Over the last twenty years, there has been a slow but steady transition of customers from large distributors to small, regional distributors such as LPS. I addressed this topic in my blog post dated July 20, 2023. Having been a sales rep for VWR International for many years and now the owner of a regional lab supply distribution company, I often reflect back on what I did then that made customers happy and compare the situation today. Here are some of the key drivers:
- Big distributors figured out that it was too expensive to have sales reps calling on any/all customers within a specified territory. Customers that didn’t generate the necessary revenue were assigned to telesales reps, web only status or, in many cases, just ignored altogether.
- A sales rep’s primary function from a customer’s perspective is to:
- Have at least a 50-50 loyalty; 50% to the customer and 50% to their company.
- Know their customer - by name - and understand their business.
- Know the products they are selling.
- Be responsive and willing to negotiate on pricing, as well as solve problems quickly when things go wrong.
- Big distributors have trimmed inventory to “what moves,” or about 5,000 sku’s out of a portfolio of millions. As a result, manufacturers must stock and be ready to drop ship on demand. Since these vendors are already geared up to do so for the big distributors, they have figured out they can grow their business significantly by supporting regional distributors who rely heavily on drop shipments.
The fact is that the words “buying power” do resonate with people. The fact is also that huge distributors drive a much harder bargain with manufacturers than regional distributors can. The illusion is that these big distributors will pass on these savings to small and mid-size customers.
What distributors have learned is that a sales rep, operating in the 50-50 mindset, will “give away the store.” So the only way to avoid that problem is either to eliminate the sales rep, or to place strict controls on what the sales rep can and cannot offer. This scenario is what we see today.
War Story #4
I started my career working as a sales rep for Scientific Products (S/P) in Louisville, KY. One of S/P’s most important manufacturers was a company called Dade (Miami) which later became Dade Behring. We worked closely with the local reps and our local rep was David.
David was single, and like many of us who were hired back then was Robert Redford category handsome. He became my best friend and we spent a lot of time together with him and his various girl friends. He finally started seriously dating Dana who just so happened to run the blood bank at my biggest hospital. She became great friends with my wife and me.
David told me that the “love of his life” was a girl he knew who lived in Chicago. While he dated many Louisville ladies for “fun”, he would one day wed the Chicago lady.
David confided in me one day that he was being promoted and would soon be moving to Miami to Dade headquarters. He said: “I’m asking Dana to move to Miami with me and she has agreed.” I said, what about the Chicago woman? He said, “I’ve asked her too. Dana is just for fun, my real love is from Chicago and I still intend to marry her.”
So the dilemma here is if I should tell Dana what David’s plans for her were. If I did, and he went through with the plan, I would stand by as one friend’s (and customer’s) life was ruined and my most important customer would disappear. If I did, another friend would disappear.
The question is, what would you do in this situation?
The Sales Pitch
Our web sales have grown by 250% this year. Much of this increase is due to the huge investments we have made to upgrade our website infrastructure (Magento2 by Adobe). Another reason for this success is due to our cost plus pricing model.
Many of my readers are probably too young to remember Ron Popeil. He was an American inventor and a direct marketing pioneer, as well as an infomercial omnipresence in the 60’s and 70’s who made the phrases “But wait, there’s more!” and “Set it and forget it!” household words.
I bring up Ron here because there is far more to LPS than just web selling. We are trying to make it “Set it and forget it” by inviting you to become a client - with or without terms. Use your credit card, your own shipping account, shop tax free with a valid tax exemption certificate. Most importantly, you will get even better pricing and a dedicated, private portfolio of just the products you buy and at the quoted prices - no expiring quotes! Just set it and forget it! Contact us today to get set up, or to find out more.
