FRANK Guerin spent the last 25 years of his career with Utility Trailer Manufacturing Company, the last 17 of which he spent as the director of dealer relations.
While conceding that his perspective is from the OEM side, he offered some suggestions on how to get maximum results and satisfaction from the manufacturer-dealer relationship.
“I can't speak for Utility now, because I am retired,” Guerin said, “but I can speak of Utility. One of the things we spent a lot of time on was making sure our goals were aligned. We kept our dealers informed of where we were, where we were heading, and what we were planning. It also worked the other way around, and sometimes we changed course based on input from our dealers. For example, it was our dealer network that convinced us to open a reefer plant — not a dry-freight van plant — on the East Coast.”
Based on his experience, Guerin believes that trailer manufacturers are looking for the following items from their dealer network:
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More sales
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Parts and service coverage
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Local representation
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Reputation
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Eyes and ears in the marketplace
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Better coverage
Dealers have their own list of expectations. They include:
- Product to sell
- Product to service
- Profit opportunities
- Access to aftermarket parts
- Growth opportunities
- Better image in the marketplace
For the relationship to be effective and long-lasting, manufacturers and dealers have to share mutual goals and visions, Guerin said.
“What is the mutual focus of each party?” he asked. “If both parties do not share that focus, you may have a problem.”
As an example, truck dealers sometimes want to supplement their operations by getting into the trailer business. Guerin said that he had some truck dealers who were successful trailer dealers, but that it is difficult to give trailer sales the proper focus when a business has its foundation elsewhere.
He added that manufacturers and dealers should not begin a relationship in which they don't have a mutual vision of the market, a compatible focus, shared loyalties, plans, and expectations. That includes the expectation of profit.
“Utility expects dealers to be profitable, and they are very critical of dealers who aren't profitable,” Guerin said. “I know of one dealer — who ultimately failed — who sold $1 million in trailers in one month and lost money in that month. For a relationship to work, the manufacturer and the dealer must be profitable.”
Guerin also stressed the importance of mutual trust and the avoidance of confrontational, adversarial relationships. These benefit neither party.
“This is a particularly sensitive area, because the manufacturer's rep typically controls your pricing and availability,” Guerin said. “But good relationships with middle and upper management are important, too. There aren't many people working for trailer manufacturers who can tell you ‘yes,’ but there are a lot who can tell you ‘no.’”
Guerin suggested resolving conflicts right away, before they get a chance to fester. Common areas of conflict include errors in billing, warranties, contract disputes, credit terms, and trailer specifications. He also urged dealers to become very familiar with the contents of their dealer contracts. These spell out the definition of the relationship and the remedies that are available when one of the parties fails to adhere to responsibilities.
“Most dealers don't ever read the contract,” Guerin said. “And when conflicts come up, the manufacturer will often refer to the contract. Know where yours is. It is the only thing that defines the relationship.”
Guerin advised dealers to make periodic visits to his manufacturer's plant perhaps once every two years. The factory visit should include:
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An opportunity for manufacturer and dealer to share their plans.
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Don't just meet with the president and vice-presidents. Visit with those who work with your dealership on a daily basis.
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Make recommendations and suggestions.
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Bring your key personnel such as your controller and service manager.
Another opportunity to strengthen manufacturer-dealer relations is through dealer councils, Guerin said. These meetings provide an opportunity addressing issues of concern. They also should be attended by the manufacturer's decision makers, which means that issues can be decided on the spot.
Guerin quickly commented on several other topics that are common areas of conflict between manufacturer and dealer:
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Territories. The geographically area defined in the dealer contract is considered nonexclusive and nonrestrictive, but the dealer is responsible for serving that area.
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Special events. Dealers should participate in open houses, trade shows, and all factory meetings. Some dealer contracts require that dealers attend all factory meetings.
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Be aware what your employees are doing to enhance or harm your relations with your manufacturer.
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Dual representation. Dealer contracts typically do not require dealers to sell a minimum number of trailers per year, but they do require the dealer to put forth “best efforts.” According to Guerin, dealers who represent two trailer manufacturers that produce the same products makes it difficult for the dealer to put forth best efforts when representing dual manufacturers. And, he points out, this makes it difficult for the dealer to receive an expanded sales territory.