The Value of Distributor Association Meetings

First a personal proclamation:  I am a proponent and advocate
for membership in distributor associations.   After fourteen years of working for the manufacturing side, I attended my first such meeting back in 1991.  The first meeting was scheduled by the owner of our company.  I expected to have fun, make some new friends, and maybe learn a few pointers on the nuances of running a distributor.  I did; however, I also observed a couple of negative things that were, quite frankly, disgusting to me. 

 

The negative points -the boondoggle thing

Some distributors saw these meetings as a tax-deferred vacation.  They came to play, not to work.  As a young, and perhaps idealistic, distributor of 37, I was determined to grow my business and make a difference in the industry.  I saw several people whose only real involvement in the meeting was participation in the cocktail hour and going out to dinner with friends.   While I was (and still am) into partying, I saw the meetings as more than just a party.  Allow me to share a very old story.

 

I wanted to meet the distributors who surrounded my home turf of Iowa.  My company never crossed swords with them, we had much to gain by establishing a relationship, and this type of meeting was the perfect venue to reach out. 

 

I can still remember my plan.  The meeting was scheduled to start at 10 am, so I figured I could catch a distributor in their hotel room ahead of the meeting.  At 9 am I used the lobby phone to call this guy’s room.  When he answered the phone, I could tell he was groggy, but because we were on the west coast where 9 am local time was 11 am Iowa time, I assumed I had just caught him off guard. 

 

I introduced myself, told him I was at the meeting, and wanted to meet him for 10 minutes ahead of the first speaker.   It all seemed like a reasonable idea, at least to me.  His response was straightforward.  One, why would I ever call a person so early in the morning.  Two, didn’t I know these meetings were not supposed to be business.  And three, he would be out sightseeing in Seattle for the rest of the day and playing golf the next day, so don’t bug him anymore.  Simply stated, he wasn’t at this meeting to make new connections, improve his business, or learn anything new. 

 

So now you know, I don’t like tax-deferred boondoggles.   Sorry.

 

Poor planning is a negative too

I discovered many of the people attending did little to prepare for the meeting.  Both distributors and their supply partners attended the meeting as if it was a stand-alone event.  Some didn’t even review the attendee roster until they were on the plane headed to the meeting.  Any networking they did was mostly data-free conversations with many unsubstantiated statements.  For example, “The new product launch was ok, but we didn’t see any real uptick in business.”  Wouldn’t it be nice if there were a few metrics, like 50 percent of our customers thought the product lacked an important feature, or the launch-related demo didn’t ship until two months after the demo?

 

There is a distinct need for the following ahead of the meeting:

·        Pre-set appointments with selected peers and suppliers.

·        Data to make the appointments more meaningful. 

·        Conversations with the distributor’s sellers, purchasing, and logistics teams to identify issues for discussion.

For meetings with other distributors the list might include:

·        New sales management approaches.

·        Discussion of issues with specific supply partners.

·        Questions on what kind of marketing plans work best in your territory.

·        Exploration of cool new services offered to customers.

·        Benchmarking on tips and tricks of distributor-centric technologies.  ERP systems, eCommerce platforms, and others.

·        Specific problems with people, warehousing, etc.

 

On the topic of data-free conversations, please remember, “How’s business in your area?” is just the business version of the 1980s pickup line, “Hey, what’s your sign?”  There is little value in either phrase. 

 

Years ago, we published a guide to getting the most out of your business.  For the sake of brevity, we are not posting it here, but we will happily send you a copy for the asking.  Instead, I would like to take this post in another direction. 

 

How to really justify your investment in an association meeting

Returning to my first meeting:  I came back with a bit of a sour taste in my mouth.  I was ready to abandon my attendance in meetings when my friend Jim Hoke encouraged me by asking this question:  

“Did you come up with enough new and beneficial ideas to justify the cost of attending?”  I sat down and wrote down the ideas I had picked up and did my best to assign values to them.  It turned out that even though the trip was disappointing, the meeting was a financial success. 

 

This launched me on a quest to measure the value of the meetings I attended analytically.  Here is my plan:

 

·        Come to the meeting prepared.  Are there areas/processes you feel could be improved?  Who at the
meeting may be facing the same issues?  Arrange for some short meetings to discuss.

·        Ask a lot of specific questions focused on improving your business.

Meetings with supply partners should be focused on gaining some small competitive advantage in your market.

Meetings with other distributors should include discussions of what types of programs, processes, and marketing are working in their territory. 

·        Keep a running list of items along with an estimate of the value they provide to you.

·        Once home, sort out the ideas based on ease of implementation.

Some of the ideas will be hard to put into place, others will be the low-hanging fruit that provides an almost instant payback.  I recommend working on the easy ones and laying longer-range plans for “just” two of the bigger ideas.  

·        Put financial metrics on the ideas and share the results with your team.

 

A few points more points on assigning values

There is an inherent value in meeting with important supply partners.  Having a relationship with the upper echelon of your suppliers provides a safety valve for issues with the local sales team whether via a manufacturer’s rep, a regional manager, or a factory-direct person.  This is of strategic importance, akin to a life insurance policy.  It’s hard to place a value on the relationship/insurance policy until you need it. 

 

Outside of the insurance against a rouge local guy, having a relationship with the supplier’s top people allows the distributor to better understand the future direction of one of their strategic partners.  This allows the distributor to improve their strategic plan and ultimately become a more important part of the supplier’s channel strategy.

 

Occasionally, in most business environments, and often in today’s supply chain tumultuous whirlwinds, these partnerships allow for a final spot for high visibility expediting.  I can name dozens of instances of these in the past six months.  

 

Distributor Association meetings provide a vehicle for establishing and nurturing these relationships.  I typically would assign a value equal to 3-5 percent of the annual gross margin produced by selling the specific supplier’s products. 

 

Most modern distributor association meetings feature a variety of new supplier showcases.  I had an ongoing goal of adding new supply partners capable of driving between 100-200,000 dollars of sales to my company within the next three years.  I would typically assign about 10 percent of the potential projected three years of gross margin gain to my value metric.

 

My track record with this system

As a distributor, I attended many association meetings.  The association meeting that most closely matched our business was the Association for High Technology Distribution.  Over the years my return on investment for attending these meetings was always north of 500 percent.

 

The investment included the cost of membership, getting to the meeting, hotels, rental cars, and sometimes a massive bar bill.  The ideas were often simple and easy to execute.  My partners and I grew our business over 14 years from $17 million to $150 million.  The locals thought I was a genius, but many of the ideas which pushed us forward came from the information that was openly shared at these meetings.

 

If you would like to tap into your distributor association and find yourself struggling to make it happen, give me a call.  I’m happy to help. 

 

Frank Hurtte, Founding Partner of River Heights Consulting, shares his personal experiences with 28 years of "in the trenches" training and 17 years as a consultant.  He serves as a personal coach to industry leaders across many lines of distribution.  He has authored 5.5 (one's almost done) books and has written hundreds of articles for national trade magazines.

Frank is also a sought-after copywriter of marketing materials for technology companies.  His charismatic, yet laid-back, easy-to-follow manner makes him a favorite among public speakers.

 

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