Living Out on the Margins
In talking with my dealers — across all those conversations — common threads emerge. Big on everyone’s minds right now is “what’s going to happen next?” concerning COVID-19, not to mention other potential disruptions.
A concern that’s been ongoing for some time, regardless of other issues, is maintaining or even growing margins. We all know that profit margins are shy, elusive things that can vanish right before our eyes. One certainly can’t rely on any one brand or product category to carry them forever.
I’ve seen plenty of examples over the years, whether it’s an exclusive vendor taking their distribution from regional to national retail or suddenly abruptly announcing that they’re abandoning an entire category and ending production, as just happened to me recently.
Beyond that, competitive pressure in the marketplace is the most common factor. Last December (you know, in the before times), I was in the mall to do some banking, and I ran into the dealer principal of one of my biggest accounts. The first thing out of his mouth after we’d greeted each other was how much he hates Amazon and the impact it’s had on his margins. And he’s not the only one.
Whether you’re the dealer principal or the general manager at a small company, you’re aware that you’re not a big box store, and you probably don’t want to be. Regardless of revenue, getting a bottom-line number that pays the bills and maybe has something leftover is crucial.
If there’s anything I’ve observed in my time working with hundreds of dealers and watching who thrives versus who barely survives (not to mention the ones who don’t), carving out a niche for yourself is essential. It requires creativity, no small amount of tenacity and a willingness to be unique.
Finding, carving out and succeeding in that niche you make for yourself is a balancing act, very much like the guy at the circus who keeps all the plates spinning in the air. You need to clearly identify your strengths and weaknesses and adjust for both.
Whatever that niche you create for yourself looks like, building relationships and converting customers to clients will be central to it. More than one industry veteran has mentioned to me that people who want to be looked after understand the need to pay a little more. When a comparison shopper comes in looking for the “best price,” you have two options you can present: the price that comes with your support answering their questions after the sale, and the price to take it and never come back. It’s probable that someone who makes an effort to shop in person will actually want service and go for the first option. Just remember that part of having a niche market is that not everyone will be your target client.
Specializing and expertise don’t get enough credit for protecting you from having to deeply discount to make a sale. These days, if you have something that someone wants, and you’ve taken pains to avoid commodification, the fact that you’re having a conversation with them in the first place is a good start: It means they haven’t already bought it online. That gives you something to work with.