Defining success
By Justin Johnson
As a distributor, you have a focus on selling and servicing customers in a specific geography, industry, or solution area. Part of your success is dependent upon the products you sell and the manufacturers that provide them. Beyond the actual physical products, a successful distribution business makes the most of its relationships with all of its manufacturers.
Doing so is not always easy, as new products are launched, existing products retired, and new manufacturers come calling. How do you go about managing this complexity while focusing on selling and servicing your customers?
There are three key things that every distributor needs to have in place to make the most of their manufacturer relationships and make their distribution business successful.
1) A Standard Engagement Approach
This is a defined and repeatable set of processes that help you onboard, manage, and communicate with manufacturers and their sales managers, whose job is to help you be successful. Start with a focus on the most important information flows: product information, sales leads, and billing.
Rather than falling into the trap of using email and spreadsheets, force yourself to take a unified approach with a single system to view and manage your manufacturer relationships.
Define the processes first around how product information and training is received by your sales team, what happens to leads provided by various manufacturers, including a way to communicate quality, and the best path to share financial information, including revenue and any rebates/promotions due based on performance.
2) A Defined Business Plan
Whatever your fiscal year and planning cycles, take the time to define what each manufacturer will contribute to your business from a revenue standpoint. Look at past performance of not just revenue but assistance and support.
Do you receive large numbers of sales leads from certain manufacturers that consume sales cycles but rarely close? Do you receive few, but high-quality, sales leads from others that often get lost in the mix due to their frequency and size?
The network of manufacturers you assemble and invest in taking their products to market need the accountability this business planning framework provides. It keeps you both accountable and lets you understand who is most helping you build your distribution business.
3) Continuous and Efficient Communication
Truly putting the processes to work and bringing the business plan to life is dependent upon continuous and efficient communication between you and all of your manufacturers. This includes regular and routine account reviews that flow both directions. What is working well, where can either of you improve, what is missing to move to the next level? Many manufacturers have this discipline and work with their distributors, but you need to roll up and standardize these discussions across your manufacturers to provide the best way to compare them all.
You also want to avoid constantly being in meetings and on phone calls, so let technology help with a system that provides visibility to you both on deals and deal status, a feedback mechanism to provide direct and meaningful details on sales leads that are received, and an easy way to share and update product information.
If you rely on emails and spreadsheets, your productivity and relationships will suffer, with everyone trying to find the most recent information, and spending time trying to schedule the next conversation. A partner portal is not the answer, as those manufacturers that have them all have different systems with varying levels of usability and relevance.
You need information pushed to you that helps you start sales conversations and close deals. Your manufacturers need information pushed to them that updates them on product demand and forecasted revenue.
As a distributor, you know your customers and markets better than manufacturers ever will. That is what makes you valuable to them and an important part of their success. Your success depends on how you build and manage the relationships with all of your manufacturers, in a way that doesn’t distract you from selling and servicing your customers. By utilizing these three keys to success, you’ll increase overall productivity and maximize the potential of these relationships.
Justin Johnson has more than 20 years of experience building software solutions for manufactures and distributors. He is an author and regular contributor to publications and thought leadership groups on the use of technology to improve profitability for manufacturers and their distributors. Currently, Johnson is co-founder and CEO of LeadMethod Inc., a software company that developed the world’s first distributor lead management software platform. He can be reached at jjohnson@leadmethod.com or (800) 406-5020.
This article originally appeared in the July/August 2016 issue of Industrial Supply magazine. Copyright 2016, Direct Business Media.
INDUSTRIAL SUPPLY MAGAZINE
The November/December issue of Industrial Supply magazine features an in-depth cover story about Kimball Midwest. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and Mike Marks, as well as interviews with numerous product and distribution industry experts.
