Call it a case of fever pitch. The temperature among promotional products buyers is heating up thanks to pent-up demand and a sense that life is getting (mostly) back to normal.
On the Mend
Distributor data related to orders and clients show a rebound from 2020, but hasn't quite hit the benchmark set in 2019.
Median Number of Orders
Average Value of Orders
Average Profit Margin
Median Number of Clients Served
Evolving Challenges
While increasing their customer base remains the greatest challenge for distributors, it’s far less pronounced than the previous year, when 4 in 10 distributors named it their top challenge. Customer retention (11% last year vs. 5% this year) is also less of an issue. Meanwhile, challenges related to meeting deadlines (12 percentage point increase) and retaining workers (up six percentage points) notably leapt from the previous year.
Most difficult challenge for distributors
Las Vegas-based Eagle Promotions (asi/185320) is seeing double-digit increases in revenues and orders. “It feels like everybody is buying,” says CEO Sean Ono. “Events are back open, companies have back-to-work needs and even our retail clients are extremely busy.”
Mark McCormack, owner of Identity Marketing Group (IMG) (asi/229993), says his Omaha-based distributorship nearly doubled its business last year and expects to see it almost double again in 2022. “All our clients are back to pre-COVID numbers and above,” he says, citing hospitals, financial agencies, insurance companies, technology and education as sectors that IMG services.
The bounce back of industry and events is certainly driving business. Karie Ballway, executive vice president of New York state-based Cooley Group (asi/168125), notes that the finance and energy sectors are benefiting from trade shows opening back up. “They’re buying promo such as writing instruments, journals and power banks,” she says. “They’re tangible and functional items that can be held onto and used during the event.”
According to Mitch Silver, vice president of Printable Promotions (asi/299458) in Chicago, employee/volunteer/board appreciation is dominating requests. “I think with the Great Resignation still in full force, employers are doing what they can to show appreciation for their teams,” he explains.
Human resources buying is strong right now, adds Ballway, for a variety of reasons: team members are aiding in recruitment efforts such as job fairs, and there are also opportunities in welcoming new hires and onboarding. The hybrid model of employment (combining work from home with time in the office) remains popular, so there are opportunities for projects involving drop-shipping to remote offices, she notes.
“All the reps I talk to are feeling overwhelmed by the rapid influx of business.” Nicole McNamee, Sales Consultant
6 Tips to Retain Clients
1. Meet in Person
Because personal contact, especially during COVID, was limited, in-person meetings have become even more effective at establishing connections, says Identity Marketing Group (asi/229993) owner Mark McCormack. “The best way to grow a relationship is to spend time with and listen to your customer,” he says. He recommends special touches such as bringing doughnuts or coffee, and for those clients who work from home, he’s sent Uber Eats or had a pizza delivered just before lunch hour. “They will return the call,” he says.
2. Know Their Business
Join some of the groups or associations your client belongs to. It will help you learn about their industry and needs in order to become a more valuable partner. Not only does this help you provide your client with better-targeted products and solutions, but you might also find a pool of people just like your client that may need your services.
3. Follow Clients on LinkedIn
Stay on top of clients when they change jobs and locations in order to maintain a relationship with them at their new firm, says sales strategy consultant Nicole McNamee. Send them free spec samples with their logo on it, especially if they’re new to a company, she adds.
4. Go for Quality Over Quantity
Concentrate on fewer clients with higher volume or value, says McCormack: “The small stuff isn’t worth the time or gas money anymore. This frees you up to spend time, entertain and focus on clients with higher order value.” His favorite quote? “Sales feed egos, margins feed families.”
5. Stay Top of Mind
Cooley Group (asi/168125) took actions during the pandemic that helped retain clients and opened new doors for the company, says Executive Vice President Karie Ballway, including bringing on a new director of marketing and implementing a new ERP platform. In addition, “our monthly touch point with clients to remain top-of-mind with relevant and educational content has been very successful,” she adds. “Analytics show that we improved the number of visitors to our website and have increased engagements.”
6. Manage Workload
If you’re having trouble managing the boom in orders and have the revenues to hire someone, do it, says McNamee. But also focus on process improvements on your own end to decide where you need the help. Those changes can free you up to both prospect and focus on maintaining existing client relationships.
Percentage of Distributor Clients Retained
After reaching the lowest point since Counselor first started tracking the metric in 2008, distributor client retention has begun to rebound.
To be clear, there’s still some hesitation. “Not all client budgets have returned to their pre-pandemic levels,” Silver says. “For some association and large group meetings, we hear, ‘We’d like to order event bags or drinkware, but only if we can secure sponsorships.’”
Still, for many distributors the demand is there. But as is the case these days, all that interest is complicated by supply chain and inventory challenges, and the extra work that goes into navigating them.
