Price Matters to the Promotional Products Buyer

Many top motivators in this industry will cause you to experience cognitive dissonance when they maintain that price is way down the list of what truly matters to your clients. To the extent that you have followed the above methods and established yourself as a member of the marketing team, and not just another swag salesman, these pundits are correct. However, in the trenches there are various reasons this perfect scenario doesn't always play out. Examples include:

1. The buyer has to or wants to send it out to bid, no matter how much he appreciates your extra effort.
2. The buyer doesn't care about your value added skill set. He just wants 1000 pens for the meeting.
3. There is a buyer change, and the new guy is trying to make a name for himself. Being stupid, he thinks he will make a name for himself through saving dollars, and you have no time to educate him.
4. You receive a bid offer or phone call request and have no opportunity to establish any kind of rapport.

These kinds of situations are highly nuanced and thus there are no easy answers. Rather I would propose a set of principles and strategies to follow.

A. Small unsolicited requests for pricing or bids. Attempt to determine whether you really have a long term opportunity here to develop important business or referrals. If not, offer your standard pricing and terms and move on.

B. Assume that the price list supplied to you by every supplier is a starting point. A big part of your job is to sell the supplier on why they should give you a price that is lower than eqp for an order of the minimum. You can then use this price and low margins to "buy" the business when there is a long term strategy in mind. This is really where the big boys play. This is why traditional distribution channels are always being stretched and challenged.

Using this type of strategy over the long term or for every client is a recipe for disaster. You need the margins. Your supplier needs the margins. And if your main customer base only buys from you on price, there WILL come a day when a competitor WILL find a way to beat you.

Also know that there is a niche for a certain kind of distributorship which discounts all of the time as a strategy. They do this by keeping extremely low overheads and offering no extras. There may also be hidden costs such as payment in advance, freight handling charges, etc. To be this kind of distributor you must create that kind of business. I personally don't know how to do it, so can't offer direction or advice.

C. A major client tells you that his business will always be a bid situation. This is my favorite kind of challenge, and one where winning is not assured, no matter what direction you take. But consider the options. You can sell them at low margins and get some or all of the business. You can sell them at decent margins, and win a few contracts. You can work your butt off to get better pricing from your supplier and work on low margins and get almost all of the business. You can SELL this client on changing his buying procedure.

What is his goal in bidding out all the work? What are his specific goals for the overall promotional products area? What does success look like to him? More than likely his "bid everything" strategy is imposed from above or is just the best he can come up with with his limited creative skills.

By determining if there is a way for him to feel more successful or, better yet, look more successful to those grading him, you can now build a pitch for your comprehensive approach as a supplier. You may even be able to use a trial close that helps him create a success grid: quality products and printing, arrives on time, problem free administration, excellent pricing, successful campaigns.

D. Keep in mind the Kirk 10% principle. Outstanding approaches to any situation will be trashed by 10% of the buyers. We made an initial call on KMart 20 years ago. Our product was already in Target and doing well. Three highly successful, professional salesmen with three piece suits entered the buyer's lair at 7:00 a.m. Part of the buyers intimidation strategy was to see first time product presentations super early.

We decided to ask the critical questions first . How many turns did he expect? How many dollars per foot? This type of thing. We knew that our item was getting outstanding turns and returning excellent dollars per foot at Target. This was the "professional way" to approach the client.

The buyer got irate and told us that he wasn't interested in training us in KMart's retail strategy. He just wanted to know what did our product do? How much did it cost? We left with our tails between our legs. This strategy works 90% of the time. P.S. We got the business anyway.