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NAED SCR Blog: Contractor-Distributor Relationships And Being The Dog At The Door

You know you are going to have a great education session on relationships between contractors and distributors when the first question to the panel leads to a strong 15 minutes of discussion.

At the NAED South Central Conference, the opening education session on “What the Buying Process Looks Like Today – What Affects Purchasing Decisions and Why”, the high quality conversation started within the first minute.

David Donovan of Electric Supply Inc. and Keith Bennett of Mayer Electric were the two distributors on the panel, along with contractors Michael Duffield of Greenway Electric, Jack Olmstead of Tri-City Electrical Contractors and Mark Mazur of MJM Electric.

 

 

The first question dealt with terms that are sometimes pushed on contractors without negotiation.

“It has almost become something that I expect,” said Olmstead. “I may not agree with it, but I see it coming.”

Mazur of MJM Electric took a different stance. “A contractor is going to prefer to deal with and work with a distributor who is not pushing terms at them without negotiation,” he said.

Duffield agreed. “We can work out a plan because as a distributor you work as a bank for us. There are times when terms need to be extended based on certain situations.”

Another of the lengthy discussion dealt with relationship building and getting a relationship started.  Mazur brought up the point that as a contractor, he usually sticks to one main distributor, but he has other small ones. “It seems like we go through 3 to 5 year cycles where we have one primary distributor. But then things change for whatever reason, and the opportunity arrives for a new distributor to become the new primary for us.”

Olmstead has a phrase for that situation.  He calls it being the “dog at the door”.  The dog will wait for a contractor to say it is looking for a new distributor, and be ready to take advantage of the opportunity. Often times, that means continuous short conversations that could take years, but once the opportunity arises, distributors need to be ready.  “Most contractors have a number of distributors that do most of their business. But if there is ever an availability through a new product or dissatisfaction, having that dog waiting at the door is a real opportunity.  So even though you are not getting business from a particular contractor, you should still keep a relationship with them because the opportunity may one day become available” Olmstead said.

And in terms of relationships, the contractors say trust is a key, even over price.  “The level of experience that a distributor sales person brings to the table does have an impact,” Duffield said. “Everybody has their relationships and you want to take care of the people who have taken care of you in the past.”

Mazue added, “We rank our salesmen and their ability to work with us and fulfill our needs.  It’s easy to talk about price, but it’s usually the history that is the number one thing with us.”

The contractors also say they like to limit the number of distributors they work with so they do not become too small to all of them.  “We don’t want to slice the pie too many times, so we keep to two main distributors and not dilute the relationships that I have with them.  Otherwise, I am nothing to everybody,” Duffield said.

Both the contractors and distributors said they are willing to charge and pay for value added services, provided they have real value.

“We are offering a service where we can have material at our distributorship, and store it there,” Bennett said. “We will then deliver the materials as it is needed to help them manage that job site.  And we have had a lot of success with that program.”

“A service we are always looking for is what can we prefab on the industrial side,” Mazur told the crowd. “One of our distributors built custom carts for us, set light fixtures in each cart and it costs less than our own labor to do that.”

 “We have actually had distributors deliver materials when we needed and to whatever floor we need it, and the cost of that is less than having our guys doing it for us,” Olmstead added. “And we are willing to pay for that service every time it is available.”

When it comes to new business, the contractors say it is often either a case of timing or chemistry to get a contractor to start using your distributorship regularly.

“This is not s situation that you can force.  If distributors come to our office that we haven’t dealt with in the past, we have them meet our people and see if there is chemistry between that sales person and my guys,” Mazur said.  “We need a guy that we can rely on and we have gotten to the point where our distributors will run a lock nut to South Carolina because we need it.  But we also have a list of distributors that we will not work with because they broke our trust.

“If we are managing a project, we try to prevent any mess ups.  We also look for suppliers that we can trust,” Bennett said. “We need that support on a long term basis.”

Both distributors on the panel said they are working every day to get new products and new product information to contractors.

 “I am always looking for new products because I want to the most innovative distributor I can be,” Bennett said. “The basic point for us we want to be the first guy out there with it.”

But I get really annoyed when I get an e-mail saying here is a new product and you need to stock this,” Donovan added. “You will never sell me via e-mail.”

Duffield gave the distributors one more piece of advice when it comes to selling new products or creating new business.

“If you are bringing me a new product, know what type of business I do before you bring it to me,” Duffield said. “Don’t come in and try to sell me something that I would never use.  It just takes 30 seconds to hook somebody, so don’t waste that 30 seconds.”

“When it comes to new products, don’t take me to lunch because I am not buying anything,” Olmstead added. “The best thing for reps is to bring it to me.  Carry it in to my office.  I want to touch it and see how it works.” 

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