PART TWO 

In Part One of this article, we looked at the central role middlemen (dealers and distributors) have always played in getting goods efficiently from manufacturers to end users. Now that we know they’re not going away anytime soon, it’s time for manufacturers to figure out how to build success into the dealer and distributor relationships.

Start with the basics: seven things manufacturers should keep in mind as they develop and enhance dealer or distributor networks.

1. They are not going away. (And you probably don’t want them to.)

Technology and direct sales methods may be expanding their roles, but distributors and dealers will remain a key element of the sales process - as they have for thousands of years. What’s in it for you?

An economical way to garner wide distribution

Access to a wider set of prospects

An in-depth understanding of individual market conditions & needs

Support for managing and distributing inventory

Assistance in building and maintaining a customer base

The ability to concentrate on R&D instead of sales

2. Don’t lose sight of your real customer.

While many invoices may be generated along the distribution chain, there is only one true ‘buyer’: the end customer. Don’t fall into the trap of focusing all of your attention on the dealer, and ignoring the ultimate check writer.

Dealers and distributors are only interested in your product if they can see how it can be of interest to their customers. They don’t need to be ‘sold,’ but to be informed on how to best sell to and support their customers. And to tell them that, you need to understand those customers inside and out.

3. Freebies and trips are no longer enough.

There was a time when you could buy loyalty and motivate salespeople by offering trips for dealers. No longer. Oh, they still want the trip, but now they also want a manufacturer who can help them build a brand and generate growth. 

Manufacturers need to find ways to offer substantive benefits that help dealers and distributors effectively build business. These can include traditional approaches such as brand awareness, emerging technologies such as geodemographic mapping and other tools that can help increase the return on investment for marketing efforts.

For example, manufacturers could help their dealers/distributors improve their own marketing by providing more information on the surrounding geography than would normally be available to a smaller business. An example is the dashboard developed by MarketVue (http://www.mvue.com/) which manufacturers are able to offer their retailers and dealers. The more unique the insight, the more its access could be linked to increased dealer loyalty or performance.

Implement these things properly, and dealers and distributors will generate enough profit to take their own trips.

4. Viva la difference!

Not all dealers and distributors are the same, or have the same needs. Some may be on a fast growth path; others may be satisfied with their current size and profits. Some may want to feature their own brand; others may like the support of a more well-known manufacturer’s brand. Some may be want to represent multiple manufacturers; and others may want the benefits that come with a higher degree of loyalty. 

The bottom line? Programs aimed at the distribution channels should be flexible, so individual engagements can be adjusted based on a range of motivating factors.

5. There’s more than a widget in that box.

When you sell a product, you’re really selling a lot more than something in a box. You’re selling all the other elements that come along with it - support, services, availability, awareness, logistics, supply, financing, etc. Find out what’s really most important to both the intermediaries and your end customer, and then structure both the offering and the communications to reinforce those areas.

  6. Remember who’s in charge here.

Consolidation is alive and well in this arena. The late 1990s and early 2000s saw tremendous rollup of distributors and dealers across a variety of industries - from funeral homes to HVAC dealers. As middlemen grow in power and influence, they represent more opportunity for manufacturers - and potentially a greater threat as well.

If manufacturers work only with the consolidated groups, the balance of power may shift. And manufacturers can find themselves forced to bend to the will of the distributor. So in addition to working with the consolidators, it’s important to continue to build business and relationships with small and mid-size dealers and distributors as well.

7. Keep it simple.

Many factors influence a dealer’s decision to carry a product, or a customer’s to buy it. Trying to address them all at once would be overwhelming - and paralyzing.

Instead, identify areas that provide the greatest competitive advantage or mitigate the greatest competitive weakness. Then develop a plan to directly address those areas, and thereby give dealers or distributors more and stronger reasons to do business with you.

And then? Implement the plan. And if things go well, prepare for some history-making sales growth.

© Copyright 2007.  All Rights Reserved.
Confidential Property of Group Newhouse, Inc.

 This article available in pdf format: Stuck In The Middle With You