Delivering for Best-in-Class Wholesaler-Distributors
March 22, 2017  |  ByMark Dancer, NAW Institute for Distribution Excellence Fellow
NAW-5 Essentials for Improving Your Channel Management-Distributors in the Digital Era #9

Our conversations with distributor leaders conducted for our most recent book, Getting Results From Your Digital Investments, revealed an interesting trend: As value chains evolve to adopt and use digital tools, channel management is becoming a new and essential competency for wholesaler-distributors. Digital tools are allowing distributors to reimagine their business–from acting as a channel for suppliers to serve local demand to becoming a business model that designs, manages, and optimizes its own multichannel structure for its own business objectives.

Three wholesaler-distributor leaders put their finger on this new reality, which is both an opportunity for driving growth and a challenge for traditional competencies:

“Like our suppliers, we need to design and manage our channels. Digital presence is about reaching customers with a quality experience. Coverage is about making sure that we have the right number of inside reps, field reps, and product specialists. Amazon could be an indirect channel for us.”

 

“Our experience with digital tools is pushing us to think differently about the front end of our business. How do we align with customers across our website, salespeople, and customer service? How do we use digital tools to provide more value through each? How do we coordinate when they work together?”

 

“Digital tools can dramatically change our ability to sell technical products, on our own, with less help from suppliers. They can help us manage marketing and sales activity at a very high level, getting the right message in front of the right customer at the right time.”

Distributors are paying more attention to their own channels for two reasons:

  1. customer sourcing preferences are shifting, forcing distributors to keep up
  2. digital tools provide rich sources of new data, enabling distributors to overhaul their channels to achieve improved customer alignment and higher levels of productivity.

For example, E-commerce platforms, social media, and videos allow a wholesaler-distributor to reach any customer—anywhere, at any time—not just to take orders, but to answer product and application questions; discuss delivery and fulfilment services; connect users with experts; and provide tracking of purchases, service levels, and marketing programs.

Further, the use of CRM, marketing automation tools, and mobile devices, allows field sales, inside sales, and customer service to surround a customer’s needs with harmonized, real-time support and proactive selling. Online tools such as videos, configurators, and tracking histories can enable 24×7, on-demand resources for customers, offloading human channels and allowing them to be repurposed against highly productive activities or engaged intimately with customers to uncover and solve problems.

All of this points to the opportunity for distributors to build state-of-the-art channel management capabilities, but many leaders find their companies must walk before they run. Channel management is a discipline with best practices, frameworks, and guiding principles. It takes sustained effort to develop channel management competencies, but progress can be made immediately by developing plans that address five essential competencies:

  1. Coverage. As a first step, distributor channels, including field and inside salespeople, must be deployed to cover accounts. Coverage can be defined as geographic territories (a salesperson assigned to specific counties, etc.), by named accounts (which can diminish confusion when salespeople cover overlapping geographies), or by segment (industrial versus construction accounts, small versus large customers, etc.)
  2. Presence. Coverage is a blunt instrument, while presence is a more precise tool. Presence involves planning how salespeople actually gain presence in sales opportunities. Methods include following up on leads, networking, conducting audits, and more. High-performing salespeople create presence while others sit back and serve demand when opportunities come to them.
  3. Conflict. It is not uncommon for two salespeople to trip over each other in the pursuit of opportunities. This is not necessarily a sign of poor channel management. Channel management policies should not be designed to eliminate conflict, because if your channels do not have occasional conflict, they do not provide your company with enough coverage. A complete lack of conflict means that your business is missing opportunities. Instead of eliminating all conflict, channel management policies should be designed to manage conflict in the exact situations where it leads to negative outcomes such as price erosion and customer confusion.
  4. Communication. Strong value-selling salespeople have very strong communication skills and often seem to be truly gifted. These skills are not a matter of chance. By exploring the methods by which strong performers communicate effectively, training programs and tools can be created for middle-performing salespeople to achieve those goals. First line sales managers can be tasked with ensuring that all salespeople use proven communication methods. Over time, as the best communication methods become part of the sales culture, customer satisfaction increases, leading to sales growth and improved margins.
  5. Compensation. After programs to address all the preceding channel management requirements are put in place, the final step is to ensure that sales compensation reinforces the desired sales behaviors. Critical compensation decisions involve the amount of leverage (base salary versus incentives) and the design of variable compensation tools including bonuses, commissions, and spiffs. Like channel management, sales compensation is a discipline with guiding principles and best practices, but it is not a cure all. Rather, sales compensation should be the icing on the cake—the final piece of the channel management puzzle that ensures a channel organization functions like a finely tuned watch. Success does not begin with compensation programs, because sales culture and channel management policies are more essential for creating a high-performing, self-improving, growth-oriented channel team.

Having mastered the basics of channel management fundamentals, distributors can turn to leveraging digital tools, including advanced data and analytics, to create game-changing channels.

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Mark Dancer, NAW Institute for Distribution Excellence Fellow

Mark Dancer, NAW Institute for Distribution Excellence Fellow

Mark Dancer founded the Network for Business Innovation to drive awareness, advocacy and excellence for B2B innovation, and to enable an exchange of ideas between leaders on business transformation, technology adoption, social impact and community engagement. For more than 30 years, Mark has worked with leading companies to achieve go-to-market excellence across a wide range of industries in developed and emerging markets.

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