Let’s face it, the relationship between HVAC manufacturers and distributors could use some work, but times are changing. This relationship is essential to our industry’s growth, and it should be mutually beneficial.
Manufacturers must be able to trust that distributors will adhere to the brand promise of quality while serving as external ambassadors for consumers. In return, distributors need to trust that manufacturers will provide the best products and services for their customers.
Working toward mutual success is the best way for the industry to see quality growth. Manufacturers and distributors have much they can learn from each other. What better way for a manufacturer to learn what products consumers are asking for than to hear it from a distributor? Is there anyone better suited to help distributors become knowledgeable about a product than the product’s manufacturer?
Here are some clear steps everyone in our industry can take to right the ship and move forward together.
- Overcoming Partnership Hurdles — The road forward requires that manufacturers and distributors learn to trust each other again. As it stands, there is a widespread perception of problems between the two that isn’t being addressed. According to research from the Industrial Performance Group, 82 percent of manufacturers and 92 percent of distributors believe problems in their working relationships hurt sales and profits. Manufacturers and distributors recognize that fixing these problems could improve sales and profits, but most companies underestimate the costs of these problems. Some argue this is just “the way things were” and that fixing these problems is a pipe dream. Most manufacturers and distributors do not take action and continue with business as usual.
- How Do We Fix the Problem? — We fix the problem by establishing clear, open communication with each other and working toward our mutual success. When we see each other as allies, we’re able to create the right products, processes, and experiences together to build customer loyalty.
- Improving Lines of Communication — It takes a few simple steps to start improving communication between manufacturers and distributors. For example, establishing a designated contact person, most likely a manufacturer’s representative or regional manager, provides a direct line of communication to the manufacturer. This liaison can help manage distributor expectations, offer product support, and bolster sales. Quality reps, field service techs, and field service support teams can do their part to strengthen communication lines through site visits and face-to-face meetings. Distributors can help manufacturers expand to new markets, gain new business, better understand their current customers, and create higher-quality products through direct communication with their end customers. Distributors can convey customer demands, product changes, delivery needs, and more.
- Building the Partnership — Once communication lines are open, it’s time to nurture the partnership. The basis of any partnership is mutual trust and reliability. Building this relationship takes time and commitment, but once it’s achieved, the benefits can last for years.
Start with sharing knowledge and welcoming each other into your facilities. Try hosting training seminars and just getting to know each other. As distributors become more familiar with manufacturers, it leads to more mutually beneficial opportunities. Manufacturers can offer events and promotions to help distributors sell equipment. By taking advantage of these sales opportunities, distributors become better brand advocates, which can have a drastic impact on profits.
Better inventory coordination allows distributors to take advantage of price breaks while maintaining reasonable stock and planning for customer demand, which helps manufacturers more efficiently plan their production.
Distributors could also provide anonymized point-of-sale data to manufacturers, allowing them to analyze purchase patterns and find opportunities for product or market expansion. The information could also be used to fine-tune promotions and incentives.
- Strengthening Relationships, Strengthening Profits — The ultimate goal between manufacturers and distributors is to build long-term loyalty and increase profitability for both parties. Open and consistent communication creates stronger business relationships, which lead to the development of better products and greater customer loyalty. Mutual success means everybody wins. DT
Publication date: 3/11/2019