It’s not just about how much you sell – it’s about how much you make on what you’ve sold.

Consider: A distributor that sells $1 million at 10% profit just brought home $100,000. However, a distributor that sells $500,000 at 40% profit just made $200,000, doubling the earnings of the competitor that outsold them by double in top-line terms.

The question then becomes: How do distributors improve margins in a cost-competitive market? Two successful distributors share insights on the topic here as part of ASI Media’s ongoing “Ask Us Anything” series, which enlists high-performing promo pros to respond to readers’ pressing questions.

Sarah Whitaker
• Owner, Williams Advertising (asi/360402)

Christopher Faris
• Founder/CEO, Boost Promotions (asi/142942)

Q: Some say, “All clients care about is price.” Is that true?

SW: Sadly, some buyers will care only about price and you won’t change that. However, many care about value. Our counterparts in other advertising formats like digital, social media and traditional advertising tend to beat us on communicating value. It’s there that we need to focus: Helping clients understand the value that we provide – and then delivering.

CF: When it comes to our clients, price is certainly a factor, but it’s not the main driver. Service, honesty, transparency, knowledge and quality are as important, if not more important, than price. When you become a true partner, clients feel confident the job will be done correctly, on time and at a fair price.

Q: How can distributor leaders help their teams achieve stronger margins?

SW: Empower your sales team to operate as brand advisers. Help them understand how to better position products with the end-user in mind. By fostering creativity and a consultative approach, you enable your team to deliver value, which sets the stage for long-term relationships, higher revenue and better profitability.

CF: With inflation pressure, all distributors need to focus on stronger margins. You can secure great supplier relationships to earn EQP and rebates. You can also focus on the top 20% of your clients, which will allow you to eliminate some of the 80% that may reduce the company’s average margin. By spending more of your time and resources on top clients, you can enhance the top and bottom lines.

Q: What can reps do to help clients understand the value of high-quality products and sustainable items?

SW: Talk about ROI. The longer the product sticks around, the better for their brand. The higher the quality, the better fit it is for the recipient, then the better the return the client gets. Relatedly, sustainable items are increasingly valued by recipients. When they see those values reflected in your client’s branded items, that’s going to be a better return for the customer.

CF: Reps must explain that the items clients provide are a direct reflection of their company. By giving out a “throwaway” item, they’re wasting money and the opportunity to engage with their prospect. Whether it’s a higher quality and/or a sustainable product, the story it tells has the impact. Help clients visualize how their brand will be perceived if the items are quality and the graphics and messaging are strong.

Q: What’s your view on the “race to the bottom” on price mentality?

SW: It hurts our medium. Digital advertising doesn’t lead with price; it leads with targeting capabilities and ROI. It’s up to the marketer to decide if that investment is a good one. Traditional media is the same. Both are as effective as the creativity put into them. We need to take a similar approach. If we do, we’ll earn a larger part of overall marketing share.

CF: It negatively impacts our industry, commoditizing what we do. There are plenty of low-cost no-service websites to choose from. Distributors have to choose to differentiate themselves with knowledgeable, well-paid, long-term happy employees who know how to leverage branded merchandise to help clients have success. You don’t need to race to the bottom if you do that.