At the end of last year, Meiko flew 50 UK distributors out to its Offenburg HQ to present its 2013 sales strategy, with the company pledging a philosophy of “total transparency” to its partners.
The last time Meiko took such a large contingent of distributors to the factory that produces all its warewashers, it was on the verge of implementing a monumental change to its go-to-market strategy that redefined the routes through which its products are sold.
Eight years ago it set out on the distributor path after a four-year stint of working virtually exclusively with Lockhart Catering Equipment on the development and sales of its own-label Atlantic brand machines.
These days, the business Meiko transacts through distribution is getting on for about a third of its UK sales and managing director, Bill Downie, is pleased with how much progress has been made since the company shifted
its approach in 2004.
“I believe that we have successfully made the leap from poacher to gamekeeper and we now find ourselves as a trusted supplier to the majority of leading distributors and to the catering industry in general,” he says.
Downie admits that complacency is the company’s biggest adversary, however, which is why Meiko has been working hard behind the scenes to conceive a raft of special offers, marketing resources and services packages flexible enough to appeal to all of its distribution partners.
“We are focused more than ever on developing the relationships that we have established with catering equipment distributors,” insists Downie. “We are introducing a host of initiatives that are geared to maintaining our competitive position at the premium machine end of the market. At the same time, we are endeavouring to maintain and, wherever possible, increase distributor margins on the Meiko product and services.
“Margins are being slowly eroded by below-sensible selling prices, influenced somewhat by the principles of value engineering and by the scattergun approach of a number of manufacturers in offering their products to all and sundry at similar pricing levels. But we must always remind ourselves that value, not just price, is the driving force behind success, and value must be driven by a commitment to quality.”
In Germany, Meiko spent an afternoon mapping out its 2013 distribution proposals, and discussing any queries or points raised by dealers in attendance.
It opened the seminar by clarifying a number of commercial issues, including the announcement that its payment terms were changing. Downie said the move would benefit dealers accustomed to working on 30-day net invoice terms.
“Because of the businesses that you are in — contracting, tendering — you are not always getting paid in 30 days, so we are moving it to 30 days of month end following month of invoice, plus 10 days,” he said. “So, in theory, if you buy on January 1 you must pay us by March 10. And our early settlement discount remains, so if you pay by the 25th of month following month of invoice you can deduct 1% from the payment.”
Meiko’s group sales director, Nick Falco, unveiled a series of special offers for distributors, including a three-year all-inclusive end-user promotion on its ECO glasswasher, dishwasher and passthrough machines, as well as a similar offer for its Premium GiO series but with the added inclusion of a ‘no bills’ guarantee, which means customers won’t be charged for breakdowns or repairs during that period.
“This is the first year that we have offered the GiO with a no bills guarantee within the three-year end-user offer,” revealed Falco. “The offer will be for two premium machines featuring GiO reverse osmosis technology. By using this technology we are building in additional reliability into these machines, so we are seeing a better return on investment — certainly the service costs are dropping dramatically because of these machines.”
Falco said that Meiko had built a 20% margin into the headline price of the offers for distributors and announced the introduction of a £200 trade-in allowance on customers’ existing machines, regardless of their condition.
He demonstrated to dealers how they could use the offers and no bills maintenance packages to provide a more competitive and cost-effective alternative to current deals being offered in the market by rival brands.
Downie added that the promotions would predominantly suit smaller distributors, typically those with three or four salesman that just want to take the offers to the street. “We understand that distributors are not all specialists in warewashing equipment in any shape or form and what we have tried to do is take the thinking process out of the equation,” he said.
Meiko also outlined its standard discount schedule for 2013 and listened to feedback from dealers who suggested that the difference in proposed discount between its most loyal dealers — classified by Meiko as ‘Partner’ distributors — and those who only buy from it because the product has been specified should be much greater.
In addition to the standard discounts, Meiko declared that a pricing promotion it ran last summer on 14 products would be introduced permanently. “This promotion proved very popular,” said Falco. “In 2013 we are going to run that as a permanent part of the distributor agreement. The 14 most commonly-used products will be available to you exclusively at additional discounts.”
The 14 products covered by the promotion include two frontloading warewashers and two passthrough dishwashers from the ECO series, as well as one frontloading warewasher, four passthrough dishwashers, two frontloading utensil warewashers and three rack transport machines from the Premium series.
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One of the most anticipated debates of the afternoon came when Meiko divulged its plans for working with key accounts, including contract caterers and hotel groups. Falco pledged that Meiko would not attempt to pull the rug from underneath distributors already working with a key account client.
He shared the key account pricing framework that Meiko has created for 2013 and explained how partners’ margins would be retained in instances where an opportunity to work together arises. “For situations where a key account that has been targeted is already working with a Partner distributor, we will consult with the particular Partner distributor prior to any offer being made,” he promised.
