Throughout this course, we’ve been discussing reseller pricing policies almost exclusively as a defensive strategy. To a large degree, that’s the correct way to think of these policies. They’re designed to prevent bad things from happening to a manufacturer, such as its key retail partners being unfairly undersold, and the brand damage that can result from price erosion among competing sellers who have no price floor to honor.
But there’s another way to view these policies, and a completely different list of ways they can benefit a manufacturer or brand. When drafted, publicized, and enforced properly, a reseller pricing policy can serve as a useful marketing and business-building tool.
So, in this next-to-last lesson of the course, we’re going to briefly review some of the often-overlooked ways you can leverage your reseller pricing policy to actually grow your business.
The Business-Building Benefits of a Reseller Pricing Policy
Improved reseller relationships
Your resale partners have plenty of choices when it comes to which products and brands to invest in selling. To the extent that you can show your retailers that you are looking out for their interests—which is precisely the signal you send when you roll out a reseller pricing policy—you will earn more trust, loyalty, and business from those retail partners. In other words, your reseller pricing policy can help you strengthen relationships with your most valuable retail partners.
More high-quality retailers attracted to your network
In the Internet era, when any seller abiding by the pricing guidelines of its supplier can be undercut at any moment by an online rogue retailer, the high-quality resale partners you’ll most want carrying your products are more likely to be drawn to your brand if you’re actively enforcing a policy that would protect them against such unethical retailers. This is another reason publishing and enforcing a reseller pricing policy can be a powerful building-business technique. It sends a signal that will resonate with higher-quality retailers—that investing in this brand will be worth the effort and resources, because this company looks after its retail partners.
Higher margins over time
As we discussed in Lesson 8: Common Hurdles to Implementing Your Policy, in some cases implementing a reseller pricing policy could create a short-term dip in your rate of sales, because the retailers who were offering your products at bargain-basement prices can no longer do so. But there’s a flipside to that coin. The reseller pricing policy you’ve expertly drafted, and which you are now effectively enforcing, will soon clear away much of the steep discounting of your products by retailers. The long-term effect of this trend will be to raise the overall margins of your products across your distribution channels.
Increased brand value
As your reseller policy helps to keep a consistent minimum price level associated with your products, your brand over time will likely enjoy a boost in consumer perception; possibly to the extent where it is difficult to find a company’s products available anywhere at steep discounts. Think Apple or Disney, for example; those companies tend to enjoy a greater sense of perceived value in the market. This is why implementing a reseller pricing policy isn’t just about preserving your products’ margins; it’s at least as much about protecting and growing your brand value over time.
New business opportunities
Finally, one tremendous benefit of rolling out a MAP or MRP policy—assuming you also implement the right monitoring solution to enforce it—is that it can provide you with the market intelligence to help your company identify lucrative new sales and business development opportunities. Here are just some of the benefits of monitoring your brands’ resale pricing environment using the right automated brand protection platform:
- Learn if a retail partner is carrying some of your products but not others—an opportunity for your team to reach out and upsell that reseller
- Discover a retailer who’s selling your competitor’s products but not yours—an opportunity to add a new resale partner to your Authorized Dealer Program.
- Analyze the effects of various pricing changes on your products’ rates of sales—an opportunity to make your pricing more competitive to capture sales, or to increase prices to boost profits.
- Track how consumers are reviewing your products online—an opportunity to quickly respond to issues and protect your brand’s image, by setting up alerts for poor ratings or works like “broken” and “doesn’t work,” for example.
- Set up alerts for key phrases in customers’ online reviews such as “excellent” or “recommend”—an opportunity to locate product advocates, evangelists, and testimonials that could be used in your marketing and sales efforts.
Best Practices for Publicizing Your Policy
Now that you see the business-enhancing potential of a well-executed reseller pricing policy, you can appreciate why you wouldn’t want to simply draft your policy and ask your resale partners to view it.
This policy will become far more valuable to you as a growth strategy to the extent you proactively get the word out about it—not only to your existing sales network but to your entire industry. Here are a few best practices to consider employing when your company is ready to roll out a new reseller pricing policy
Announce the policy to your resale channel—and explain how it benefits them
As soon as you’ve published your new MAP or MRP policy, you’ll want to send out a notification to all of your existing resellers and distributors, as well as to any businesses considering joining your Authorized Dealer Program. The tone of your message should be upbeat and enthusiastic, and it should explain that you are launching this pricing policy to protect both your brand and the interests of all authorized resellers. Indeed, you will want to start your communication with this message: To protect your valued partners, you are implementing this new policy to ensure no resellers are able to undersell them.
Issue a press release to announce your new pricing protection policy
This is a relatively simple and inexpensive way to have your policy featured in the publications that your industry’s resellers, dealers, and distributors read. It’s also a great opportunity to reinforce the message suggested above—to let potential resellers know that your company is implementing this new policy in part to protect the interests of all resellers in your network.A properly worded press release announcing your new policy can introduce your brand and products to a wide range of new potential resellers, and at the same demonstrate to those resellers that yours could be an attractive product line to carry because the brand itself will protect them from being undersold. This press release is also an ideal time to mention that your policy will be supported and enforced with the help of an automated brand protection platform. This will add more weight to your promise of protecting your honorable retail partners against being unfairly undercut.
Publish your policy prominently on your brand’s website
When a potential reseller visits your site and clicks on your “Partner,” “Reseller” or “Dealer Program” page, they should see a prominent message alerting them to the fact that your brand will protect them against being undercut if they join your resale channel. Perhaps include a bold “WE PROTECT OUR AUTHORIZED RESELLERS” headline with a “Read our MAP Policy” link below. Whatever specific language you choose, you want to convey to a prospective reseller reading your site that you treat your channel partners with respect and care. The more prominently you can present this message, the better.
Update your channel regularly about your monitoring and enforcement efforts
You can also leverage your pricing program as a marketing tool by communicating with your resale channel on a regular basis to show them how you are policing the pricing of your products and protecting them against unauthorized resellers. With the automated price-monitoring platform, for example, you will be gathering minute-by-minute data on how your products are being sold across the web, including by unauthorized resellers. If you can show your channel of authorized sellers how your monitoring system is having significant success in preventing MAP violations, and how you are quickly shutting down those instances that your system does catch, this can go a long way toward increasing confidence among your resellers, and trust in your brand. Caution: There is an important caveat to this final suggestion. If you send messages to your channel to publicize the pricing violations you’ve dealt with, you should never refer to the offenders by name. You can discuss the actions you’ve taken in the aggregate (“We shut down 12 violators in June”) or describe a violator by company type (“We suspended inventory to one apparel retailer for 90 days for a pricing violation”), but do not name any of these businesses in your public communications. There are two reasons for this. First, a frustrated or embarrassed retailer could consider this an act of defamation and sue your business. Second, an antitrust regulator or court could later deem your public shaming of a particular business as a de facto threat, act of coercion, or creating an agreement with the retailer. Finally, it’s worth pointing out that these measures for marketing your reseller pricing policy can help you grow your business at very little cost to your company. In fact, several of the ideas listed here won’t cost anything other than your time.
Okay, time to see how much you’ve learned about the business-building opportunities a reseller pricing policy can offer.