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    Suppler Contractor

    16 Things Every Contractor Should Talk to Suppliers About

    Jan. 3, 2020
    HVACR suppliers can often be founts of information and offer many types of support. But do they share it with you? Interview suppliers to see if your current or another supplier can give you a better overall offering.

    It is all to easy to fall victim to inertia in business.  Things are going well so you do not rock the boat.  You start to coast.  When you coast, you are heading downhill.  This is why it is good to shake things up every so often.  One way is to interview suppliers to see if your current or another supplier can give you a better overall offering.  The first of the year is a great time to start.  Here are 16 areas of discussion.  

    Conducting a Supplier Review In the advertising world, advertisers periodically conduct an “agency review.”  They may retain their current agency or they may end up changing to a different agency.  Agency reviews are terrifying for the current agency and tedious for the advertiser.  So why do them? 

    Agency review ensures you have the right agency, with the right chemistry, and the current best practices.  It keeps your agency on its toes so the agency does not take your business for granted.  Everything about an agency review can apply to reviewing your HVAC suppliers, both for parts and equipment.  Keep your current suppliers on their toes and maybe discover that another supplier is a better fit in terms of how they conduct business, the terms they offer, and even pricing.

    To conduct a supplier review, call your supplier(s) and other potential suppliers and schedule a two-hour block of time for each.  Prepare a list of the items you would like to discuss and send it to the suppliers in advance.  

    Your ability to execute an agency review is dependent on your market clout.  Suppliers want to move boxes.  If you move enough boxes, they will jump through all kinds of hoops to get your business.  If you operate one or two trucks, they will show less enthusiasm.  Nevertheless, the discussion is always worthwhile and a sharp territory manager (TM) will get it.  Here are 16 areas for discussion.

    1. Your Annual Business or Success Plan
    The review is a dialogue, not a list of demands.  You want to find the supplier who can best help you achieve your goals.  That starts with identifying your goals and then, sharing them.  If you prepare an Annual Business Plan or Annual Success Plan, send it to the supplier in advance.  This should be the first thing you discuss.  This is what you want to do next year.  Does the supplier want to be part of it?

    2. Market Awareness
    Any TM calls on multiple accounts.  They also interact with fellow TMs.  If they are any good at all, a TM has a pretty good sense of what is happening in the market, related to the industry.  Without violating confidences, it is fair to ask the TM to share what is happening in the market.  What is changing?  What should you be aware of that might be an opportunity or a threat? 

    3. Economic Outlook
    All manufacturers and most suppliers have an economic outlook prepared at the corporate level.  See if your TM can get a copy to share with you. Based on the economic outlook you might want to step up your projections or you might need to step up your marketing.

    4. Areas of Improvement
    Ask your supplier for three areas where you can improve.  Remember, TMs see a number of contracting businesses, including very good ones and poor ones.  Your TM should be a resource and able to identify areas for improvement.  Even if these are areas you already know about, his views validate your own conclusions. 

    5. Pricing Changes
    A TM may or may not know about upcoming price changes.  Nevertheless, it is fair for you to ask about any planned price changes so you can use the information as a call to action with customers.  Plus, depending on your pricing system, you want to have sufficient time to build the prices changes in.  Of course, most manufacturers will give you plenty of lead time since they will be using the price increase as a call to action for you to stock up.

     6. New Products
    What are the new products the manufacturer will be releasing?  You were probably told about them during fall dealer meetings, but product releases are fluid.  What is coming?  When?  What will it cost?  What will it do for your customers and for you?

    7. New/Existing Programs
    It is almost certain that suppliers have more dealer programs than you are aware of.  Sometimes the TMs do not know about all of the programs offered.  Ask for a complete list of programs, regardless of whether the TM thinks they are good for you or not.  Ask what is coming.  The TM may not know, but by asking him, you give him an excuse to ask the sales manager.

    8. Training
    Get out a calendar and talk with the TM about training for the year.  Instead of making this one of those things you intend to do, but never quite do, set dates.  What can the supplier do to train your personnel at your shop?  What training will be offered at one of their locations?  When?  Is there a cost?  Will they cover the cost out of co-op? 

    Instead of an incentive trip, ask your supplier to pay for the cost of sending a couple of people to the Service World Expo (www.SWEShow.com) in Tampa September 22-24.  This is not simply a reward for purchases, but an opportunity to gain information that will help you buy more in the future.

