Rivet|MRO was featured in the March/April edition of Industrial Supply Magazine article, Stop Throwing Money Away.
Here’s the text of the story:
STOP THROWING MONEY AWAY
by Tim Rasmussen
What if I told you that your distributorship intentionally threw away a $30,000 check every year? That’s if you’re lucky. Chances are, the check your distributorship is throwing away is bigger. Much bigger.
The average independent industrial distributor with $30 million in revenue is probably missing out on more than $50,000 in co-op funds. That’s like throwing away $50,000 every year that could have been invested in growing your business.
How much product would you have to sell to earn $50,000 to spend on marketing? It’s around $1.6 million (if your distributorship nets out at 3 percent pre-tax profit, as most do, that would be the profit generated from $1.6 million in sales).
How much effort would you put into a $1.6 million sale? How much effort do you put into claiming co-op marketing funds?
Co-op marketing funds are an overlooked treasure trove that can fuel new sales growth. Most distributors don’t pursue co-op funds because the process is complicated and time-intensive; every manufacturer has different rules and the claims process can be overwhelming. Then there is the issue of resources for program design and execution—so most distributors don’t even try to maximize their co-op. They just settle for a few pieces of low-hanging fruit.
For those who diligently seek to maximize co-op, however, the rewards can be great. And, it’s not too late in the year to start the process. Here’s a quick primer on 10.5 simple things you can do to start claiming more co-op marketing funds.
1) Keep track of your manufacturer contacts—you’d be shocked at the number of distributors who don’t have ready access to names, phone numbers and email addresses for key contacts. You can’t claim co-op funds if you can’t find someone to approve the request.
2) Make sure your sales team has a voice in the process. Before you start planning, talk to your sellers and find out what tools they need to improve their performance. Ask them what kinds of promotions work with your customers. Document their wish list and refer to it as you develop your funding requests. And there’s a bonus benefit: when your sales team has a say in the planning, they have a greater buy-in when it comes to execution!
3) Ask your manufacturers for co-op program details and save them in a single co-op file. Having the co-op program rules in-hand makes planning their use much easier.
4) Involve the manufacturer in the planning process. Learn about their priorities that align with yours. Meet early in the year. The earlier you engage, the better. Some manufacturers won’t approve requests late in the year.
5) If your manufacturers don’t have formal co-op programs, ask them if they have informal programs. How do they determine budgets? What types of initiatives do they prefer to support? Make sure your requests reflect this input.
6) Be prepared to demonstrate how you will drive and track co-op program results. Manufacturers are more willing to support co-op marketing projects that will provide a return on investment.
7) Demonstrate how you will apply your co-op support to strategic initiatives that are in alignment with the manufacturer’s key focus(es). If a manufacturer sees linkage between your co-op request and their key initiatives, there is a higher likelihood your request will be funded.
8) Develop an overarching marketing positioning strategy. Marketing is about telling compelling stories—what’s yours? What makes you better and different? Understand that and make it come to life in your co-op marketing programs.
9) Ask about Market Development Funds—they are often separate from co-op funds. These kinds of funds might be available when the manufacturer has an important new product launch or asks you to pursue a new market for their products.
10) Don’t let your internal resources drive your co-op planning strategy. Find external resources to help you find, claim, manage and use your co-op funds. Just because you don’t have internal video production resources, for example, that doesn’t mean you shouldn’t pursue video co-op projects.
10.5) Commit to the plan. Maximizing co-op funds is about perseverance. Get organized and remain focused. Follow-up regularly with your manufacturers, especially your bigger ones.
Still daunted by the complexity of co-op? Don’t be. Where else can you get free money to grow your business?
Tim Rasmussen is the founder of Rivet|MRO, a marketing consulting firm that focuses exclusively on independent industrial distributors. One of the firm’s major services is its Co|optimizer co-op maximizer program. Rivet|MRO also provides strategic marketing consulting, marketing analytics, distributor-specific syndicated social media management, and traditional resources of a full-service agency. For more information, visit www.co-opMAXIMIZER.com and www.rivetMRO.com.