Building Strong Distributor Relationships to Drive Mutual Growth : 4 Key Areas

For B2B industrial companies getting their product to market, there are two main channels; an in-house sales team going direct to the customer or through a 3rd party channel. Each approach has its advantages and disadvantages; however, for those opting to go through a 3rd party channel (examples - dealers, distributors, manufacturers' reps), certain key areas can make this strategy successful. It's important to remember that distributors are independent entities. While they sell the manufacturer's products, their objective is focused on growing their presence in their local market, enhancing their brand, and delivering that value to their customers.

What does this mean for the manufacturer? How can they best collaborate with distributors to foster a win-win growth mindset for both parties? This article focuses on the four main areas that build strong distributor relationships for mutual growth - understanding, communication, training, and incentives – and examines how each can be developed and implemented for a win-win strategy for both the manufacturer and the distributor.

1.???? Understanding Distributor Needs

The success of any great partnership is a deep understanding of the other party’s needs and challenges. For manufacturers, this means going beyond surface-level interactions and investing time in comprehending the dynamics of that distributor. Most distributors stock several different manufacturers brands – some complimentary and some that compete directly. They often focus more on promoting their own brand and local value, rather than the manufacturer’s brand which can sometimes diverge from the manufacturer’s broader objectives. To bridge this gap, manufacturers should:

• Conduct Regular Assessments: Regularly assess the local market conditions, distributor capabilities, and specific challenges they face. This helps in identifying pain points and opportunities for collaboration.
• Understand the Distributor Capabilities: Recognize that distributors may not see the benefit of a value-added product if the asking price is out of sync with their market or if there's no demand for that product locally.
• Engage in Open Dialogues: Maintain open and honest dialogues to ensure alignment of goals and expectations. Understand that distributors might find upselling particular features too labor-intensive, detracting from their primary objectives.
• Promote Local Value: Acknowledge and support distributors in their efforts to promote their brand and local value. This might involve co-branding initiatives or co-oping funds to support localized marketing strategies that align with the distributor’s goals.

Be Prepared to Move Distributors: If the distributor serves the low end of the market, and the manufacturer’s brand is a premium brand, they may struggle to adapt to the sales tactics needed to sell high-end products. If this is the case, it may be time to look for a new distributor in that geographic region.

2.???? Effective Communication

Regular communication is critical for maintaining strong distributor relationships. Clear, consistent, and open lines of communication help prevent misunderstandings and enable swift resolution of issues. Good coordination between the manufacturer’s regional sales managers and their marketing communication group needs to be established, to ensure the communication is consistent and resonates with the distributor. Some areas to cover include:

• Making sure that communication with the distributor is visible to all at the manufacturer. Scheduling and implementing regular check-ins and updates with them through the various channels e.g., video calls, emails, and in-person meetings is key to ensure the manufacturer has one voice (for example, if the MarCom group sends out a stock clearance email, the sales managers need to know about it).
• Establishing a centralized platform or distributor portal for where distributors can visit to get critical information, such as product updates, market insights, and promotional activities.
• Encouraging feedback and actively listening to distributor concerns to refine strategies and improve operations. Consider implementing a ‘distributor or dealer council’ – and organizing a structured event around the feedback.

Effective communication ensures that both parties remain aligned and can swiftly adapt to changing market conditions.

3.???? Training and Support

There are two main areas distributors need education on – How to sell the product, and installation and service of the product.

Sales Training

Providing comprehensive sales training is crucial for ensuring distributors have a thorough understanding of the manufacturer's products and service offerings. This training should encompass technical details, product features, and the unique value propositions of each offering. Manufacturers can deliver this training through a variety of formats, including presentations, videos, and webinars, which allow for flexibility and accessibility. In-person sales training sessions are particularly beneficial as they provide distributors with hands-on experience and the opportunity to engage directly with the products. Additionally, offering on-demand training through a distributor portal or an online training platform ensures that distributors can access these resources whenever they need, enhancing their ability to stay updated and informed.

Service Training and Support

Training: Manufacturers also need to provide extensive training on installation, troubleshooting, and other service-related information. This ensures that distributors are well-equipped to support customers post-purchase, thereby enhancing customer satisfaction and loyalty. Service training can also be delivered through a mix of presentations, videos, and in-person sessions, with the added expectation that these resources are available on demand. This allows distributors to access crucial information at any time, particularly during critical moments.

Support: When the distributor is out in the field at a customer location, it is essential that they can obtain immediate technical help and assistance. Both their credibility and the manufacturer's reputation are at stake if they cannot resolve issues swiftly. Therefore, having a robust support system in place that provides quick and reliable technical assistance is vital for maintaining strong distributor relationships and ensuring customer satisfaction.

Implementing a certification program to validate the distributor’s expertise and commitment to the brand can help the distributor’s reputation with their customers, and strengthen their relationship of commitment to the manufacturer. One such example is the Authorized Distributor Certification offered by Rockwell Automation. This program provides training in Rockwell Automation's products, including advanced courses on system design, installation, and maintenance. Distributors who complete the program receive certification, which signifies their expertise in Rockwell Automation solutions and ensures customers receive top-notch service and support. This certification enhances the distributors' credibility and helps them stand out in the marketplace.

Incentive Programs

Motivating distributors through well-designed incentive programs can significantly boost sales performance and loyalty to the manufacturer’s brand. They can be based on the whole of the manufacturer’s product range, or concentrate on a particular model – sometimes used when a manufacturer brings new products to the market and wishes to speed up the adoption by the distribution network. There are many different ways of structuring such a program, below are listed some of the most common:

• The program is based around a tiered reward system that recognizes and reward top-performing distributors.
• Financial incentives are offered, such as annual rebates, bonuses, and co-op advertising funds.
• Creating non-monetary rewards, such as exclusive access to new products, additional marketing support, and recognition programs.

Incentive programs should be regularly reviewed and adjusted to ensure they remain motivating and aligned with overarching business goals.

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Conclusion

In summary, building strong distributor relationships encompasses many areas that require a carefully thought out and individual approach based on what the manufacturer is looking to achieve. By understanding distributor needs, maintaining effective communication, providing robust training and support, and implementing motivating incentive programs, manufacturers can create partnerships that drive mutual growth and success. This approach not only strengthens distributor loyalty but also enhances overall market performance, positioning both parties for long-term mutual growth and success in the competitive B2B manufacturing sector.

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