    9. Call Expectations

    Set expectations for sales calls.  You should be happy to give your suppliers your time as long as they make it worthwhile.  For example, tell TMs not to show up with little more than an order book, the latest joke, and a box of donuts.  They should come with information that will help your business.  It could be news about the market, information about supplier/manufacturer programs, or a business services recommendation. 

    10. Co-op
    The use of co-op varies widely from contractor to contractor.  Some contractors are more aggressive about what they want and some TMs are more creative in getting it for them.  See what you can do for co-op that is more than the traditional shared ad.  Can you apply it to training?  Can you use it to pay for your local association dues?  Can it pay for the Service Roundtable? 

    Usually, it is tough to buck the existing program.  For example, the manufacturer might have a direct mail co-op program that requires you to use their post cards.  If so, try to get them to co-op radio or pay for your Constant Contact fees for email marketing.

    Ask for support at events you participate in or conduct on your own.  These funds can come from different budgets than co-op, or they might be co-op funds.  For example, you might be one of the sponsors for a golf tournament.  See if your supplier will co-sponsor with you.

    Another example is charitable work.  If you have a “heat the town” initiative where you provide a free furnace installation for a worthy indigent, ask the supplier to donate the equipment.  Many will.

    If you run an oldest furnace contest (reach out to the Service Roundtable by calling 877.262.3341 or emailing [email protected] for a free, turnkey oldest furnace program), see if the supplier will donate a furnace in return for brand promotion in your marketing.

    If you publish a consumer newsletter (and you should), ask your suppliers to advertise in your newsletter.

    11. Elite Dealer Program
    If the manufacturer has an elite dealer program you buy into, make sure it makes economic sense.  See if there is flexibility on the fee.  Maybe you can get it added to your co-op or rebated back if you hit agreed purchase targets. 

    If you opt out of the program, see how many of the benefits are available based on your purchases.  Someone in the marketing department came up with the program.  While TMs are encouraged to sign dealers up, they are paid on the boxes they ship.  The TM should be interested in doing anything he can to ship more boxes to you. 

    12. Pain Reduction
    With any supplier, there are points of pain.  There are things that just do not work well or that irritate you unreasonably.  This might be warranty returns, labor credits, fees paid for literature, and so on.  Identify the points of pain and see how they can be addressed or resolved.

    13. Service Improvement
    If it has not been covered in the discussion about programs and pain reduction, ask how the supplier’s service can be improved for you.  Can they deliver equipment to the job site on the next day?  How can they help with your supply chain management for parts?  Will they provide vendor managed inventory? 

    14. Referrals
    A few leads might be generated for contractors participating in an elite dealer program, but there are referrals made in addition to the leads resulting from marketing efforts.  These may come over the transom or just be the request of a TM’s friend who knows what he does for a living.  Ask for those referrals.

    15. Points of Differentiation
    Ask your supplier to identify things the supplier can do that his competitors cannot.  What makes him different?  Better?  Why should you do business with him?

    16. Price
    Finally, there is price.  There is always price.  Ask if there is anyone getting a better price than you get.  Then, ask what you need to do to get the same price.  Maybe it is something you can achieve or maybe you need to double or triple your purchases.  It might not be something you can get this year, but it gives you a target for the future.  However, there is more to price than the surface number.

    Ask your supplier if you can get a rebate on purchases, rather than a price reduction.  Some suppliers provide it as a way of giving a slightly better price for some contractors  without changing the nominal price for everyone. 

    Ask if there is a new customer discount.  If so, ask if you can get the same discount as an existing customer. 

     Finally, see if there is a buying group that pays a rebate.  Not all, but most manufacturers and national distributors participate in one or more contractor buying groups.

    A Tale of Two Contractors 
    Two contractors competed in the same town.  They both charged at the upper end of the market, both did quality work, were both highly regarded in the community and industry, and both carried the same lines of equipment from the same suppliers.  Yet, one of the contractors received better service, more attractive programs from the manufacturer, and better pricing.  Why?  He conducted supplier reviews and was willing to shop his business.  Meanwhile, his competitor never considered another supplier.  Which contractor do you want to be?

    Join the HVAC industry’s largest contractor buying group, Roundtable Rewards.  Learn more by calling 877.262.3341 or visit www.ServiceRoundtable.com.  Membership in Roundtable Rewards if free to Service Roundtable members.