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Like many of you, I was relegated to a little extra windshield time over the holidays. To pass the time and to avoid giving in to my inner road rage monster, I spent many hours listening to podcasts. I know, I know. It seems that I am beginning many of my columns with, “I was listening to this podcast ….” I have really got to get a new opener. On the other hand, I learn a ton from these auditory gems, and I can often weave them into my advisor practice or simply improve my own view of the world.
As I was saying, I was listening to a podcast episode where the host and the guest were clearly close friends for many years. One of the keys to their successful bromance was that one was the Alpha in the relationship and the other was the Beta. In other words, the host thrived on being the more dominant party in a relationship, while the guest was very comfortable being the less dominant. This came out in subtle ways, such as picking a restaurant to meet at or choosing a particular activity to do together.
I started thinking about all sorts of relationships I had been a part of or observed over the years. Two Alphas would often clash and try to find ways to be the lead, while two Betas would constantly wait for the other to take the reins and nothing would ever get accomplished. So how does this observation relate to distribution? In our supplier relationships, there is always an Alpha and a Beta; but does it always remain consistent?
I was doing a little coaching work with one of my long-standing clients and this subject came up. Not that I would suggest to a client that it was a Beta to the firm’s supplier Alphas, but it came up in a more subtle way. We were talking about requesting co-op marketing funds from its suppliers to support some of the more sophisticated digital efforts the company invested in. I am a big believer that suppliers need to shoulder some of the load when we actively market their brands. It only seems fair, and it was kind of a given in the industry I grew up in.
Over the years, I have heard this client suggest that co-op was something its suppliers had never offered and it wasn’t very prevalent in the niche. Having had some prior relations with those suppliers in my previous life, I knew these funds were available — they just hadn’t been available to my client’s company. His company was the Beta in that relationship.
I had to step back and help him think through the position of supplier dominance. He shared with me that many of the suppliers still withheld parts of their product offering, claiming territory or channel conflicts. In many cases, my client had to ask, or rather beg, to allow his firm to sell the line in certain areas. Oh, you can sell it in Michigan, but you can’t sell it in Texas. I really hate this kind of manipulation.
For some context, this company exceeded the $20 million revenue mark. With several suppliers, its purchases crossed over the million-dollar mark. It is no longer the little dog, but company execs have not been able to convince themselves otherwise. Even though the firm is clearly moving up the food chain, it still considers itself as the little dog. This mentality starts at the top.
Clearly, the first thing this leadership team must do is start acting like a bigger dog. I don’t mean this in an arrogant way, but the team needs to see that it must become the Alpha in its supplier relationships.
In working through this change of perception with my client, we realized that he was hanging on to the way he developed relationships in the past. When the company was a small, insignificant player on the map, he begged to be set up with second-tier suppliers. Begged to get a line of credit. Begged to get any sales support. When someone from the supplier would drop by, he would get an “atta boy” and a nice pat on the head. This self-perception has clung to him and hampered his ability to gather the resources and support to rocket his company forward.
Change Your Mindset
So how does one become an Alpha in a supplier relationship? First, you need to adopt a change in mentality: no longer will we ride the coattails of our suppliers’ brands; it is time they start riding ours. We must convince the supplier that we are the horse to ride into the future.
Obviously, we can’t be doing the same marketing activities of the past. Just as we try to demonstrate a unique value proposition to our customers, we need to apply this same approach to convincing our suppliers that we are the better option in the market.
When was the last time we pulled out all the stops when doing market planning with a supplier? Put on your selling shoes. Create a PowerPoint. Manufacturer sales leadership can relate to a good presentation. Throw out terms like market share and target markets. Words such as omnichannel and e-commerce get the juices flowing. Talk about sales innovation and an analytical approach to driving revenue. Highlight some of your successful initiatives and conversions.
Make no mistake, this is a dog-and-pony show. At the end of the presentation, we want manufacturers to be inventing new ways to drive products through your door. That’s when the marketing funds magically appear.
Once you become the Alpha, you get to pick who will ride your coattails. I would suggest picking a few key suppliers who respect your position in the market to sit down with and discuss formal marketing plans. This isn’t an arbitrary growth goal with a pot of gold at the end of the rainbow. I am talking about real planning.
What joint marketing activities are we going to perform? What products are we going to focus on? What customer segments are we going to aggressively target? How are we going to support key e-commerce initiatives? How and when will product knowledge sessions take place? How can we use marketing funds to support these goals? These are the high-level conversations that take place when we quit fighting for the scraps.
In case anyone gets the wrong impression, I am not anti-manufacturer. I love working with suppliers who are excited about driving new market opportunities. I am thrilled to invite suppliers to participate in innovative initiatives. What I abhor is professional laziness. I have little regard for those who rest on brand equity from the past and look down upon the distributors who drove their brand for decades.
Distributors have every opportunity to be the Alpha in their supplier relationships; they only need to look in the mirror and believe it.