Bringing National Accounts To Buying Groups

This is the first part of a four-part roundtable about buying groups.

For interested distributors, there’s certainly no shortage of buying groups from which to choose. But why join a buying group in the first place? It turns out buying groups have a lot more to offer than simply group discounts. To dig deeper, Sanitary Maintenance asked distributors what questions they would ask of buying groups. We then posed those questions directly to leaders at each organization.

How do buying groups effectively deliver national accounts to members at what is a reasonable distribution price point to service these accounts?

First and foremost, any group that claims to offer national accounts must have a knowledgeable, experienced, vertically aligned field-selling organization to go out and sell the value proposition. Once new business is acquired, then it’s all about driving efficiencies. Having a state-of-the-art e-commerce platform, visibility into order tracking and a seamless delivery mechanism in place are now table stakes when competing with the logistics providers in our space today. — Michael Wilson, vice president of marketing and communications, AFFLINK, Tuscaloosa, Alabama

Negotiated cost-to-serve conditions will ultimately determine whether a distributor believes an account it has been handed is “reasonable.” It has been our experience that the cost of “free” is high and carries other subsequent disadvantages. In many cases, third parties who unilaterally secure business on behalf of their distributor members, while appearing to be beneficial, possess a greater capacity for producing unsatisfactory results and questionable compliance at all levels. SMA ascribes to an “equity-based” model that facilitates a highly collaborative process that intimately involves member distributors in all phases of account pursuit and development, from pre-call targeting to account retention and maintenance. Such a process at SMA fosters greater compliance, and in the end, stakeholder satisfaction and sustainability over longer periods of time. — Dick McGann, president and CEO, Strategic Market Alliance, Charlotte, North Carolina

The United Group defines a national account as any end user that has more than two locations in two markets, and we take a different approach to the issue. We facilitate members’ servicing multiple-location accounts by helping them identify and work with fellow members in those markets. The members work out the deal terms that are agreeable between themselves. The United Group takes no fees or percentages from the process; members are completely autonomous in the relationship. — Bob Klief, vice president of marketing, The United Group, Monroe, Louisiana

The problem with many “national account” platforms is that they simply are not profitable for the distributor when factoring in the time it takes to service the account, technology costs and the slim margin of business that the overall opportunity represents.

DPA prefers a “ground-up” model for tackling regional and national accounts. If a distributor presents an opportunity to the group then we can help identify DPA distributors in those geographical areas to service the account. We will make sure that everyone’s on the same page with product specs and delivery times, and assist by securing contract pricing with the manufacturers. The distributor who found the opportunity will act as the “quarterback” with DPA providing coaching, resources and sales support. — Zachary Haines, executive director, DPA Buying Group, Cincinnati