MANUFACTURER & DEALER RELATIONS
Profit Margins Dealers we surveyed and spoke with were consistent in their desire for profit margins . And it ’ s a deeper category than just profit per wholegoods sale . The profit margin topic incorporates respect for business independence , consistent communication , product availability , warranty support , plus the topic of fees for marketing .
Some manufacturers help with profit potential by focusing on high-priced product . “ We support dealers by pricing our products to be high margin ,” said Tim Kubista , vice president of sales and marketing for RC Mowers . Few manufacturers can do that across product lines .
For manufacturers who compete with a broader range of products and price points , such as Makita and its growing OPE line , customer service might be the key to profitability . “ Entrepreneurial dealers are evolving ,” said Dennis Stauch , vice president of OPE sales for Makita . “ Service is a big opportunity for dealers to build more relationships and sell more products . Some dealers will service just their own products and their biggest customers first , and that ’ s fine , but they should be open to other buyers and brands .” He points to Makita ’ s factory-service centers as an opportunity to relieve a dealer ’ s service-shop backlog and make service profit .
On the topic of Makita tools in big-box stores , Staunch said that the manufacturer segments products as much as possible and sets price parity for all dealers with a Minimum Advertised Price ( MAP ) policy . “ We have people checking on this , but it ’ s difficult ,” he said , “ and that ’ s why it ’ s important for OPE dealers to add more value to customer relationships .”
For some OEMs , this is foundational to the relationship . “ It ’ s important for us that our dealers remain profitable ,” said Vranches of Takeuchi . “ Dealers can make money with our products . Still , the relationship is contractual , and both parties have responsibilities .”
A couple dealers we surveyed gave special shout-outs to distributors , a group in this relationship I didn ’ t mention . “ I would actually highlight Pace , a distributor ,” said one dealer . “ They treat us as a customer . They make the OEMs they distribute look good to their dealers . They share in our struggle and actually help us . And they seem to understand that if we make money , they will make money .”
Good Communication The quality of communication is not judged by one or two messages , but by a long-term process . “ We ’ re all dealing with troubles , from labor shortages to supply chain and more . But at the dealer end , we ’ re often kept in the dark ,” said Greg Paul . “ If we had better communication , things would be different .
Honda has had a stop sale on mowers for several weeks , and I don ’ t have any more information on what to do .” The topic of Honda push mowers was an issue for a few dealers we heard from , and the “ issue ” was more about lack of communication than the actual stop-sale matter .
One dealer responded to our survey to acknowledge the work of Stanley Black & Decker and its Cub Cadet brand . “ They demonstrated they will continue LAB ( Listen / Act / Build ),” said the dealer , “ a policy that helped turned the Cub Cadet brand around over the past decade . They listen to their dealers and customers to make products and programs better .”
The manufacturers who understand this will have an advantage . “ One of the biggest things , and we talk about it frequently ,” said Christin Wam , senior director of marketing at Briggs & Stratton , “ is the relationship and communication . I have the strong opinion that when you can help a dealer grow their brand , it will help grow ours too . And dealers can contact us anytime .”
While communication is not a single message , the delivery and receipt of messages can cause problems today . Back to my discussion with Husqvarna that started this story , and it ’ s clear that message delivery needs some work . “ Who is opening our emails ? Who is looking at the communication ?” Those are questions raised by Carlos Haddad of Husqvarna . “ I ’ m not placing the blame on dealers . We need to make our messages as simple and clear as possible . And that ’ s why we have field staff talking with dealers .”
A few dealers I heard from share the same view as Greg Paul , the Ohio dealer who has become a good source of information for OPE Business . “ I think decisions are being made with an ivory tower mentality ,” said Paul . While some manufacturers may have an abundance of MBAs and white-collar execs in corner offices , the concept of misunderstanding might be cleared up with more frequent communication .
“ Sure , some of us have MBAs ,” said Vogtman from Toro . “ But we don ’ t just sit behind desks . We ’ re into the business and the product . I ’ ve mowed my son ’ s baseball field with our products for years . We expect Toro employees to know the products and the business .”
Let ’ s promise to talk with each other more often .
www . OPEBusiness . com September 2023 OPE Business 21