A cooperative strategy is a business tactic where firms work together to achieve a common objective.

In the corporate world, this can mean many things. For example, it can mean two companies go into a joint venture where they create one business and pool their resources to get an advantage over the competition. Or it can mean two firms develop a purely contractual relationship and pull their unique resources together without taking any equity position changes.

The latter is referred to as a non-equity cooperative. In the plumbing trade, non-equity cooperatives don’t necessarily mean making a deal with your direct competition. Still, it does mean making deals with people both up and down the supply and logistics scale to get an advantage over your competition. Most owner-operators would say this falls under the relationships and networking category, but it can be much more than that if you put enough work into it.

The slight advantages you gather at each stage can snowball into a significant advantage for your company simply because you’ve put in the effort where your competition hasn’t.

Wholesalers

Let’s start with wholesalers. Wholesalers can be very active and helpful, and others can be very inactive and useless when stocking items and doing customer pricing.

Suppose you haven’t started pushing wholesalers around for better deals on anything. Now is the time to start. I don’t suggest being the annoying pushy guy arguing at the counter about why the 10-cent washer should be 5 cents, but I am talking about searching for deals on whatever your bread and butter is. One of the best examples would be water heaters. Most medium-sized companies go through the motions when checking the prices of water heaters or expansion tanks — maybe once a year. But you don’t want to be the person who finds out that you’ve been overpaying for water heaters or expansion tanks in December, realizing you have been overpaying by 10% for an entire year. Besides, wholesalers all have a pricing matrix strategy to make up for their loss leaders, which is where a strategic cooperative comes in.

Get prices together on your most commonly installed items and spend time looking online or calling and getting quotes a few times a year and put that information together on a spreadsheet. You will start to notice which companies use pricing strategies for loss leaders and gainers. For example, some companies will charge $100 less per water heater but significantly increase supporting items such as expansion tanks, vent piping, hanger iron, supporting brackets, press fittings, black tees, caps, etc. In contrast, other companies have low prices on supporting items and higher prices on water heaters. The goal is to get the lowest prices on a single sheet and set up a meeting with the branch manager to negotiate a few times per year.

Establish a two-way promise where you will send your employees there instead of their competitors in exchange for a set list of pricing on your most common items. Make sure you are kind and thank them for their time; this isn’t the time or place to be pushy. It’s just a business meeting. Of course, you can always go down the street and talk to the competition, but the wholesaler already knows that.

Marketers

Another often overlooked cooperative advantage comes with dealing with a marketing firm. Whether in person or online, meeting with a marketing firm is significant. Many times plumbing firms will use the same local marketing firms, which can cause problems.

The marketing firm you’re using is somehow trying to make both you and your competitors win by playing the same game on the same field. They will split up victories and winning strategies so you both are happy and want more but will never provide a significant advantage to one or the other. You’ve got to make a strategic move with your marketing, whether that means changing to a different marketing firm or using a marketing firm from a different state who doesn’t want you to compete but wants you to dominate.

The key to getting an advantage with a marketing firm is similar to dealing with wholesalers. They go cheap on some stuff and expensive on others. However, you will have no idea how to compare apples to apples because they are great at packaging, so you will have to use your gut to decide who to use. For the best results when making a deal with a marketing firm, it is best to have as much SWOT analysis done on your competition as possible. What ads do they run, where, and for how long? How is their branding? Color schemes? Layout? Deals? This will help your marketer build you a standout brand and carve more customers out of your area. Building a relationship with an out-of-town marketing firm that wants you to dominate instead of competing is a massive advantage.

Think about cooperative strategies you can deploy to your advantage. Wholesalers and marketing firms are just two types. And when you make a deal, consistently revisit it to ensure you’re reaping the benefits.

About the Author

Anthony Pacilla is a registered master plumber for McVehil Plumbing in Washington, Pennsylvania. He has over two decades of experience in the plumbing and HVAC trades, and has a bachelor’s in business and economics from Thiel College.