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Going to market through distribution can be a channel to growth. Most manufacturers fail miserably when it comes to assisting their distributors in the process.
When you think of a typical distributor, what strengths come to mind? Most distributors are good at managing inventory, spreading their cash and accounts payable in a micro-managed way to optimize their own profits and sales. They are good at managing their sales force and are very responsive to their best customers. Most have solid customer service capabilities.
If they carry multiple, competing products, then they either push the brand that rewards them the best or the one they have the most knowledge or experience with. The job of the manufacturer then is three-fold:
- Educate the sales force and management/ownership of each distributor so they are more expert on your products than any others
- Provide opportunities for new customers, new business at existing customers, or higher margins at customers
- Create professional yet customizable marketing, sales, and service tools to drive your business at the expense of both competitors and other brands/products that they carry
Why then do most manufacturers do a poor job of this?
Many executives fail to understand that going to market through distribution increases the need to spend on excellent marketing and sales tools. Distribution partners increase the variation in the customer experience a manufacturer has with their end-user. It also creates a more distant relationship with the end-user, one that is often controlled by a third-party partner.
If a significant part of your business goes through a distribution channel, then are you world class at marketing for these distributors and to your end users?
If not, then you are abandoning the relationship between manufacturing and end user. You are transferring the management of your brand to many other companies; some of which may carry competing brands, some may be minimally involved in your product, some may be a liability in their marketplace.