Partnering with suppliers is not a new concept within the roofing industry. Many roofing manufacturers have partnership programs to encourage loyalty from roofing contractors. However, establishing new, successful client relationships for roofing contractors through such programs is limited, and there are a few key reasons why.
By studying other industries where partnership programs are fundamental to competitiveness, you can learn a great deal about creating successful supplier partnerships.
In the information technology industry, manufacturers carve out exclusive territories for value-added resellers who work directly with the end user to specify and sell the manufacturer's products. The manufacturer supports the channel partner with pull-through marketing, training and pricing discounts. The reseller acts as the company representative for the end user. Managed well, the partnership is a win-win relationship that results in profitable business growth for the manufacturer and channel partner.
Supplier partnerships also are common in the retail, automotive, aerospace and other manufacturing industries. The partnerships are leveraged for product development, cost savings, supply chain efficiency, and sales and marketing collaboration. Companies in these industries have been able to trim enormous amounts of waste, expand markets and increase competitive market share.
Although the industries differ, there is no reason you can't learn from and apply these principles of supplier collaboration. Why is it important? According to New York City-based McKinsey & Company, a global management consulting firm, companies that collaborate deeply with suppliers have double the earnings before interest and tax (EBIT) growth rate of their peers.
In the roofing industry, the manufacturer-roofing contractor relationship often takes the form of a vendor-customer affiliation. The parties are co-dependent but work independently to achieve their goals. This primarily is driven by a two-step distribution model that is the predominant sales channel in the roofing industry. Manufacturers sell to distributors who, in turn, sell to virtually any contractor with a distributor account. This model does not engender partnerships and loyalty.
Roofing manufacturers try to counteract this lack of loyalty by using partnership programs designed to offer incentives to roofing contractors to be loyal to their brands. These programs primarily are based on volume with larger purchasers being rewarded with various incentives, including co-op marketing, trips and/or vacations, and merchandise. The result is mainly "window dressing"; it does not necessarily drive business behavior. All these partnership-type programs are virtually identical and missing a key component—collaboration on a joint business plan for mutual success.
Partnering for success
Studying supplier partnerships in other industries can help you learn how to leverage your suppliers' resources to your benefit. Supplier collaboration is a function of maintaining a delicate balance between demand and supply. For the most part, the primary focus of the supplier relationship is ensuring the correct materials are available at the right time and location. However, sourcing managers with a narrow focus on delivery are missing out on one of the chief advantages of forging collaborative supplier partnerships: an opportunity to drive synergies that are otherwise perceived as impossible within the confines of their businesses.
According to The Boston Consulting Group: " [T]he best buyer-supplier collaboration programs focus on five elements:
Product manufacturers and roofing contractors bring a great deal to the "relationship table." Manufacturers bring sales, marketing, logistics and product expertise. Roofing contractors provide end-user sales, building owner relationships, installation expertise and on-site logistics. Both parties depend on each other for success, but getting the most from the relationship requires a partnership built on cultural alignment, clear expectations, commitment and trust.
A partnership connotates more than a casual connection based on mutual interests. It is a relationship based on mutual respect, shared goals and hard work. As such, not every manufacturer-contractor affiliation can or should be a true partnership. But developing a few strategic relationships with suppliers will allow you to capture more market share at higher margins.
Ideal channel partners have:
Partnering is composed of two components: a defined process for achieving your objectives and building trust in the relationship to ensure you achieve objectives.
Benefits of channel partnerships
Partnering with a roofing manufacturer will provide you with access to sales, marketing, technical and logistics expertise, and attention that will help you accelerate your business growth.
Developing a joint business plan with measurable objectives, timetables and assignments will provide a commitment by both parties to prioritize their time to achieve success. The plan is customized to your partnership and, therefore, can and will operate outside the bounds of the manufacturer's published partner program. You will get more value and more resources than nonpartner contractors.
During my tenure with one roofing manufacturer, senior management made it a priority to meet with and develop joint business plans with a select group of strategic roofing contractor partners. This annual process developed deeper relationships between the companies, identified operational improvements and developed a joint plan with expectations for growth. The result was a higher level of commitment of resources by both parties and an increased growth rate.
Following are some examples of potential benefits of channel partnerships:
Roadmap to success
Following are three fundamental aspects to a successful channel partnership:
Selecting the right supplier partner is fundamental to developing a collaborative partnership that will yield benefits. You will need the internal capabilities and capacity to manage the association to be successful. This means assigning a point person within your organization whose job is to work closely with the supplier(s) to maximize the affiliation and extract the most value. This person should have the skills and resources necessary to unlock the relationship's potential.
Don't underestimate the time commitment required to manage the partnership. Similar to dating, the courtship stage is new and exciting. It is after the marriage the work begins to make the relationship succeed. I recommend starting with one strategic supplier partner, learning from the process, and expanding to other suppliers as needed and as expertise and internal capacity allows.
Selecting a partner with a similar cultural fit, setting expectations and following through on the plan will help to ensure success.
Is there alignment between the mission and values of the organizations? Do you share similar customer-value propositions? Regardless of how good the strategic fit and business potential, the relationship will break down if the cultures are incompatible.
Strategic partnerships follow a tact that allows them to address short-term needs while staying focused on the tactical roadmap to accomplish longer term goals.
