Question

Topic: Advertising/PR

Incentives For Suppliers

Posted by Anonymous on 9/26/2008 at 7:23 AM ET 125 Points
Hello everyone,

I need help with giving incentives to my suppliers to get them to buy more products. My business is mainly b2b and deals in medical anaesthetic products. I have had success with various promotions but need new ideas. Any help would be gratefully received.

Thanks
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RESPONSES

  • Posted by babbsela on 9/26/2008 at 7:31 PM Accepted
    Are your "suppliers" distributors of your products? Are you looking for incentives to help them sell more to their customers, or increase their customer base? Or, are these end-user customers?

    What is your challenge? Are these people buying a certain amount from you, and some from another company, and you're trying to win more of their business?
  • Posted on 9/29/2008 at 3:52 AM Author
    Hello everyone,

    First of all thanks for the replay's. To answer your question Phil, I have already told the manager that discounting stock to the suppliers will result in them not buying any stock for a long time. I have told the management that the end user have to be the one's that we promote to, as they are the one's who will demand the product meaning that our suppliers will want more stock to satisfy the demand.

    The problem facing me is that my company dont seem to care what our end user want. There has been no research to ask what our customers want when products are being developed. As a result our warehouse is stacked with products which we cant sell and are close to their sell by date.

    As the manager is only interested in promotions (which are not being measure, as far as I can tell), I thought instead of continue being negative or obstructive, I would just come up with promotions and let him deal with head office.

    SO in response to babbsela, the challenge is get our suppliers to purchase other products from us instead of going to our competitors and to sell our product more than competitors, so any help would be well received.
  • Posted by pghpromo on 10/8/2008 at 2:49 AM Accepted
    Your distribution companies (i.e., suppliers) who sell to end-user customers should be in good position to know what these customers need, and they are not likely to purchase any product which they do not anticipate being able to sell to these customers. Some larger distributors may track all end-user sales and can produce reports for you identifying exactly which of your products are big sellers and which are not. (Be prepared--Some distributors charge you to provide this data.) Using this report as a starting point, you can visit with distributors about what else THEIR customers are looking for, then you might be able to find a match and move some additional product out of your warehouse.

    However, if your existing distributors are unable to confirm their customers want anything you have sitting in warehouse, then you will likely need to visit with your manager about developing a second business model with a different distribution network, in order to move your other products to a different customer base.

    Hey, are end-user customers doctors and such? You can always prepare a special purchase incentive and pass it along to your distributor companies. The promotion would be that end-user customers earn either free product or a premium gift upon placing an order for X product or mix-and-matching any combination of X and Y product. Example: Buy 3, get 1 free. Buy 25, get 10 free. Buy 50, get a XYZ Gift Card. You have to run the numbers beforehand to determine how much $$ to give away in the form of free product or gift card, etc. In the endodontic supply market, we have had good response recently offering American Express "Fill It Up" cards as incentives for end-users buying from distributor companies.

    And then, in an effort to get your distributor companies to SELL this promotion to end-user community, you can arrange a SPIFF, where your company arranges a contest for distribution company's sales staff. Top seller of your promotional offer gets his own prize of some kind. You can establish 1st, 2nd, and 3rd place prizes. Sometimes a SPIFF lasts for a week, and you may have to pay distributor for the privilege of commandeering their sales force for so many days, but it's an investment because the end results is MORE SALES of your products. This means your participating distributor will have to order more product from you. Distributor gets more revenue, you get more revenue while moving more product downstream---WIN/WIN.

    Another idea: We also offer contract rates for end-user customers. As long as customer signs an agreement to purchase a certain volume of product during 12-month period through distributor of his choice, then he gets discounted rates as a reward for loyalty. He still buys only the amount he needs, but he establishes a predictable purchasing volume which can help you plan manufacturing levels.

    Hope some of this is helpful.
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