As a manufacturer, you know the important role of your channels. In fact, in many cases, they are likely to be a core part of your business. The ability to sell indirectly through channels gives you the ability to focus on what you do best: developing, designing and producing a product. While dealer and distributor channels can be a huge help, if not handled properly, they can become a great burden and create unnecessary inefficiencies.
Channel managers face many challenges, but some are more prevalent than others. There are really five primary challenges I see in my day-to-day work with manufacturers:
- Being easy to buy from
- Lack of visibility into the channel
- Ensuring that your product solves customers’ needs
- Measuring and managing channel performance
- Attracting and keeping the best sales reps
Here are some simple rules I’ve found helpful in addressing these challenges.
Treat Channels as Customers Too
Channel sales require you to look at your distributors as your customers. It’s likely that you have a web portal, but make sure you are using it appropriately. You should be providing online product selection, configuration, pricing, quoting, ordering and order tracking. Offer your channels the best and most interactive content that you can.
Provide as much as you can in the way of marketing and sales assets—brand assets, customizable marketing collateral, interactive selling tools, quoting tools and interactive distributor storefronts. And, remember that training is critical for your distributors, especially if you sell complex products. Avoid making common mistakes, like relying too much on your partner portal, not taking advantage of communities, not sticking to an editorial calendar and renewing the same tactics every year without any justification.
Choose Channels Wisely, and Stick to the Rules
There are four simple steps to establishing your channels, and they all require rules and follow-through. You must select, manage, motivate and evaluate your channel partners. In the selection process, you must first know what you want in a partner, and don’t settle for anything less. The goals and objectives of your channels should ultimately be tied to the company’s overall goals and objectives. When it comes to managing your distributors, communicate the rules of engagement upfront.
There should be incentives for upholding the terms of the agreement and penalties for not doing so. When you evaluate your partners, don’t be afraid to terminate them if they are not following the rules or if you decide to take your business in another direction. The most critical thing when it comes to your rules of engagement is the follow-through. Manufacturers struggle with this often because they do not have adequate visibility into channel activity. They often have termination policies and penalties, but fail to implement them. Channel partners will observe what happens with other partners. If you fail to incur penalties or enforce the rules with one partner, the others will notice and stop following the rules too.
Know How to Attract and Successfully Motivate Channels
As discussed above, be picky about who you choose as partners. They will share in your success or your failure, and you want to be with the right person. Motivating your distributors to sell your product is also a very important part of your strategy. While your distributors are not your end-customers, you must find ways in which you both can be profitable through your partnership. Ensure that you are rewarding the channels that do the best work. You must win the mindshare of your partners. Segment your partners, set targets for them, train them and communicate effectively.
The best way to make your distributors more effective is to build their commitment to your organization. Figure out how to make your product critical to their financial success. And, think about how you can be easier to do business with. Reduce as much time, cost and inconvenience as possible between you and the distributor. By doing so, distributors will be more inclined to support and sell your products.
Communicate Effectively to All Channls
All channels are not created equally, and they effect channel sales differently. It is certainly a challenge to be relevant to all of your distributors. Your channel communications cannot be a “one size fits all” approach. Segmentation should not be based solely on revenue. Segment to enable good communication. Good components of segmentation are: share of wallet, product specialties, job role and other behavioral persona information. Target individual employees within your partner companies. You have a great strategy in place for your end-customers, so employ that same mindset to your channel.
Channel communication is key. Always keep these lines open. More is better. All too often, manufacturers and vendors think they understand their channel businesses, but that isn’t the reality. Spend some time with your partners, openly communicate and truly strive to understand how they operate.
Your distribution channels, and their impact on channel sales can make you highly successful or they can significantly hurt your business. Invest time, money and manpower into effectively managing your channels. It will be worth it!