With so much business being conducted online, it’s sometimes easy to forget the importance of dealers, distributors and reps in the attainment of business goals. Channel managers (whether they have the title or just the responsibilities) must lead and direct the go-to-market efforts of their company. Here are a few concepts and questions to address as you plan your efforts.
- Identify major sets of end-customers (accounts or segments) that require different services from your distribution channel. Describe the segments and list the specific service requirements of each.
- In what stage of the life cycle are your major products? What knowledge and support on the part of the channel are required to be successful with these products?
- On average, approximately what percent of your distributors’ (or agents’) total revenue comes from the sale of your company’s products?
- Define the pre-sale, sale, and post-sale activities required to sell your products to each type of end-customer. Be specific.
- Do you have different levels or categories of distributors or agents? What are the specific requirements to be part of each category?
- What types of support do you provide to your distributors or agents? What do they expect from you?
The Manager’s Guide to Distribution Channels
by Gorchels, Marien & West
Filled with market-proven tools and techniques for creating and managing channels that work in sync with your channel partners and end users, this real-world guidebook will show you how to:
- Stay on top of changes in how customers want to buy and receive your product
- Evaluate your channel in a step-by-step process
- Align your firm’s overall objectives with its channel objectives, and ensure a solid supporting infrastructure
Presentation on Aligning your Channel Tactics
Aligning Your Channel Tactics is a slide presentation condensed from corporate training on the topic. It provides a quick visual overview of channel management activities.
Ideal Candidate Template
There are several characteristics a channel partner (distributor, dealer, rep, etc.) might need to exhibit to increase the likelihood of a successful business relationship. This generic template is an example. List and define the terms in the first column, describe the partner’s “fit” in the second column, and rate each component of fit in the third column. This is useful for initial contracts as well as for annual performance reviews.
“Joint manufacturer-channel planning is just as important in the digital age as it was before. It boils down to knowing what your goals are.”
Co-op Advertising for Channel Marketers
What is the purpose of cooperative advertising? Or market development funds? To many manufacturers, the programs are necessary evils. So they make no efforts to improve program utilization rates. Worse yet, they may try to maximize the percent of claimable funds that are NOT used. That can be a mistake. Well-planned and well-executed programs help your channel partners (distributors, dealers, etc.) grow market share. And that helps increase manufacturer sales as well. Remember that a distributor’s or dealer’s market position is a result of the mix of products valued by a select market segment. The manufacturer’s brand benefits from the strength of this position.
In addition to the general benefit of a stronger dealer being able to elevate a supplier’s position, manufacturer marketers might want more specific goals to be accomplished through their coop advertising efforts. These marketers will realize the most success by transforming into campaign planners who use a full complement of marketing tools, media, and objectives.
Be clear about WHY you are doing the program
While most marketers understand the importance of reach, frequency and timing in their own advertising programs, they don’t always apply the principles in their work with the channel. Add to that the complexity of B2B sales (complicated products, multiple decision influencers, and long sales cycles), and the importance of an integrated campaign becomes apparent. A manufacturer-channel marketing communications (marcom) calendar, listing the manufacturer’s promotional efforts along with the available channel programs and collateral, illustrates frequency across media tools, including social media.
Start by plotting on the calendar the months when corporate marketing communications efforts will take place. List planned national advertising, trade show attendance, public relations efforts and other manufacturer-centered promotions. Next, list the planned product marketing programs, ad slicks, merchandising kits and promotional events that dealers can choose to participate in. (Remember to include the costs of these items.) Not only will this encourage the channel to be more deliberate in their collateral utilization, it also helps improve the budgeting process.
By planning in advance, manufacturers can negotiate ad rates with publications and pass along discounts to dealers for local/regional insertions. Educate the channel about the importance of multiple contacts with customers (and influencers) to gain attention. Some companies use co-marketing programs (in addition to or in lieu of coop advertising) – by partnering with the dealer at trade shows, linking with their websites or using other approaches to increase campaign effectiveness.
There are many administrative issues that need to be pre-planned to allow the programs to run smoothly. Distributors must know several things. How much money can they accrue for cooperative advertising? How much of their advertising costs will be reimbursed? What are the program requirements? What is the standard process to apply for reimbursement? Here are some thoughts on these administrative decisions.
- On what basis can money be accrued for coop funds? Most manufacturers calculate available coop funds based on a percentage of the distributor’s previous year’s net paid purchases. It’s true that purchases are more easily trackable than distributor sales. Yet, using purchase volume as a criterion rewards distributors for how much they purchase rather than how much they sell. Therefore, some manufacturers prefer to use net sales rather than net purchases. Also, note that the prior year’s activity may be inappropriate for a new dealer or a new product. In these cases a quarterly accrual – or even an advance accrual – may be more appropriate.
- What percentage of this net business (as described above) can be used for coop? The most common range is 1-5% of net business, but it can vary significantly by industry. Ask yourself what the potential benefit might be of an additional percentage point in your ability to accomplish your stated objectives.
- How much of a dealer’s advertising can the accrued coop funds be used for? While the 1-5% of business indicates the total fund pool available, not all manufacturers reimburse all of a dealer’s ad expenses – even if there are funds available. Generally, reimbursement is between 25% and 100% of the dealer’s direct expense, with an additional prorating depending on the percent of the ad dedicated to the manufacturer’s product. Some manufacturers will not cover any of the cost of a shared ad, or may specify that at least 50% of the ad be devoted to their brand to qualify for the proration.
- What requirements must be adhered to? The specific requirements should be based on the objectives mentioned earlier. Define the acceptable media types (newspaper, radio, direct mail, web, etc.). Specify whether (and which) logos, product images, slogans, brand promises, sales terms, etc. are required for the advertising to be approved, and if manufacturer templates are required. If there are restrictions on competing products being placed in the ad, describe that as well.
- What is the process for applying for reimbursement? The easiest way to handle this is to provide a simple downloadable template for reimbursement. The template will specify several things: (a) the timing for filing of the application (e.g., within 60 days of the ad being placed), (b) the percentage of the cost to be reimbursed, (c) any costs specifically excluded from reimbursement, (d) whether the reimbursement will be in the form of a rebate or a credit, and (e) any minimums or maximums in terms of dollar amounts or number of advertising claims accepted per year. The template should also list the necessary attachments (e.g., original tear sheet or notarized script, and invoice for the advertising listing dates and/or air times as appropriate) to validate ad placement.