“Business is coming so heavily and quickly – all the reps I talk to are feeling overwhelmed by the rapid influx of business,” says Nicole McNamee, a promo sales strategy consultant catering to both industry sales professionals and procurement teams. Many companies downsized during COVID, she notes, and now are building their teams back up and trying to support this growth. Meanwhile, supply chain issues aren’t helping. “Everything takes more time, which has the effect of taking longer to close deals.”
Getting inventory remains a top challenge for distributors. “Order sizes are way up, but we’re spending twice as much time to find product,” says McCormack.
That’s unlikely to change in the near term. “Supply chain is and will be an issue going into 2023,” says Ono. “Getting the goods is the first problem, then getting them at a realistic price is the second problem, and the suppliers having enough staff to produce the orders in a timely fashion is the third problem.”
“I may do a presentation with eight items,” adds McCormack, “but I tell my clients that by the time they choose one at the end of the meeting, most of these may be gone.”
“It feels like everybody is buying. Events are back open, companies have back-to-work needs, and even our retail clients are extremely busy.” Sean Ono, Eagle Promotions
Those conditions have created a sense of urgency among buyers. “As the cost of everything seems to be going up and gas prices continue to rise, everyone is afraid of inflation and they’re looking to lock in orders early before prices go any higher,” says McCormack. “We have warehousing and storage capabilities, which has helped us grow. Some clients are now buying in bulk early and holding on to it in order to make sure they can get inventory and will have enough when they need it.”
McCormack saw a banner ad that T-shirt prices were going through the roof. “I took a screen shot and sent it to my clients,” he says, “and they all started buying T-shirts immediately.”
Back to Basics
Driven by a desire to reduce overhead and costs, promo companies have throttled down their additional service offerings the last two years. Identity Marketing Group (asi/229993) for example shut down all its online stores for clients under $200K per year. Owner Mark McCormack explains: “The amount of work keeping up with stock at vendors and longer turn times simply wasn’t worth it. It hurts your reputation when you can’t deliver quickly or have back orders, even if it’s not your fault.” There were benefits to the move. McCormack says it led to “great conversations with our clients” and a resulting leap in order sizes.
Other Services Provided by Distributors
From what he’s hearing from suppliers, Silver is anticipating “another crazy fourth quarter” where inventory will be extremely difficult to pin down and a mad scramble to get orders in on time. “It seems 2022 will be a repeat of 2021 with distributors pushing clients to make early holiday gifting decisions,” he says.
How early is early? “I took my first Christmas order – in May!,” says McCormack. Many people got burned on inventory last year at the holidays, and are looking to avoid that this year, he explains. “There’s been a re-education of clients,” he says. “We’re stressing that they need to order early, and their choices will be limited.”
Most Valuable Traits
There are a number of qualities that buyers value and expect from their distributors, such as creativity, idea generation, pricing and speed of delivery. However, supply chain and other COVID-related challenges have made certain qualities more meaningful to current buyers.
Reliability is key right now, says Sean Ono of Eagle Promotions (asi/185320). “Many distributors can’t execute and deliver; pricing is important but means nothing if the client can’t get their goods on time,” he says.
Adds Mitch Silver of Printable Promotions (asi/299458): “Buyers want a distributor that can take work off their plate. In most companies, the marketing and HR departments are thinly staffed, so anything we can do to make their job easier is appreciated.”
For example, Printable Promotions was tasked with procuring appreciation gifts for employees returning to the office for the first time post-COVID. “We sourced cooler bags and stuffed them with snacks, laptop decals, bottles of water and a note from the CEO. We assembled and shipped the kits in bulk to be desk dropped,” says Silver. “The client really appreciated us doing the sourcing, fulfilling and shipping on this project.”
Honesty and transparency are also highly prized. Whenever possible, Cooley Group (asi/168125) works with preferred suppliers to navigate supply chain challenges, says Karie Ballway. “We continue to see delays in this space, so we also need to be flexible and look at alternative suppliers,” she says. “We’re providing spec samples of alternate options and educating clients that another brand can be feasible.”
Strong relationships are increasingly important. “My sales reps talk about relationships all the time – they feel if they survived the pandemic together, that relationship is going to last,” says promo sales strategy consultant Nicole McNamee. A lot of clients lost their jobs during the pandemic, but then landed somewhere else. Adds McNamee, “When those relationships are managed properly, it’s like a stock split – retain the original client, but also continue the relationship with the departing client at their new firm.”
And don’t think that idea generation and creativity aren’t important anymore – it’s just being displayed in a different way. As McNamee suggests, with today’s sourcing issues, one strategy is to take a standard, more readily available item and use it in a unique way. For example, take a small desk set and add clever messaging that people will want to use and keep on their desk.