not easy to do business with, nobody really cares.
Cabinet manufacturers have long struggled to distinguish themselves in what we refer to as “the sea of sameness”. And they’ll continue to struggle so long as their focus is on product alone. So here are our top 10 things (plus 2 to grow on) a manufacturer can do to dramatically reduce the possibilities of getting dropped next time around:
- Re-engineer your business process (credit, ordering, service, warranty, etc.) for the dealer’s benefit – not yours.
- Work with dealers to streamline & eliminate any excess or unnecessary costs.
- Separate you design solutions from your pricing engine to achieve flexibility and ease in how you price your products.
- Work with dealers to gather business intelligence on what sales promotions work best.
- Invest in ways beyond just product training to help teach dealers to sell more effectively.
- Stop forcing dealers to order “your way”. Instead, build your systems around accepting dealer’s orders “their way”.
- Invest in new tools to help you quickly roll out promotions, products, and new pricing.
- If you make a mistake on your end, do the right thing and eat it for the dealer.
- Focus on equipping dealers with tools, training and best practices to make them more profitable and successful.
- Make your pricing is so simple that a fifth grader could do it.
- Use your relationships and savvy to bring dealers more sales opportunities.
- Remember that sometimes the executive (not the rep) just has to place that call with the dealer to let them know you are on top of the issue and that you truly appreciate their business.
I could go on for another 20 more, but I’ve always believed you should pick one, solve it, and then go to the next one. That’s because as the old saying goes, actions really do speak louder than words – especially in this market.
Think of it this way, if you start today and knock out one a month, by this time next year you’ll be the most sought after cabinet manufacturer on the planet.