Clarity Tip Sheet...

6 Success Tips for Good Channel Partnering

To achieve coverage in as many countries as possible, many companies choose to work through distributors. Although this approach may produce an impressive amount of “pins on the map”, it may not really yield the anticipated sales levels.

The real problem is rarely the distributor, but how the manufacturer manages the process.

“Unhappy marriages”
It’s sad, but true: you can often compare relations between British companies and their foreign distributors or channel partners with “unhappy marriages”. In such cases where the co-operation doesn’t work, it’s better to discontinue the relationship, but it doesn’t happen that often.

Often, the underlying reason is a misunderstood hunt for profit; for the distributor it’s nice to have an additional product in the portfolio, and for the manufacturer there’s hope of being able to sell in an additional country.

Confused mutual expectations
The primary reason for the souring of a manufacturer-distributor relationship is that the parties have never discussed and clarified their respective expectations of the co-operation.

• The manufacturer wants to open up new markets for his or her products and sees channel partners or distributors as a cost effective alternative to an in-house sales force
• The distributor wants additional products to offer customers, alongside other products currently in the portfolio.

This is where things often go awry; neither party is willing to invest seriously in the other. Manufacturers wants as many “flags” as possible on the map and therefore struggles to provide proper support to each distributor. Distributors want as many products as possible and naturally find it difficult to focus equally well on all their manufacturers.

Why use distributors?
One thing is clear: if building your own sales organisation is the right thing to do, you should never use distributors simply as a cheap alternative. Either the market and your products are suitable to being served through a distributor, or they are not suitable.

Distributors are often more skilled in typical sales techniques as opposed to advise and technical competence. That’s why distributors are most typically well suited to settings with many customers and relatively simple products.

In such situations, using distributors is the best approach, but you then have to put up with their greater focus on selling, and less emphasis on understanding customer requirements.

Similarly, they also tend to emphasise price as a bargaining tool, and many companies find that distributors tend to complain over cost prices more than internal sales people do.

Frequent manufacturer complaints over distributors include…

They don’t sell enough” (they pick up orders rather than create orders)
They sell at too low prices” (they don’t understand the product’s actual value to the customer)

Both points can be valid, but it’s important that the manufacturer considers his or her own role. After all, the manufacturer generally chooses the distributors, not the other way around.

That’s why it’s also up to the manufacturer to ensure that distributors work properly, and that necessitates support which manufacturers are often unable to provide because they have spread their activities on far too many distributors.

This strive to be widely represented is, paradoxically, also the reason for the lack of success. If you don’t help and support distributors, you can’t blame them for concentrating on easy-sell products.

Six distributor management success tips

You should consider a number of points, and these six are amongst the most crucial ones...

Choose specialists - particularly if you’re a niche player or sub-segment specialist.

Integrate distributors - you get the best results by integrating your partners as if they were a part of your business and not just some easy-to-forget appendix.

Create guide lines - you should not be wary of introducing clear guide lines and policies. It’s a common misconception that distributors won’t accept them. Once you’ve chosen the right distributors, they should be quite likely to accept guide lines, as long as they are sensible and profitable.

Help them with their marketing - most distributors are salesmen which is why you should offer (qualified) international marketing support

Enable high earnings - you are fighting against other manufacturers so you shouldn’t be mean about providing marketing support. Also, don’t deal directly with end customers, unless you’ve already agreed it with your distributor partner.

Keep up steam - good distributors can actually pick and choose as they please, so you should ensure that they don’t feel tempted to leave. By providing constant and consistent attention, you can make sure they don’t feel overlooked.

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