If you want to start a spirited conversation at a meeting with a group of lubricant marketers, just ask them what they think about buybacks, or if they feel the back fees are adequate and what they believe is a good mix of buyback business. And if at the same meeting you feel the need for some mental gymnastics and what will in all likelihood be an exercise in futility, ask any major in attendance to share with you and others within earshot how they calculate their buyback fees and what metrics and triggers they use to adjust these fees.

One thing you can be sure of is that these and most other questions and comments concerning buybacks will get attention. This is because in the view of many lubricant marketers, growth in buyback business is one of the most significant issues on their plate.

So what are the majors doing to assure that buy- back fees are fair and that their valued channel partners are equitably compensated for driver wages, fuel, insurance, and other rising costs that go into delivering a gallon of lubricant on the major's paper? From what Jobbers World is hearing, some majors say they are "studying it." But what does this mean? What are the majors studying and how long will it be before marketers see any results?

For some majors, "studying it" means they are spending big bucks on market research data. As an example, two majors recently spent major bucks with a consulting firm for benchmarking studies on buy- back fees. Marketers were told that the objective of these studies was reportedly to compare the buy-back fees of the major against the fees of other majors to determine if its fees were inline with the competition.

But in the words of just about every marketer Jobbers World spoke with about these studies and others like it, beyond the fact that the numbers are often dated and wrong, these benchmarking exercises are out of touch with reality. Rather than benchmarking and addressing the real and dynamic costs associated with delivering a gallon of lubricant in specific cities and states and to specific classes of trade, some feel they do nothing more than "benchmark bad numbers against bad numbers." Moreover, they seek to prove that the major's fees are equitable only by saying they are "inline with the others." To some, this proof is not much different or persuasive than the student who seeks to prove to its parent that the "D" it got on a test is OK because everyone else in its class also got a "D." And worse yet, there is no need for them to do better because its grade is inline with the other in its class. This novice attempt by the student at best in class benchmarking doesn't wash with a parent. And the more professionally wrapped version of it in the form of a high priced market research study on comparative buy-back fees isn't washing with savvy lubricant distributors either.

Don't get me wrong, some majors have worked closely with their marketers when studying buy back fees and they are sensitive to cost differences in regions and accounts. But overall, Jobbers World's data indicates that others don't.

So while the majors continue to "study" buy back fees, Jobbers World will be taking an in-depth and independent look at the facts in its upcoming series on buy back fees. Because while some majors are reportedly "studying it," the cost of diesel went up $0.24 a gallon, marketers got one letter from their insurance carrier about a significant price increase, and at a minimum, the marketer's drivers have seen at least one pay raise. And yes, for those marketers in the North, it will very likely cost more to keep the major's product warm and dry this year than it did last.

Get the facts on Buy Backs and other important marketer issues by subscribing to the full print version of Jobbers World

Pacific Oil Conference and Jobbers World joined to include a comprehensive program for all lubricant distributors at this years POC conference in Reno on September 19 to 22.

The lubricant distributor track of the conference is specifically for and about lubricant distributors. It will provide POC attendees with independent insights and information on such issues as: The state of the US lubricant distribution business and its future, Managing costs and optimizing efficiencies for lubricant distributors, Growth through acquisition, Success at private labeling, Benchmarks in lubricant distribution, Sharing the costs with cooperative buying

Jobbers World Online is a free e-publication provided as a service to lubricant distributors. In addition to this publication, Petroleum Trends International, Inc. publishes a monthly Jobbers World Newsletter. This print newsletter is available only by subscription and provides a comprehensive analysis of current events, hot topics, business opportunities and assessments, lubricant pricing, and other information and insights designed to help lubricant marketers and manufacturers run their business better.