It's Time to Find a Niche in Ad Specialties
Distributors develop creative solutions to select promotional product suppliers.
Uncertain times and a changing industry have forced some traditional forms distributors to diversify their products and services in hopes of surviving these economic times. As a result, one area that they've ventured into is promotional products, in which they are having to face some formidable giants.
The biggest obstacle distributors say they faced when beginning to sell ad specialties was tackling the different vehicles for sourcing products. Once companies had a handle on what was available to them, they needed to figure out how to choose manufacturers and release that information to their sales reps. Although redesigning a company's infrastructure is usually a wise investment, it's not always cheap.
Wayne Martin, director of vendor relations, American Business Forms, Glennwood, Minn., noted, "We've invested $3 million to $4 million per year for the past couple of years to develop new internal technologies like sourcing programs and databases."
These internal technologies are the tools that help sales reps stay cognizant of the promotional products and suppliers available to them. Other resources include trade shows, conferences and seminars, while some distributorships enlist procurement teams to notify reps of new products or vendors.
"We created a procurement department that focuses on promotional products, and we use several online tools to search for those products," said Jeff Scott, vice president, Merrill Corporation, Monroe, Wash. "We use our creative group to design themes for marketing strategies."
At American, sales reps go to the main office twice a year to attend business meetings, conferences, vendor-sponsored seminars and trade shows that have more than 150 vendors.
"A tremendous amount of networking takes place at our trade shows. We hear from vendors that they are the best shows they attend because of the relationships they have with our reps," said Martin.
While the main tools for procurement are found online through companies like ASI, PPAI, DMIA and others, some suppliers are wary of what online procurement has to offer.
"We don't do a lot of online research. To be honest, I think the Internet is just a gigantic advertising board. However, ASI and PPAI are starting to offer a lot more online catalogs, so we've downloaded some of them," said Kevin Smith, president, PPI Graphics, Canton, Ohio.
Narrowing the Search
What online services do offer, however, are choices. And while choice is often considered a virtue of freedom, it can also be a thorn in a businessperson's side. Even with procurement teams and tools for sourcing, the options can still be overwhelming. To combat this, distributors have come up with different ways of narrowing their pool of suppliers.
For instance, because American has about 6,000 vendors in its database, it needed a way to cull out who they wanted to work with. Part of the solution was to become employee-owned and to develop a preferred vendor program called "Partners for Progress." In the program, vendors offer various discounts for prompt payment and rebates, which supports employees' Employee Stock Ownership Plan (ESOP) accounts.
"This produces a full circle commitment that encourages the reps to use vendors who contribute to their ESOP fund. Those vendors then get the exposure that was promised," said Martin.
While Martin and his procurement team have access to all 6,000 vendors that are in the database, the sales reps have access to only the 400 vendors who participate in the program and contribute to ESOP funds.
However, before even thinking about picking and choosing its suppliers, the company needs to make itself known in the industry. The key to doing this is to build relationships as well as gross sales dollars. According to Smith, a distributorship just starting out should go to trade shows to educate manufacturers as to its capabilities. As PPI Graphics grew, manufacturers eventually started calling on the company, at which point it was able to be more selective about who it would work with. There are a couple of reasons why this is beneficial, one being that at busy times of the year, jobs can fall through the cracks. Working within a limited pool of suppliers allows distributors to develop relationships and build order numbers and dollars spent.
Another way to develop relationships is to invite manufacturers to educate the company about their promotional products and marketing strategies.
"We have several vendors that come in every year with the launch of their new catalogs. They bring in a whole line for us and give very specific information relating to the products," said Scott.
And of course distributors tout the benefits of value-added products, because ultimately these services are what distinguishes them from competitors. PPI Graphics has found that fulfillment in particular is a service that adds value to its product listing. "We do a lot of work with larger companies that need products shipped all over the world. It helps eliminate the pricing game when we add other services," said Smith.
Smith also discussed the importance of adding services in light of the lack of supplier loyalty, noting that a supplier will produce an order for him one day and for his competitor the next.
"ASI suppliers traditionally do not keep quiet about the concepts that distributors bring to them. They often turn around and take it out to bid, which can cut down the profit margin for distributors," he said.
Knowing clients and their needs will also give the distributor that necessary edge. More often than not, the commodity in ad specialties is the idea surrounding the promotional tool. As such, business forms and commercial printers are at an advantage because of their familiarity with their clients' needs.
Even though the ad specialties industry can sometimes seem overwhelming, the benefits do outweigh the costs. It simply requires creative solutions to not only know what the client wants, but what the distributor and sales reps need in order to be efficient, committed and inventive.
"There are great opportunities in promotional products. The key is to diversify business and get as many different lines of printed materials in the tool box as possible in order to be more of an asset to the client," said Scott.
By Sarah Lerow