Show Specials

I am embarrassed to admit that when I was asked to write on the subject of show specials, my first reaction was: “You mean people still give those?”

Just thinking about show specials makes me sentimental. It hearkens (yes, I'll use the word “hearken”) back to a time when payphones were an indispensable communication tool, when an eight-cylinder Cadillac was the car of choice, when fax machines were cutting edge technology and when customers actually placed orders at trade shows.

Was this some kind of time warp, or are manufacturers still offering, and retailers still taking, show specials? More importantly, is it good business? To find out, I asked a number of manufacturers and buyers if show specials were a benefit. And if so, to whom and why?

What I discovered was that most manufacturers offer them and all buyers expect them. I found something else that intrigued me. Manufacturers seem to fall into two schools of thought on show specials: One group sees them as a cost of business; the other sees them as an investment.

Manufacturers who see show specials as purely a cost of doing business seem to have no good reason for giving them. One manufacturer even told me his company just does it to be nice. I laughed a little nervously, murmured something about hearing someone calling my name and moved on.

The rest of this group, though not as kind as this Good Samaritan, indicated that they gave show specials because their company always has. If a buyer came to the show, they got the special — no strings attached. It's a tradition.

Those who see show specials as an investment, however, have definite reasons for giving them. They use show specials as an inducement to secure larger orders, place displays, move old inventory, or seek an advantage over the competition. For this group, show specials are a strategic tool.

Most buyers I spoke with see show specials as an entitlement they earn for attending the show. After all, it's expensive to go to trade shows, and specials help offset that cost. These buyers say that they take the special discount off of their purchase orders whether or not they meet the company's requirements, and that they usually receive it anyway. (When asked about this, several manufacturers simply shrugged their shoulders and said the buyers were essentially correct.)

Free freight is easily the most popular special among buyers. What's interesting, however, is that no matter how good a special, none of the buyers said they would purchase a product they didn't like even if it was on special. They also said that if they liked the product, they would buy it whether there was an incentive or not.

Buyers also said they would increase an order to meet a minimum only if the line offered enough good products to warrant it. Otherwise they would simply forgo the product — special or no special.

After reviewing all the information, it seems that too many manufacturers are giving away too much profit for too little gain. They're providing show specials out of habit, with little or no strings attached, and buyers are taking it because they can. In short, manufacturers have resigned themselves to show specials as a cost of business rather than utilizing them as an investment to achieve clear strategic and tactical goals.

Here are some ways that manufacturers can give buyers an incentive for buying their products while adding to, rather than subtracting from, the bottom line:

• Before every show, ask: “What is my goal for this show, and how will this show special help me achieve that goal?”
• Use discounts as a way to secure placement of permanent displays or committed shelf space. These displays will provide a source of future business at non-discounted prices when the customer (hopefully) reorders. The additional real estate and visibility will help increase brand awareness.
• Don't just give away a special; insist that the customer hit volume targets in return for the discount. Do due diligence to determine what volume levels are needed in order to make that discount pay off in additional gross profit. Then stick to your guns, and don't allow the discount unless conditions are met.
• Freight costs are higher than ever, and they're still going up. Therefore, before giving away free freight, do your homework and determine what it's going to cost. Based on this figure, determine the additional volume a customer needs to purchase in order to recover the freight costs, and make a little additional profit to boot.
• Use show specials as a way of avoiding the dreaded close-out specialist. Give show-goers incentives to purchase slow inventory at prices that are good for them and even better for you.
• Use a show special to gain a strategic advantage over a competitor who may not be at the show or may not be giving a special.
• Make sure that the performance required from a customer to earn the special is appropriate. Don't ask for volume levels too big for them to hit, or try to sell them displays that are so loaded with inventory it will take years to sell through the product.

In the final analysis, show specials, like any incentive, work best when they provide a win-win for seller and buyer. So make sure whatever specials are offered serve a clear, distinctive strategic purpose for the company, and provides true value for the customer.