21 replies to this topic

[samknox]

Surely we can't fully have both. So I'm wondering which is more important to distributors, and which is more cost effective for suppliers.

I always enjoy receiving EQP, but I've never asked for it. For me I'd rather pay full price for the quantity I sold, at a fair margin and have my suppliers have my back when I need them to. Art touch ups, free rush etc. Thoughts?

[djoctagone]

samknox said:

Surely we can't fully have both.

I disagree.

EQP is earned. If a distributor purchases enough from a certain supplier, they ought to earn EQP.

A distributor is not going to purchase much from a supplier that has poor customer service, hence rewarding the suppliers with great service, and hence those suppliers reward the distributor.

[royster13]

Just curious what folks think customer service costs?.....I think some folks have a hard time imagining that customer services costs would be enough to affect a supplier's bottom line....But they certainly do....Time is money...And lots of time is lots of money..

I love TradeNet's online system and as nice as those folks are, I rarely have to call for status, invoices, tracking numbers, etc.....But I also like how well I get treated by Hub, Americanna and Dooley who do not have such service....

So it is a toss up as to how I would like it....

[royster13]

Scott I think suppliers that reward large distributors with special pricing do more damage than good....A supplier that makes next to nothing your orders needs my orders to average things out.....The better deal you get, the less likely I am to use them and at the end of the day they are beholden to a large supplier that makes them very little profit but creates so much cash flow they can not do with out them.....

Now having said that, perhaps a system that rewards average sales per salesperson would be better....That way the good salespeople in little distributorships have somewhat of a chance competing against folks in large distributorships.....

Scott I am sure I sell more magnets that you but because of your aggregate volume you have access to deals I can not get...So who is the better client for the supplier?....

[djoctagone]

royster13 said:

Scott I am sure I sell more magnets that you but because of your aggregate volume you have access to deals I can not get...So who is the better client for the supplier?....

The PPD that pays faster than the other.

[royster13]

I think there is more to it than that.....Yes I am sure suppliers like distributors that pay quick, however, if they are still making very little money on them, they may make may more money on slower paying distributors that give them more margin.....

[royhill]

If I had to choose between a slightly better profit (EQP) or great CS I'd take the CS. As I beleive that would assist me in the long run better and that would add more to my bottom line the EQP.

But I don't see why one can't expect good pricing with good CS. While it may cost more to staff and train correctly, once staffed and trained right I don't think good CS cost anymore than poor CS. A "smile" in a voice and a caring attitude along with knowledge of the products will bring the supplier more loyal customers than offering EQP to everyone IMHO.

[jimknecht]

royhill said:

If I had to choose between a slightly better profit (EQP) or great CS I'd take the CS. As I beleive that would assist me in the long run better and that would add more to my bottom line the EQP.

But I don't see why one can't expect good pricing with good CS. While it may cost more to staff and train correctly, once staffed and trained right I don't think good CS cost anymore than poor CS. A "smile" in a voice and a caring attitude along with knowledge of the products will bring the supplier more loyal customers than offering EQP to everyone IMHO.

First of all, EQP is a term which has been bastardized so much, that it means nothing. Some cup suppliers might have their last price column be at 2500 pieces where someone like us, has 50,000.

Also, think about these companies that offer basically everyone EQP... no matter of volume. You really think that haven't set up their price structure to do real well with selling at that last break? If I sold every order at the 50,000 piece break, we would go broke.

I can however, reward distributors with large to huge volume with much better pricing. What I loose in profit on individual jobs can be offset by volume.

Royce disagrees with suppliers offering special pricing to the big boys, but how is that any different than my basic price columns anyway. I have 9 columns, starting at 100 pieces & going to 50,000 pieces. As the volume goes up, the price goes down. As the quantity goes up, my per piece profit goes down, however I am running more pieces, so that helps make up for that. Using Royce's argument, it would not be fair to sell someone 5000 pieces at a cheaper price than what he paid for on his 500 piece order. Simple truth is, it is quite common to expect better pricing, the more you order... be it an individual order or a huge distributor sending hundreds of orders.

Oh, & by the way, great CS costs more than bad CS... a lot more.

[AdmanGR]

I typically place my business where I know I will enjoy both EQP / extended pricing as well as world class CS. Both can be enjoyed in harmony.

Since our EQP list is in the neighborhood of 200 suppliers, it generally isn't too tough to find the other part of the equation ( most days):rolleyes:

[ridety]

I agree with Jim that the term "EQP" is totally relavent to the supplier and to their pricing structure.

And, I'm certain that good customer service costs more than crappy customer service.

If I was a supplier, I'd be shooting for super slick management/order entry system/website that reduced the need for customer service. Then I'd back it up with great customer service anyway.

Nobody would get EQP, but I'd have an end of year rebate credit (based on volume) that they could apply to the next year. (i.e. Spend $20,000 get $500 credit.........spend $40,000, get $1200 credit, etc.)

[Schlep]

When my customer calls me I don't ask them if they want a good price or good service. (one or the other)

When you go into business I think you have to be prepared to provide both.

EQP is something that should be a bit of a reward for for being a good and loyal customer, you should not have to give up good service to get it.

And (I hate myself for this) but Jim is correct EQP has been bastardized.

We had one company (4 column pricing) change their structure and we all got 3rd column, yea right all they did was invent a 5th column (not shown on the pricing sheet) for larger clients and increased their column pricing to us so third really was first.

[adam2208]

I feel that, as Scott states, EQP or preferred pricing is earned through volume. What I dislike are the MFR's that give the same preferential pricing to PPD's that spend 10k with them as they do 100k. We tend to partner with MFR's that offer both aggressive pricing and providing outstanding service and product quality but if we had to choose one or the other...give me the service/product quality.

