We rolled out our MAP [Minimum Advertised Price] policy about a year ago, and looking back I’m 100 percent confident that it was the right thing to do. It was a decent amount of work and took a fair amount of time — but it certainly wasn’t the largest task I ever undertook, and it didn’t distract from the other aspects of our business.
You see, I’m building a brand — not selling cheap stuff. It’s critically important that dealers who choose to sell Seizmik products can make money doing so. If they don’t, it’s inevitable that competition will devolve to price only, and the majority of our sales will end up with the retailer willing to take the lowest margin on the highest volume. While it’s not sustainable to have razor thin margins, I also don’t want all of my sales coming from the small number of retailers who can afford to take it to the lowest common denominator.
From the beginning I made it clear we were serious about enforcing our policy and quickly cut off a number of the largest web retailers because they violated the policy. I had serious conversations with our distributors to let them know they weren’t wasting their time helping us enforce our policy. I put my intention to stop selling to distributors who don’t enforce our MAP policy in writing. We showed them that we mean business, and it worked. Heck, it wasn’t even hard. And it was kinda fun.
Now we have a group of dealers who are actually helping us enforce the policy — they alert us when they come across someone in violation, and we take immediate action. Dealers have learned that they’re not wasting their time in helping catch violators and that they can improve their gross margin by doing so.
I’ve cut off a few dealers permanently because of repeated violations and had more voluntarily stop selling Seizmik products. To all of them, I say, “Good riddance.” If you’re interested in only competing on price and aren’t interested in maintaining a reasonable and sustainable profit, I’m not interested in doing business with you.
I’ve been very pleased with the support and cooperation I’ve had from all of Seizmik’s distributors in enforcing our MAP policy. In fact, most of them have exceeded my expectations. They were all understandably hesitant to throw their full support into the program because so many aftermarket brands have failed to execute and enforce their MAP policy — and some even violate their own policies. So it took a little time to earn their trust and get their full commitment, and I had to make the first move. But once established, things moved pretty quickly, and it’s certainly been consistent.
So my advice to other companies (suppliers AND dealers) who are committed to the powersports channel and have a long-term strategy is this: Embrace MAP policy and enforce it consistently and relentlessly. Take it seriously and be committed. It’ll pay off quicker and be easier to manage than you expect.
And to the brands and retailers that aren’t committed to powersports and are interested in closing the next sale more than anything — keep on competing on price and participating in the race to the bottom. If the only competitive advantage you have is price, you’ll end up in the highly commoditized low margin business that you want to be in. You won’t have Seizmik products to sell, but you won’t miss them because we’re not the right fit for you.
We’re not perfect with our execution. Dealers sometimes get away with violating the policy, but only for a short time. Many have aliases, shady corporate structures and systems that make it very hard to cut off their access to products when they violate policies because we can’t figure out who they are. So while we’re not perfect, we’re consistent and relentless. If you’re one of the dealers who are trying to hide and play games, I’d like to respectfully ask you to just stop. You’re working hard to do something that isn’t profitable or sustainable, and we’ll eventually have our MAP policy enforced. I’d suggest you spend that time and energy fine tuning your business to be profitable and sustainable — and not detrimental to my business and the overall industry.
Seizmik makes quality products, and we stand behind them with great support and service. We have the best warranty in the business, and we go the extra mile to make sure our customers are happy with us. All of this is possible because we have a sustainable margin structure in place throughout our distribution channel — and it’s sustainable, in part, because of our MAP policy.
Steve Shankin is founder/president/CEO of Fuquay Varina, N.C.-based Seizmik and its parent company Vialink. He got into the UTV accessory business in 2002. His companies have designed whole vehicles and extensively studied how consumers use UTVs.Click here for reuse options!
Copyright 2015 Powersports Business