Distributor Relationships Are Crucial

February 17, 2005
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Some of the most important relationships contractors can have are with their distributors. Good distributors can help contractors grow their businesses, look good for their customers, and become more financially successful. Poor distributors can do just the opposite by creating numerous obstacles that the contractor has to negotiate in order to successfully meet installation promises.

Both sides often grumble about the other: Contractors complain about high prices and late deliveries, while distributors moan about contractors who want the lowest price but don't pay their bills on time. It's often a love-hate relationship, but like a good marriage, a successful contractor-distributor relationship is built over time and needs constant work and attention so that both parties are happy.

Contractor-distributor relationships can be critical to both entities’ success. (Photo by Patrick Costa.)

Focus On Core Issues

There's no getting around the fact that contractors need distributors and distributors need contractors: Each needs the other in order to survive in the HVAC world. Mike Donley, partner, Donley Service Center, Phoenix, said that distributor relationships are crucial, because that's where most customer problems are resolved.

"The factory really avoids getting involved in warranty claims, so we have to rely on a good distributor relationship to get customer problems resolved quickly," noted Donley. Donley Service Center has chosen to market the American Standard, Bryant, Goodman, Amana brands for many reasons, including quality, distributor, position in marketplace, and price.

Steve Saunders, CEO, Tempo Cooling and Heating, Irving, Texas, said that there are three simple criteria that he looks for in a distributor:

1. Competitive pricing - This may be more important in the construction business than in the replacement business, but all contractors need to pay close attention to costs. "At the volumes we purchase, we expect to always have pricing that is competitive in the marketplace."

2. Availability - "Our job is to put it in, make it work as promised, and pay for it. The distributor's job is to have it. If we need to forecast, communicate, or plan in order for the distributor to have what we need, that's fine. However, in the vast majority of cases, there is no reason why they shouldn't have the product we need to do our job."

3. Help solving problems - "If we have problems that we cannot solve, we want help with them. If we have problems with the manufacturer's product, then we want real significant help - and quickly. If the manufacturer has problems with a product, we need everyone to get involved and resolve them ASAP."

While these criteria may seem basic, they are sometimes hard to achieve due to unexpected problems or competing priorities. Distributors who regularly put their focus on these core issues and have consistently high performance levels will be the ones with whom contractors enjoy doing business.

"That being said," Saunders noted, "Our core suppliers do, and have done, a great job over the years with addressing the core issues." Tempo offers Carrier, Trane, Lennox, and Goodman products.

Good Relationship

Dean Sorg, owner, Sorg Cooling and Heating, Frankfort, Ky., has installed only Lennox equipment since 1985, mainly due to the good relationship he has with the company and its representatives. "The high quality and high efficiency level of Lennox equipment along with the direct-to-dealer connection has always been a good arrangement. A number of other distributors who have offered a variety of brands to us have never seemed to offer the same relationship in service."

Sorg notes that he is open to the concept of adding a second line and dealing with other equipment distributors, but he just hasn't found anyone else who can do what Lennox has been able to do for him. He said that other distributors show up occasionally with some kind of "deal" to get his business, but those relationships have not worked out.

"We just don't tend to deal with those who only come to us with the best price," added Sorg. "We have good relationships with a few select distributors now based on years of meeting our needs in a timely and friendly fashion."

Sorg noted that his Lennox territory manager visits frequently and is always available if any questions or problems occur. There is additional support from Lennox field service consultants, inside sales consultants, and toll-free representatives on the district and national levels.

"Lennox as a company works very aggressively to offer marketing opportunities and special pricing. They will also offer additional incentives for a variety of special projects. The regional distributors tend not to have a significant involvement in questions about our business, nor do they have any significantly different marketing opportunities," stated Sorg.

Steve Saunders of Tempo Cooling and Heating said he and his staff meet regularly with distributors to ensure that everything is running smoothly.

It Takes Time

Contractors do not readily "jump ship" from one distributor to another. Many are comfortable in their current relationships with distributors, especially those who have helped them over a long period of time. That help could take the form of better pricing, faster deliveries, or marketing assistance, although most contractors are willing to hear about new opportunities.

Donley noted that his company decided to start offering Amana products because the distributor offered many benefits, including better terms, marketing support, incentives, and commitment to service. "We have also chosen to move away from a distributor for many reasons, usually because we feel that we're being taken for granted," he said.

As Saunders noted, "Those who help the most get the most business. A company that shows a great effort over a one-year time period might get a significant chunk of new business, but they won't get it all. We have long memories and recall the many times when our major suppliers have helped us. We don't forget to help back, but it is not simple. It takes time to get a big share of our work."

Both the contractor and distributor will fail to please the other party all the time. In fact, each side will, at some point, fail to deliver on a commitment.

A failure does not necessarily mean the relationship is doomed; if good communication exists between the contractor and distributor, then the relationship can usually be repaired. The key is to communicate expectations and disappointments because fuming silently won't help the situation at all.

"We have experienced some huge failures with our distributors," said Saunders.

"But, it is a relationship, and we are not always perfect either. We have to balance their history of success, the current failure, and the future opportunity. We also have to look at ourselves and ask what we have done to help contribute to the situation. Often the roots of failure can create the seeds for the next success."

Publication date: 02/21/2005

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