Surviving Manufacturer Breakups

In business as in love, sometimes there comes a point in a relationship when you know that it is just no longer working out any more, and it is time to move on.
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In business as in love, sometimes there comes a point in a relationship when you know that it is just no longer working out any more, and it is time to move on. Sometimes your interests have just drifted apart over time. Other times one of the partners decides they are looking for more out of the relationship than the other can offer. Sometimes the breakups are clean, “Hey, let’s still be friends,” kind of deals, other times they are mutual “It’s not you, it’s us” things, and other times…not so much.

When the breakup is on our end—the dealer deciding they just don’t want to do business with a given distributor or manufacturer any longer—usually it is a pretty passive, drifting-away kind of affair. We start buying less and less. We stop calling. We just sort of make a new plan, Stan, hop on the bus, Gus, and move on to another solution, Newton.

But when the manufacturer decides that we are no longer the right partner for them, the way they go about the breakup can either leave us feeling ready for a rebound or like an angry, jilted ex that is just begging for a Taylor Swift ballad. (There is probably no breakup more worthy of the “Bad Blood” anthem than the explosive and litigious Crestron and Cyber Sound case from a few years ago…)

Here’s a list of a few breakups our company has been through and how the manufacturer handled them.

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 Photo: ThinkStock

The “Let’s Still Be Friends” Break
When we started our company, Sharp was one of the leaders in affordable (ie: sub $10,000) front projection. Then the company transitioned into large CRT rear pros, then the first DLP front pro, and then LCD flat panels. We stayed with them through it all, and were a direct dealer with Sharp for many years. But like most of the video companies, at some point the company phased out “small” direct dealers and transitioned to a distribution model. When this happened, Sharp got us approved with a distributor and encouraged us to continue doing business with them this way, and we still utilize the company’s products for our large-panel needs.

The “Let’s Work it Out” Break
For many years our company’s flagship TV solution was Pioneer Elite. This started with their fantastic, yet phenomenally heavy and thank-God-we-don’t-have-to-deliver-them-anymore line of rear-pro CRTs, and then moved on to their Kuro line of Plasmas. (When a video product remains industry reference for years following its demise, you know how utterly amazing and ahead of its time it was!) When we were an Elite dealer, we carried the company’s line of AV receivers and DVD players (as well as the company’s beautiful urushi-finished audio cabinet) to pair with the video displays. However, when Pioneer decided to leave the Plasma market, the company contacted us and said they would still like us to be a dealer, but that to continue being a dealer, we would need to bring in a mix of the current AV products. Ultimately, we felt this wasn’t right for us and we parted ways.

The “It Looks Like You’ve Moved On” Break
Sometimes a company can tell from your flagging sales figures that you are not really giving their product your all. Usually a company’s dealer agreement includes minimum annual sales to maintain your dealership status, but often these will be overlooked if your rep feels like you are coming along or if there aren’t any other viable dealers in the area. With the case of one automation company, even though we’d done a few medium-sized projects over the years, it became pretty clear after recent POs only included replacement batteries and chargers, that we were not really committed to the line. So with a month’s written notice we were informed we would no longer be a dealer. While this was understandable and didn’t really affect our business, the one thing that sucked about this breakup was that the “children” involved—our customers—got orphaned in the process. We’ve since had two jobs where this company’s products needed servicing and they would not allow us to send the items in for repair. Even when offering to pay retail, pre-pay, or give a credit card for any charges, our old rep said that to get gear serviced, we’d need to reach out to another dealer and get them to submit an RMA for repair for us. Or go through the process of trying to become a dealer again. This is a pretty lame policy, and just because mommy and daddy fight, the kids shouldn’t have to suffer.

The “I Want to See Other People” Break
The worst breakups are the ones when you think things are really going well. When you really like the other person, think they like you too, and see a nice, long, committed future between the two of you. And then one day, POW! You receive a registered letter in the mail stating that effective immediately you are no longer in a relationship. They’ve moved on with their life and there isn’t a place for you in it. This is what happened to my company along with about 150 other dealers of a large British speaker manufacturer about five years ago. Even though we felt like we were being a supporting dealer—including showing many of the company’s products including its flagship speakers in our main theater—they drew a line in the sand sales wise with a figure that was unobtainable in even our best years, let alone coming out of the worst recession our generation has experienced. Turns out they wanted to see other people: a younger, fresher model in the form of selling their products inside a Big Box’s store-in-a-store. This was the kind of breakup that left us stuck with a lot of expensive inventory and feeling bitter to the point that even if given the opportunity to be a dealer again, both my business partner and I doubt we’d accept. To the company’s credit, however, they have continued supporting our existing customers with repairs and parts as needed.

Has your business gone through any breakups? Go ahead and tell me about it in the comments. It’s cathartic.

John Sciacca is principal of Custom Theater and Audio in Myrtle Beach, SC. 

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