Graham Harrison, sales manager at ABM for Catering Leisure, was one of the distributors on the trip. He welcomed Meiko’s ‘no bills’ guarantee in particular, claiming it could “rock the market place”.
Harrison told Catering Insight: “In 30 years of being in this industry I have attended many conferences, but this was probably the most professional. In my opinion, Meiko really has decided its way to market. They are very open and honest about where they deal direct. The rest seems to be through a network of chosen distributors.”
Nick Howe, managing director of Court Catering, said: “They are offering preferential terms to certain dealers and what we are actually offering to the end-user, more importantly, is a really good deal, so hopefully all parties will benefit from that.
Also, I think once the client can get over the issue of the capital cost, and look at the payback of the product as well — and the three-year and up to five-year no bills offer — they will see the benefits. There is nobody else in the market place offering that at the moment and there are very few companies that can actually offer that service level.”
Chris Keith, director of Sigma Catering Equipment, added: “Initially I think everybody had worries about what Meiko was going to propose, but ultimately there was nothing that came out of it that made any of us think that this is not going to work for a distributor. Certainly the three-year no bills package is a great idea. Being able to sell that to end-users is going to give them peace of mind. Meiko is a premium product so it is not going to suit everybody, but certainly with the right clients that package is going to be a great advantage.”
For Meiko’s Downie, the trip was all about showing distributors that the company’s policy is to ensure its most dedicated partners are protected wherever possible.
“We feel that our most comprehensive overhaul of our distributor offer in eight years shows how committed we are as a company to ensuring our partners have the right offer to allow business to grow,” he said. “2013 will be a pivotal year for our distributor policy, as our offer will clearly identify which distributors make use of the terms, and also highlight those that have not been so enthusiastic.”
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Bonus cheques promised for top-performing distributors
Meiko told dealers in Offenburg that it wants to significantly grow the amount it pays out on retrospective rebates this year. The warewashing manufacturer outlined a six-band retrospective rebate programme for 2013, starting from 0.5% for distributors that transact up to £40,000 with Meiko all the way to 3% for volume players doing upwards of £210,000.
Meiko’s UK managing director, Bill Downie, said: “In 2011 we paid out just under £70,000 on retrospective rebates and with your help we would like to increase that figure substantially in 2013.”
Downie also used the event to reveal that Meiko will pay dealers a special “performance bonus” of £1,000 if they invoice sales above £70,000 for the year — an idea that it devised as an alternative to working with buying groups such as ENSE.
Downie has questioned the value that buying groups offer in the past and he said: “When we talked to ENSE and we talked about management charges and those kind of things, we didn’t see why we would pay somebody in America a management charge to manage our business — we didn’t understand that — so we did a calculation of what that management charge would be and it roughly worked out as giving Partner distributors a cheque for £1,000.
“We also worked out that the turnover of sales invoicing you would need for that £1,000 would be in the region of £70,000, so anybody who hits £70,000 with us in 2013 will get a cheque for £1,000. And they can have it when they settle the bill for the £70,000 or they can accumulate it to the year-end and we will pay it with the rest of the retrospective rebates.”
Dealers served ‘A la carte’ menu of technical packages
While services and maintenance revenues are a lucrative revenue stream for some catering equipment distributors, others prefer to sub-contract the work, either because they don’t have the resources in-house or because they don’t consider it to be a core business activity.
Meiko claims the fact that its partners adopt various routes to market has prompted it to develop an “a la carte” package of services and warranty options that they can tailor to their own customers.
“10 years ago we had 11 engineers and two call handlers, today we currently have 35 engineers and eight call handlers in the office,” Meiko’s technical service director, Dave Kemp, told dealers in Offenburg. “We have also decided to promote two of our senior technicians to technical support supervisors — north and south — predominantly to help our engineers out on the road with technical advice. But also over the coming months those engineers or senior supervisors, along with our sales managers, will be calling into your technical services people, making sure they are fully aware of drawings, specifications and are up to date on any technical issues.”
Kemp took distributors through a series of extended parts and labour warranties that they could resell to their customers, starting from just £80 a year on frontloading and passthrough machines and £160 on rack transport and flight type machines.
He admitted that fixed price repairs had been something of a “grey area” for distributors in the past, but said Meiko would clarify that moving forward by creating five separate packages priced between £135 and £275 depending on the time and day of the week.
Additionally, Meiko published a list of the 50 most common parts for frontloading and passthrough machines and the top 30 for rack transport and flight machines, and pledged that these would be carried as a minimum on all its engineers’ vehicles. “Should for any reason our service vehicle be out of stock on one of those parts attending your site, we will return and fit that part with no additional labour cost to you,” vowed Kemp.
He also confirmed that for 2013 Meiko would be giving Partner distributors a 25% discount on the gross list price of spare parts, compared to the 20% discount they were entitled to previously.