[jimknecht]

Whoo Hooo!!!

Two distributors in a row agreed with me. Thanks Arnie & Ty! Danged if it ain't too early to go out for a beer to celebrate. :D

Edited by jimknecht, 19 February 2010 - 06:14 AM.

[royhill]

Agree that EQP is is not the same across the board and that volume discount makes sense. After all that is what price columns are and it is in virtually every industry.

And I guess I need to be educated on what is considered good or great CS. As I stated I understand staffing and training cost more than being understaffed and not training. But any company worth thier salt should be adequately staffed with train employees.

It does cost more to have trained employees on the front row as well as it cost more to train back office or production line employees. But does it not cost more to have "bad" employees vs "good"employees? Between turn over, retraining, lack of productivity and eventual loss of customers I would think properly trained people might even cost less in the long run. And basically that is what I consider good CS, a person with knowledge of product and a customer oriented attitude.

Granted I only owned small restaurants/bars with not more than 15 or so employees and while they may have technically worked for me, we all worked for the customers. Just like most industries, there were a lot of places for someone to have a meal or a beer so without good CS, it could cost more not to hire & train well and deliver good CS. In fact it cost some thier business.

[FindingPromo]

A very robust and up to date on line order placement and tracking system is all good for when you have distributors that know your products and/or had a end buyer very involved the initial choice / selection of the product . . . Hence not a lot of interaction needed for additional product knowledge or very easy access to product ideas/uses/photos of products in use / in action.

Strong Supplier Customer satisfaction teams can help to steer the PPD into replacement items when stock is unavailable in color needed in rush etc. Sometimes also complimentary items / more sales and profits for both Supplier and Distributor can happen when PPD's engage more with strong CSTeams / outside reps as a part of the process.

Lot's of good points in this thread on how different Suppliers set up their pricing grid codes and creative uses, quantity breaks that are many times different on similar (if not the same) blank products carried by multiple suppliers. In the end, it's all about the landed net you get things for and the price a PPD chooses to sell it for, since it's actually their choice.

I know one of our partners and their sidekick pen by HPC, has been compared side by side landed net to even some bigger suppliers' "world sourcing" pricing and it's well . . . . I encourage you to take a peek and compare, all-knowing of the great service you'll get at HPC Global.

Any way Suppliers are very creative in the ways that they set up promotions. SSC Bags has a partnership program where after your first order (check with your local rep or CS for details, minimum orders etc.) you get 30% off of your next order and EQP for the balance of the year. Working over these last few weeks on tour with customers from AZ, CA to OR and today in Seattle, there many folks being very creative in their upcoming custom domestic, and stock import bag needs in the coming weeks.

Interesting discussion on this one. In cases up and down from supplier to the end buyer, you get what you pay for in many cases, and the best pricing will not get you the best service always hand in hand.

Edited by FindingPromo, 19 February 2010 - 07:31 AM.

[djoctagone]

FindingPromo said:

A very robust and up to date on line order placement and tracking system is all good for distributors

Tracking system: great.

Online order placement: not so great for PPDs like Indoff that already have their own web-based order management system (and soon to be Web 3.0).

Unless the discount for using the supplier's platform is significant, having to rekey data into their website is not worth it--especially if an error is made in the rekeying effort.

[rosec]

Here I go again....
I have a pricing structure that if I offer EQP on say my mens rubber basket ball I'll be losing money on every 300 pc order. Sure I give rebates. I have some companies that do hundreds of thousands a year with me, that is a huge consideration. I work in a structure that allows me to make money but I can't give it away! I would be out of business.

On the other hand if you call me I'll take your logo and make you up three or four virtual samples to show your client what we can do for them. I tweek it...I don't know if I'm going to get the order but I am willing to invest my time to help you show your client what you can do for them. Sure I am going to work with my faithfull clients and knock off a set-up here or there sharpen a pencil. I have hands on with every job as it goes through and my clients know I am accessable all the time....we all bring different things to the table.

Thanks, Rose

[royster13]

It does not matter what a supplier does it will be wrong for the other half...So at the end of the day, a supplier has to decide which half is the most profitable for them and let the rest go.....Or come up with 2 completely different models.....

[samknox]

Lot's of great feedback on this thread. Thank you! I agree with Jim that bad customer service always costs more in the end. I also like the idea that PPD's who pay on time should be rewarded. That is coming from a PPD who always pays ahead of time;)

When push comes to shove it doesn't matter if a PPD is selling 10,000 units a month, if they aren't paying the supplier for 90 days. We only have to think back to the HUGE (not naming names) distributor who went out of business last year and sent the industry into a bit of a spin $200 million in debt.

I think asking your client if they prefer bare bones pricing or excellent customer service is actually okay, depending on how it's worded. We won an order against an online distributor who was selling below cost (you know who it is) on bic click sticks. Can't fight with that...they're all Bics. It looked like we were up a creek until our client told us he trusted us and had a bad CS experience with the online company before... This is the exception but looking back I choose my suppliers the same way.

We have a repeat order of some membership cards for 50,000 pieces and I'm willing to eat 10% of my profit to never deal with the supplier I used the last time based purely on their customer service.

[imcreativejane]

EQP or Customer Service? That's where our sales reps come in if we need them. How about both? If I don't get from customer service what I think I should have, I go to my rep--I often have a business card from someone I've met.

I'm a small, rising distributor and just today was getting "beat up" by a customer on an item I was only making 30% on. I still had to go lower to keep the order away from the big guy my customer was working with--someone who doesn't care if they only make 15%. He ordered 2 other items from me, but still, it sucks like yellow snow.

Each of the other items come from suppliers I meet at trade shows when I go. I love seeing those companies and like to pass on business as much as I can. Anybody that comes to Fargo in February will get whatever business I can give them!