Sales Tool
Historically, pro dealers have used co-op dollars to advertise hardlines, tools, paint, kitchens, and windows and doors–in other words, merchandise that attracts homeowners into their locations. Pro-Build’s divisions that generate sufficient retail sales–such as Dixieline Lumber and Lumbermens–have found co-op to be “a tremendous tool” for selling consumer-oriented products, says Atkinson. San Marcos, Texas?based McCoy’s Building Supply generates 30% of its annual sales from homeowners, whom it targets with ads funded with co-op dollars supplied by such vendors as Owens Corning and Glidden, says Dan Stauffer, McCoy’s vice president of marketing.
Most dealers concede this kind of advertising is all but useless for driving pros into their yards, which is why some don’t even bother seeking co-op support. Mill Creek Lumber in Tulsa, Okla., which operates 28 lumberyards, prefers instead to rely on the relationships its outside sellers solidify with builders.
“It’s not like the tooth fairy. Business doesn’t just come to you; you have to go out and get it,” says Rich Bass, Mill Creek’s CEO.
“We’re still marketing to contractors through homeowners,” says Dan Richards, advertising manager for Union, N.J.?based Jaeger Lumber, which gets only 5% of its sales from consumers. However, when it can, Jaeger is shifting co-op dollars into contractor-focused marketing, like its rewards program where pros earn points for trips based on their purchases. Such transitions, though, aren’t universal, and a sizable number of dealers still leave co-op money on the table. Warren, of Black Millwork, estimates that only half of his company’s dealer network claim the full amount of co-op dollars that Andersen makes available.
The Maine Attraction
More for us, Rod Wiles might respond. Wiles is director of marketing for Hammond Lumber of Belgrade, Maine, which isn’t shy about negotiating with vendors for co-op dollars that other dealers don’t claim. About half of Hammond’s annual sales come from homeowners, and this eight-yard dealer has used co-op dollars to promote its own name and services. Wiles says Hammond isn’t interested in co-op programs where the dealer and vendor split costs evenly because, he believes, those arrangements benefit suppliers whose products are often in competitors’ stores, too. Consequently, Hammond looks for vendors that are willing to kick in between 75% and 100%. He points to at least two suppliers–California Paints and ShoreMaster Dock Systems–with which Hammond has strong relationships.
Hammond reaches pro customers primarily through statement stuffers that convey a vendor’s marketing message. Kuiken Bros. uses co-op dollars to cover between one-quarter to one-half of its annual ad spending, including a recent promotional mailing to 1,000 architects and builders.
It’s common for manufacturers to funnel co-op dollars to dealers through their distribution networks. “The co-op usage of our distributors almost doubled in 2006, and is on that same track this year,” says Mark Nowotarski, director of marketing for door manufacturer Therma-Tru. All of Alpine Lumber’s co-op dollars are claimed through its distributors, says Hamid Taha, this Englewood, Colo.?based dealer’s vice president. The co-op support that Jaeger Lumber claims for hardware, tools, plumbing, electrical, paint, and seasonal products is managed through Emery-Waterhouse, a distributor in Portland, Maine, which also pays out the rebates from suppliers. Richards explains that by using Emery as a clearinghouse, Jaeger receives more co-op dollars than it would if it filed claims with multiple suppliers of different product categories. (Emery also bills Jaeger through the dealer’s buying group, ENAP, which helps increase Jaeger’s annual patronage dividend.)
