The Ideal Partner Can Help Your Business Live Happily Ever After
Starry-eyed, teenage girls aside, there’s much more to marriage than just romance. When you boil it down, it’s really about forging a union between two parties who agree to share their experiences and assets in the pursuit of building a mutually beneficial life together. And if you think that sounds suspiciously similar to a business partnership, you’re right! One such partnership is a dealer program.
These programs are available from an array of product and service providers. The reality is that, to avoid the difficulty of standing alone against all competitors and the pressures of the marketplace, a dealer seeking synergy and support must examine the potential offered by dealer support services from one or more suppliers.
A marriage between a dealer and a supplier may be “made in heaven” at first, but can just as often be subject to changing interests as time goes by. The way to protect oneself is to perform a very serious evaluation of likes and dislikes, needs and wants, conditions and exclusions, expectations and measurements, as well as the quality that is sought from such a total commitment.
Dealers Help Suppliers Meet Key Objectives
At the supply end of the equation, there are manufacturers, distributors, and service vendors that are trying to bring their products and services to the attention of an increasing population of potential buyers.
They want to extend or expand their brand awareness “footprint.” They want to manage their prices and production by serving a wider population of users. They want to manage their costs by moving their products and services through a supply channel with unlimited sales potential where their product meets the consumer.
Dealers are an ideal means of achieving those objectives, if they just follow the plans and requirements of the provider. What rules? Brand labels and identities have significant value, which cannot stand if the dealer decides to modify them.
Most programs have at least a minimum level of production to retain participation. There may be requirements for training, providing on-site warranty repairs, a required investment in advertising or marketing materials, or a number of other qualifications to secure and retain representation.
Parties Must Weigh What the Relationship Brings Them
As you might expect, dealer support services come in different flavors that require the dealer to ask questions and seek independent verification to determine what service offers the greatest value.
The first task is to determine what benefits the dealer expects to reap from the program. Since there are multiple elements, it is essential that the dealer prioritize those elements and discard ones that are nice but unessential. Then, the spectrum of offerings must be evaluated to determine the best fit for the dealer’s specific needs.
The dealer and the supplier both need to consider the merits of the affiliation before any actual contracts are signed. The basis of an effective “prenuptial” is full and open disclosure, with clear understanding of objectives for striking the agreement.
Tech Support Tools Include Internet, CD-ROMs
Technical support usually is based on specific or proprietary product lines that the participating dealer can access. Depending on the complexity of the product or service, the support may include training at the provider’s facility, regional training sessions, or on-site at the dealer premises.
The more complicated and unique the product, the greater the requirement for technical training. Additional support may be available through dedicated telephone access, the Internet, training and instructional manuals or CD-ROMs, and traveling technical resource personnel.
10 Marketing Features That May Be Offered
Sales and marketing support is probably the most critical area for the success of an affiliation. The following are 10 elements to consider: 1. Field Sales or Marketing Representatives; 2. Sales Training; 3. Advertising Materials; 4. Builder Relationship Programs;5. Identification Materials;6. Web Site/Web Page Links;7. Employee Uniforms;8. Advertising Support;9. Lead Generation Programs; 10. Local Trade and Home Show Presence;
Lessening Administrative Burden Is a Possibility
Administrative services and support may also be offered in a dealer program. Where there are long-term financial relations to be administered between the end user and the provider, or where there must be clear definitions of the services being offered, it is always prudent to use a contract that spells it all out.
The provider’s contract is the underlying statement of both customer and dealer expectations. The provider may also offer a selection of additional services, such as access to various insurance programs, billing services to the end customer, and collective purchasing of products other than directly from the provider. The provider may also offer elementary business planning assistance or conduct business planning and management training seminars.
Relationship May Foster Networking Opportunities
One of the greatest—but most intangible—mechanisms to develop a dealer organization is through networking. Dealers should be supportive of each other in representing the product or service, even if they may be competitive in a geographic sense.
These councils are an opportunity for open discussions on the product, service and customer that is virtually priceless in exposing flaws and correcting them before business suffers. It enables the growth of team spirit and equality of commitment that ultimately enhances sales results and builds loyalty between the participants. For a program to be a win-win situation, both sides must be willing to openly participate.
Some Providers Offer Leases and/or Loans
Financial services fall into four general categories: leases; loans; conditional loans; and purchases.
Leases—In the simplest cases, a dealer with periodic excess capital may finance his or her own leases to customers. There are several sources of commercial or industrial lease financing available. Some providers also extend their leasing arrangements to larger residential systems.
Loans—These are available in several forms. The dealer may pledge assets, such as the recurring revenue from a number of contracts, to act as collateral on a loan for business expansion. Or, the dealer may secure shorter-term loans from either the distributor or manufacturer to purchase equipment or components that will be repaid in 30-, 60-, 90- or 120-day time frames.
Conditional Loans—These are based on a pledge of the recurring revenue from a number of accounts for a predetermined period of, perhaps, 36 months, after which time the dealer recovers the account. This strategy can be applied to both existing and recently sold accounts as a means of recovering working capital without giving up the long-term recurring revenue entirely.
Purchase Agreements—These contracts are based on either an agreed multiple of the recurring revenue agreement, such as 30, 32, or 36 months, or a fixed value for the contract and an additional value for the installation. The customer typically signs the contract of the purchasing entity with the dealer acting as an agent.
Be Careful When Signing on the Dotted Line
No program can effectively be managed unless there are means to measure and quantify the result of the efforts. Sales results are a necessity, regardless of the product or service offered. Market demographics also act as a management tool to determine the results of advertising expenses or promotional programs.
If the provider spent considerable resources in time and recruitment dollars to identify the dealer, there is an expectation of results. Where uniforms have been purchased, calling cards printed, decals instal
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