Being on the vendor side of the consumer electronics industry for nearly 30 years, I have participated in thousands of negotiations with retailers and have come away with five key points that have helped to cultivate great relationships based on mutual goals and respect. These are not the only points to consider and they are not in a particular order; they are merely offered up based on what I believe has consistently generated the most fruitful retailer relationships from the standpoint of the vendor.
I strongly believe that better retailer/vendor relationships begin with the mutual understanding that the retailer is in control of the relationship based upon choice of vendor. That choice is made regularly by the retailer which creates a responsibility of the retailer to make that choice based a proper assessment of the vendor.
Rather than bore you with a sterile set of considerations, let’s do a quick role-play. Today, I’m your vendor and we are across the table from each other negotiating our business for 2014. My goal is to prove to you that I’m a better vendor than the others. Here are five discussion areas I expect you to bring up in today’s meeting:
1. Set Expectations
Should I assume that your expectations of my company are the same as all other retailers? If I do, I’m an idiot and you should not be doing business with me. Take the time and explain to me what your specific expectations are of my company and of me this year. If I am a responsible vendor, I will exceed your expectations and consistently out-perform my competition. As long as you have explained exactly what your expectations are, I will also assume that you will be paying attention through the year and hold me accountable. If you don’t hold me accountable, I can’t help but assume that you weren’t serious about your expectations of me. My best dealer relationships are those that pick up the phone and let me have it when I fall short of their expectations. It makes me a better vendor.
2. Prepare a Vendor Plan
Seems like a no-brainer, but wow…I can’t believe how many retailers, who are businessmen and entrepreneurs, have little or no plan on how to do business with me for this year. So, what’s your plan? Are we growing the business this year? Have you planned your activities out against a calendar so I can accrue funding and come up with special buys in support of your plan? Do we understand each other enough to know if your requests are reasonable or not? As a responsible vendor, I ask you for this plan because I want to grow your business with me in a way that is in both of our long-term best interests. If all I wanted was more sales volume from you, I would just drop pricing and not care about planning our business together. But I’m a better vendor than that.
3. Credit Considerations
I need you to work with me a little here. My credit department is under tighter scrutiny these days – the economy stinks and the company is nervous about extending credit. You’ve shown me that you have good payment history, so why don’t we go a bit further and get some audited financials into the hands of my credit manager. Yes…I know this costs money and you’re a privately held company. You absolutely are not required to submit this. As a responsible vendor, I am asking for this information because I want to be doing business with you for the next ten years, and my company’s financial condition matters. If you can invest something in our relationship now, we’ll have a very good chance of growing our business together profitably in the coming years without having to downsize, cut back on support, pull back on business programs or raise prices. I intend on being a better vendor now and in the future.
4. Direct or Distributor?
I want to sell you direct. Plain and simple. Not only can I manage our business together, our dealer agreement obligates all direct dealers to conform to various policies such as MAP, anti-transshipping, customer service and others that help keep the market stable and vibrant. There is value in doing business directly with me – but only if I have offered you the proper training on my products, prompt fulfillment of your orders, quick resolution of problems, timely responses to your requests and strong enough incentives and rewards for supporting our business together. If I fail in any of these fundamental areas, then I can’t expect you to see the value in a direct business relationship with my company. Responsible vendors understand this dynamic and consistently work on improving the value of dealer direct programs. Yes, there are some vendors that don’t seem to care whether you buy direct or through distribution – some would prefer not to know you at all. But I’m a better vendor and I value your relationship with me.
5. Get Access
As a responsible vendor, I have a lot of people and tools at my disposal to help execute on our business relationship. And I use them…and you have use of them too. I’m confident enough in myself and my colleagues in our alignment with your business direction that I’ll do something you wouldn’t expect: I’ll give you direct access to anyone in my company. Training needs? Go through me or call my training manager directly. Product idea or problem? Contact our product support manager. Problem with anything I did? Here’s the number of my boss. Of course, you can use this number to call him to complement me if I exceeded your expectations. I’m a better vendor and my team behind me is ready to prove it.
If I have satisfied your expectations, worked to plan our business together, built our internal financial position to maximize your credit worthiness, proven my value to you as a direct supplier and confidently offered you access to my entire organization, does that not make me a better vendor than most? If so, choosing my company to be part of your business planning for 2014 is the right thing to do. If I have failed at any of these five areas, should you not re-assess our relationship and perhaps make a change?
