SOI 2015 – Branching Out

Traditional Distributors Forced To Shake Up Businesses

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SOI 2015 – Branching OutDistributors are increasingly diversifying their businesses in an effort to appeal to the changing needs of clients.

As online sellers of promotional products have worked to provide quick answers and fulfill orders at lower costs, traditional distributors have been forced to shake up their businesses. In fact, distributors have diversified their business to the point that they say that an average of 60% of their revenue comes from promotional products. That’s down from 85% just six years ago.

And, it’s exactly what clients are demanding from them. A full 65% of distributors say their clients are seeking more services from them in addition to just fulfilling product orders, a number that has steadily increased over the past six years. Yes, the business is changing for industry distributors, as they face increased competition from online companies that are willing to play a low-price game that they’re better set-up to win.

The key to successfully adding services outside of the promotional product realm, according to Hadley Winslow, is to not bite off more than you can chew. “If you expand too many different ways, you’re going to lose focus, and nobody can be an expert at anything,” says Winslow, promotional consultant for Specialty Incentives (asi/331870).

That’s why, in order to gain a competitive advantage and build customer loyalty, Winslow has become an expert at one additional service that many of her competitors prefer to outsource.

“The other thing I do is help them with artwork, as far as converting .jpegs and files like that into vector art,” she says. “I think a lot of people outsource it to graphic artists because it does take a lot of time.”

But Winslow says this service is especially beneficial to smaller companies that are purchasing promotional items. “The reason I do it is because we work with a lot of businesses that are small or are just getting going, and so many of them only have their art in .jpegs or low-resolution,” she says. “I’ve taught myself how to create vector images out of .jpegs, and it’s just an additional service so they don’t have to worry about finding someone else who does it. I don’t have to worry about them being able to relay correctly what it is that we’re looking for, and it just helps both parties.”

Service ExpansionFull-Service Providers
Today’s competitive landscape has resulted in ad specialty sellers becoming so much more than just providers of promotional products. Steve Lapensohn, CEO of Lapgevity (asi/249351) in Dallas, has a specific additional service that has helped to create closer relationships with his clients: For years, he’s partnered with a Dallas-based ticket broker, Ticket Finders USA, in order to provide discounted event tickets to his end-users and become a more complete solutions provider.

“A lot of people don’t think of it, but tickets can be used as a morale gift, as a sales incentive. They can be a gift with purchase. They can be an employee-of-the-month gift,” he says. “Corporate loves it because they can use it as a sales incentive model.”

Lapensohn has tied in tickets to popular sporting events with sales reps who work for one of his top clients, Microsoft. “We have a program right now with Microsoft where if an employee sells 50 Surface tablets, they get two free NFL tickets to any game,” he says. “It’s a fun experience, it gives a sales guy a chance to go to an NFL game and sit in premium seats. We do a lot of sales incentives, based around tickets.”

But Lapensohn has taken his ticket broker relationship even further, using it as an avenue to become a total solutions provider. For example, he was able to provide one of his clients discounted tickets to a major golf tournament along with the logoed golf balls and visors they initially ordered.

“It makes me look good,” he says, “and the client gets to write one check, gets to have one experience. Any distributor can do it. There’s StubHub and there are all kinds of ticket brokers everywhere throughout the world. Every distributor has access; they just don’t think of it.”

Lapensohn says many distributors – even those capable of providing additional products or services – miss out on the opportunity to offer those options simply because they don’t ask. “The products that we do are all components of events and bigger experiences,” he says. “When you ask questions about what the client is going to do with the product, it can lead you into other categories if you have the resources. You might get into event management. You might get into all kinds of other services for whatever that experience is around the product.”

Lapensohn believes distributors just need to think outside of the traditional products they provide and think about their offerings more as fulfilling anything that could occur at a promotional event. “If your client asks you for 500 baseball caps because they’re taking everybody to a baseball game,” Lapensohn says, “what if you said to them, ‘I could provide the tickets and the transportation?’ You could now turn a $1,000 baseball cap order into a $50,000 deal where you’re doing the transportation, maybe the food and the tickets – oh, and by the way, the baseball caps, where this conversation started. If you’re savvy enough, you can tie it all in.”

Alternate Revenue Sources