Maintaining and improving a successful partnership requires focus on rapport in addition to the tactical output. Most partnerships fail when there is a lack of balance between accomplishing the goals and objectives and building a healthy relationship.
Channel partnerships are strategic by nature. They require a commitment and level of trust that can't be developed or managed with every roofing manufacturer. This doesn't preclude having relationships with multiple suppliers, but not every relationship can be strategic. Channel partnerships are selective, but many of your manufacturer relationships will continue to be vendor-customer in nature.
What does each party bring to the relationship? Outlining goals and objectives becomes a critical point where you begin to understand how important the affiliation is to each party.
What specific sales projections are expected by each party, and are both parties committed to reaching them? What projects and customers will be jointly developed? It quickly becomes clear at this point whether both parties have the same expectations about results. Without a detailed discussion of expectations, misunderstandings and disappointment eventually will harm the relationship.
How will the sales goals be accomplished? It is critical to identify the key steps that must occur within an agreed upon time frame to begin producing results. Objectives must be measurable in outcomes and within a time frame. Starting with training and joint sales calls, it is critical to agree specifically on what will be accomplished by whom and when. New habits are being formed and without discipline and accountability, it becomes easy to lose focus and make excuses for why the plan is off track.
A commitment to the partnership is critical. Each side must commit time, energy and resources to ensure success.
Open, frequent communication is vital to staying on track. Quarterly management-level status meetings help address issues early, stay on schedule and maintain accountability for the field sales people. Management participation will signal the importance of the relationship and quickly align the organization in support.
In my experience on the roofing manufacturer side, the annual planning set the roadmap, and the quarterly meetings between the regional manufacturer sales management and contractor management teams provided an opportunity to check progress and make course corrections as necessary to stay on track to meet goals. These meetings work as a catalytic mechanism to convert the plan goals and objectives into performance.
The most important aspect in the relationship is trust. Trust is developed through honoring commitments to completing goals and objectives and to the partnership; contributing in an equitable way; collaborating openly; maintaining a consistency in behavior; and open communication.
Developing a specific plan of action is critical to realizing value from the partnership. Goodwill and the best intentions won't sustain the disappointment of falling short of expectations without a good roadmap. Be realistic when selecting the scope of the effort and developing a timetable with specific tasks and personnel assignments.
Focusing on a few target building owner accounts and creating an account-based marketing (ABM) plan is a good first step.
ABM concentrates sales and marketing resources on best-fit accounts to turn them into customers or increase sales with existing customers. This is an excellent first step for any supplier partnership as you can limit the scope of efforts to specific targets of interest. In effect, you are drawing boundaries and not interfering with other supplier relationships or business areas where there is not mutual interest and ability to collaborate.
Equally important, identifying a specific joint activity makes the relationship real in practice, helps the partners learn to work together and provides a basis for measuring performance. Having real work to do makes it possible to get the relationship started. Of course, you want to select accounts where it is possible to develop negotiated work. Public projects such as government entities and public schools are not good targets for collaborative ABM.
After an account is identified, learn more about how buying decisions are made within that organization—who are the key influencers and decision makers? Determine whether you or the supplier already has a relationship with one or more of these stakeholders. Begin the process of developing a joint strategy to influence each key person.
Another area of potential collaboration is contacting building owners with expiring warranties. This can be a successful method to reconnect with a building owner because his or her existing roof system is approaching the end of its useful life. Offering a free roof system evaluation often can open the door to a conversation about maintenance to extend the existing roof system's life and warranty and/or start the conversation about roof system replacement.
Mining this data can be a challenge. In my experience with roofing manufacturers, older data often can be incomplete and difficult to access. However, if you work on small portions of the data at a time, you can extract tremendous value that serves as the baseline for an owner marketing campaign.
A variety of co-op marketing activities can be used to develop new project opportunities. The specific tactics depend on the program objectives, the capabilities of the roofing contractor and manufacturer, and available funding. Following are examples:
Don't let this benefit pass you by! I can tell you from experience that relatively few roofing contractors take advantage of the in-house marketing expertise of roofing manufacturers. In my time in charge of marketing for one manufacturer, we were more than willing to go beyond the written guidelines of the co-op program with a contractor that was interested and invested in jointly marketing our businesses to building owners.
Supply chain efficiencies
The essence of the supplier relationship is providing the right product at the right place and time. There is a tremendous opportunity for process efficiencies in product delivery and transaction processing. Collaborating closely with the right people within the organizations will uncover opportunities for improvement that will help your bottom line.
Collaborating with your suppliers will allow for co-development of products and application techniques that will save you time and labor and provide you with a competitive advantage. You will be surprised by the amount and quality of ideas that will come from a meeting of your best roof technicians, foremen and supplier technical personnel.
Supplier collaboration represents untapped potential to improve efficiencies, reduce business costs and increase market share. Looking to examples from other industries demonstrates the business and competitive advantages that can be derived.
Developing strategic supplier partnerships requires a commitment of time and resources to be successful. Carefully selecting partners, developing a specific plan of action, appointing the right person to manage the relationship and maintaining close communication will help ensure success. The rewards of these efforts will be realized not only in business growth but in unanticipated opportunities to improve your business processes and competitive position in the market.
Jay Thomas is president of Decision Driven Marketing, Boston.