Tom W.)–Distributors are not customers. Distributors are not employees.They are BOTH. They are partners.
Time and time again I see how many companies do get this wrong. Of course, manufacturer or supplier has to look after their own interest- but in the end the key to success on many markets is the relationship with the distributor. It is the trust between two parties.
The distributor is the eyes and ears on the ground. But just because the distributor is the outlet through which a company can reach their clients- it does not mean the distributor becomes the employee. One can demand (that’s what the sales plans and targets are for)- but it works both ways. The distributors have their own requirements, sometimes very demanding. They look after their own cash flow, their own reputation, which often was built over many years. If a supplier does not meet the needs of the distributor- they will go somewhere else. Make business with someone else, very often the direct competition. If supplier fails to deliver the product on time again and again- they may look around for someone more reliable.
Supplier cannot dictate policies onto the distributor and cannot have a full control. Never will. But by building a long-term relationship, they can influence their partners. They can share the ideas, practices and resources. They can create a platform at which different distributors via networking can also share experiences.
According to Gallup, there is a clear connection between an employee engagement and the business performance of the employer. This is probably even more important with the distribution network. As a supplier- you have to somehow create that engagement with the distributor sales force, indirectly.
It is all about the support. A supplier must be fully aware of all the differences and little nuances on each market and support distributors by giving suggestions and ideas accordingly. Different cultures, different languages and different ways of making business- it all adds up. In one country it is enough to do the formal meeting and the business is done. In other countries you must meet socially, have a drink. Sometimes even few 😉 And I know what I am talking about- I’m Polish 😉 But it is all about building a trusting environment.
And it is something that works both ways. The distributors may suggest things as well- product development, new business leads, they can pair the supplier with an influential KOL. But at that point it is even more important not to brake that trust- because once the distributor becomes disengaged, disillusioned… it’s game over.
Failing to understand the distributor’s business is probably the biggest mistake a supplier can make. For a distributor- it is all about the margin. They invest money and time- and want products which will bring a return. It sounds simple- but it’s not. The distributors have their own strategies, aims, histories, reputations, philosophies and contacts. They have something a supplier does not have- expertise. And that’s precisely why they are so valuable. It is never a one-way street.
Distributors are the face of the company, simply put. The supplier may have a huge marketing department and spend hundreds of thousands of dollars on new booths, posters, Congresses and trade shows- but in the end it is the distributor’s sales people who are working on the ground and trying convince the end users to use this particular solution. A supplier cannot expect that the sales people employed by the distributor will automatically sell their product, without the tools. Product training sessions, educational materials, experiences from other markets- without all this the whole venture becomes a Russian roulette. May work, may not. The sales people employed by the distributor most definitely sell other products. Many. But this is yet another great opportunity to influence, to show how different portfolios can complement each other. And another one often missed.
There is also a huge difference between selling and taking orders. If a supplier wants to truly understand what is happening on each territory, they need to be in touch with their clients. Many products, particularly in the medical devices industry need to be marketed. They need to be sold in the OR. The relationship between the sales force and the surgeons is invaluable. Simply assuming that everything is great when numbers are hit or assuming that things go wrong when the target is not met… that is definitely not the right way.
There is no point creating offers which result in products gathering dust in distributor’s warehouse. Distributors usually know what they want- and they want to minimize the costs associated with keeping stock. Making a distributor overstocked will simply blur the picture- at some point the orders will stop (or become smaller), but that does not mean that the products are not reaching end users. Any offer should encourage the distributor to sell more, but without any burdens. Only then they will have the biggest impact.
And last but not least. Some countries or regions are smaller, some are bigger. Wealthy and poor. Developed and developing. The key would be to make sure that they all feel valued and important. Creating a system which works for everybody as much as possible will help reach a proper market share not on just one or two key territories, but on most markets. I’ve seen time and time again how smaller countries do not get much support simply because of their size. Yet that means that it may be actually easier to achieve success there! And of course Uruguay will never bring as much turnover as Italy- but it may be actually easier to achieve success there with a proper attention.
It is all about the communication and trust, understanding and support. It sounds simple and almost idealistic- but it’s neither.
Original Article: www.linkedin.com/pulse