What the Manufacturer can do to help the Dealers
Dealers and partners face numerous challenges in running their businesses. The challenges include limited resources, cash flow issues, hiring the right people, time management, marketing, and acquiring products at the right price and on time.
This article explains how manufacturers can support their dealers.
Many dealers, system integrators, and other resellers are small businesses with limited resources. They have developed a small market in their region for specialty products. They usually provide installation and service to their customers. One of the most critical needs of the dealer is to increase sales.
Here are some of the challenges they face and how manufacturers can help:
Challenge: Sales are the critical element in dealer survival and prosperity. A dealer must maintain and improve their sales. They are too busy with day-to-day activities to focus on the marketing that increases the number of leads.
Building a robust online presence, engaging customers, and differentiating oneself in a crowded market are essential aspects of generating new leads. Many dealers have trouble creating and maintaining a website. They lack the capability and knowledge to optimize the website so that it appears in Google search results.
Why it matters: Without effective marketing, even the best products and services go unnoticed.
How can manufacturers help? They can provide advertising funds, primarily through the use of educational content marketing, which helps promote an understanding of the latest technology. It helps both the dealer and the prospect understand the benefits of the new products. The publishing of technical and educational content also increases the search engine optimization (SEO) of their website.
Challenge: Product specifications can be complex, and their usability in an application may be challenging to comprehend. The products occasionally fail to meet customer requirements due to an inadequate understanding of the product and expectations by both the customer and the dealer. Products fail to meet the manufacturer’s specifications, resulting in customer complaints and application issues.
Why it matters: Product returns due to incorrect product choice for an application can result in lost revenue and erode customer confidence.
What the Manufacturer can do: They can provide an application engineer to assist in system specifications and ensure that the product meets the customer’s goal and expectations. They can also provide educational materials that simplify the specifications and offer examples of usage.
Challenge: Product reliability can lead to field failures, resulting in lost time and customer dissatisfaction. Products are returned for several reasons, including failures, misapplication, and failure to meet customer expectations.
Why it matters: Product returns can be costly for the dealer and the manufacturer.
What can the manufacturer do? They can provide product support that helps the dealer confirm that the product can meet the customer’s requirements. Offer straightforward and easy-to-follow product return procedures.
Challenge: manufacturers’ pricing models are usually defined by the dealer’s previous business. Dealers who sell the most receive the most favorable pricing, while those who have not sold much receive the worst (highest) pricing. This pricing model may not be the best for new product introductions. It’s hard to determine who will be successful in selling new concepts.
Why it matters: The pricing strategy may deter some dealers from entering a new market. In 1983, Sony decided to sell a word processing product through its dictation channel. Unfortunately, the word processor required a different sales method than a dictation unit. The salesperson needed to explain the benefits and return on investment of this radically different product. The dealers with the most favorable pricing had the least ability to sell the new technology. It ultimately led to the failure of this product line.
What the Manufacturer can do: Consider using a unitary pricing strategy where all the dealers receive equal pricing. Pioneer Corporation employed this approach when introducing a new CD-ROM changer, exemplifying a unitary pricing strategy. This gives everyone the same chance to sell the latest technology.
Challenge: Managing operating expenses, payroll, inventory, and unexpected costs. Cash flow issues challenge them, as they often have to pay for products before receiving payment from customers, which creates cash flow problems.
Why it matters: Inconsistent or insufficient cash flow is one of the leading causes of small business failure.
What the Manufacturer can do to help: Extend credit payment time from 30 to 60 days or longer, depending on the market. For example, if the dealer sells to hospitals, they can expect invoice payments to be made within 45 to 90 days.
Challenge: Offering competitive salaries, benefits, and opportunities for career growth to attract top talent is a significant challenge. Many dealers have limited resources and personnel. The owner may be the installation specialist, or they have an installer on staff whom they rely on to keep the customers happy. They are very exposed to mistakes or problems during the installation.
Why it matters: Small teams often rely heavily on a few key people—losing one person can have a significant impact.
What the manufacturer can do to help: Assist the dealer in training their new employees. Provide free and convenient education and training through educational content, training videos, and remote learning, making it accessible and convenient for dealers. Provide technical support that helps dealers solve system design and technical issues.
Challenge: Business owners often juggle multiple responsibilities, including sales, marketing, finance, human resources, and operations. They have limited time for marketing or considering how to introduce new products that can drive business growth.
Why it matters: It can lead to burnout and reduce the effectiveness of core business tasks.
What can the Manufacturer do? They can help build dealer recognition by adding the dealer’s website to their own, encourage and assist with marketing, provide technical support that can alleviate some of the support burden on the dealer, and make technical content available for education and improved sales skills.
Challenge: Managing vendors, delivery timelines, and fluctuating costs, especially during economic disruptions. Customers often take a considerable amount of time to make a purchase decision. Once they do, they want the product now! This expectation is further exacerbated by product delays, from manufacturing to extended delivery schedules. Dealers don’t have the resources to purchase inventory.
Why it matters: Product availability issues can affect cash flow and customer satisfaction. Customers can cancel their orders if their expectation of delivery is not met.
What can the manufacturer do: Drop ship from the manufacturer to the customer. Provide a communication channel that enables the dealer to manage expectations by utilizing educational content marketing to inform prospects of potential product delays.
The dealer channel faces numerous challenges that can impact its performance. This includes cash flow, personnel, time management, marketing, and Inventory availability. The manufacturer can help by increasing credit time, providing marketing funds, utilizing marketing strategies that enhance the dealer’s web presence, maintaining adequate inventory levels, and allowing drop-shipping of products. Manufacturers can use educational content marketing to improve the performance of their dealer channel.
If you would like help understanding the dealer’s challenges and how the manufacturer can assist, please don’t hesitate to contact us at 914-944-3425, email [email protected], use our contact form, or visit our Kintronics Media website.