SPAs … A Key to Tomorrow’s Distributor Profitability, Essential Today

Over 100 distributors have responded so far, representing various sized distributors, responded to the survey. Some of the key results included:

• 33.3% of respondents have more than 250 individual SPA, customer defined, agreements. Another 13.6% had more than 100 SPAs. In fact we spoke to one regional distributor who had over 3,000 SPAs!
• 60.6% of respondents feel that the numebr of SPAs that they negotiate will increase. Only 9.1% fee that they will eventually have less SPA agreements.
• Concerning profitability, distributors ranked SPAs as a 7.64 on a scale of 1 to 10 in importance to their current and future profitability.

The survey is still open for distributors to share their thoughts. A manufacturer survey will be forthcoming. If you are a manufacturer and are interested in this topic, contact Allen.

In reviewing the preliminary results, Allen commented that “SPAs can be a competitive advantage for manufacturers and distributors to take market share when appropriately used. The key to retaining profitability is distributors claiming their funds, on a timely basis and capturing all of the funds that they are owed.”

And with market share being the name of the game right now, expect usage of SPAs to increase. But it then begs some questions:

• Whom do they benefit?
• How can distributors increase their benefit?
• Do manufacturers and distributors have the “right” market intelligence to determine the appropriate price?
• Do distributors have the “right” personnel negotiating and implementing SPAs?
• Are distributors capturing 100% of their eligible SPAs or is this an additional profit source (due to breakage) from distributors?
• And if rebates are so important to distributor profitability, how do SPAs affect them?

Remember, if your a distributor, take the survey and share your thoughts.