“We are a medium-size food manufacturing company directly selling our products to large independent and national chain retailers. The more volume we sell to them the more they dilute our profits.  How do we build better business relationships with them beyond giving more discounts and financial supports?”   - Dante, Makati City
 
Big retailers are one of the fastest routes to moving your products to more shoppers. But they are, most of the time, the most challenging channels to deal with.  Many suppliers perceive them as anacondas who are always on the move to squeeze their preys to death.  They clinch more discounts, lower prices, more display space rentals, new store opening supports, anniversary supports, product highlight supports, and many more supports.  There are suppliers who just give up and look for alternative channels for their products. But how come others are able to build more profitable business relationships with them? Is it a function of business size? Company and brand reputation? Selling skills?
 
In dealing with various suppliers and retailers, I discovered that most of these progressive suppliers share common denominators that are not so secret after all. They deliberately follow proven approaches in creating value with their major customers.  Let me share with you a few of them that are more applicable in your setting.
 
They know their customers well enough to influence their decisions. Their salespeople are able to effectively generate relevant information about their customers. They keep updated and robust Customer Fact Book for each account which contains information necessary to fully understand the structure, policies, idiosyncrasies and motivations of the customer.  The information is then integrated in their system and is regularly used for informed decision making. This makes a lot of sense, for how can you serve someone you do not know well?
 
They provide operational efficiency.  Most retailers claim they do not really make money from operations due to staggering operating costs that theydemand efficiencies from suppliers. Do you provide them the right products when and where needed? This is one of the reasons why they slap suppliers like you with hefty penalties if you deliver the wrong products at the wrong time.  Buyers would normally inform your salesmen about the retailer’s standard service level. For example, if the standard service level for an item is 90%, it means that on average, if they order 100 units, your actual delivery must be at least 90 of that item at the agreed space and time. If they require next day delivery, you must have the logistics structure to support that. When you constantly fail in these aspects, retailers will compensate the loss through more discounts or other financial supports. Even if they do not make money from operation, they can recover from other direct to pocket income (yes, that’s your other financial supports). Start to measure your service level, order-to-delivery leadtimes, billing accuracy versus agreed standards with your customers.
 
They act as business consultants to customers. Their people are trained to deal with key buying influencers in the retailers and speak their language well. They help their customers with decision making by providing relevant information and sound suggestions that will positively impact the customer’s business or imagein areas such as: market intelligence, shopper and consumer insights, product category management, joint promotion programs, retail marketing strategies, supply chain management, special trainings, etc.Your customers expect your sales people to be complete professionals: highly skilled, knowledgeable, reliable, and dependable.
 
They pursue collaboration.The above practices usually lead to supplier-retailer collaboration. This is attained when there is mutual transparency, willingness of both parties to cooperate and forge long-term business partnerships.  This is where you and your customer have developed close business ties as a result of:  your reasonable price, your operational efficiency; your brand’s good quality and marketing supports; your service dependability and reliability, and good personal relations with the customer.  Companies refusing to embrace collaboration will, sooner or later, find that their existence is threatened once a competitor moves to collaborative partnership with major customers.
 
Emilio “Bong” Macasaet III is Partner and Chief Distribution Strategist of Mansmith and Fielders, Inc. (www.mansmith.net), the leading marketing and sales training company in the Philippines.  For inquiries, please email info@mansmith.net, call (+63-2) 584-5858 /412-0034 or text (63) 918-81-168-88.   Please also send your marketing, sales and strategy questions to mentors@mansmith.net.