Teaching The Rep A Thing Or Two

Teaching The Rep A Thing Or TwoDistributors serve many masters from suppliers to customers.

Supplier reps, for the most part, do not understand distribution. They are taught about their company’s business, then sent out into the field to make “calls” on distributors without relationship management skills. They see the CEO or owner of the distributorship driving a nice car, belonging to a country club and sitting in the corner office and think of only one thing: This executive is making too much money, and it’s our money. Instead of seeking to understand the role of distribution in the channel, individual reps are more likely to impose guidelines and rules that make sense in the world of manufacturing. These rules or guidelines hold little validity in the world of distribution. The reps either don’t understand (or forget) that distributors are intermediaries that perform a cost transfer role. They don’t understand that distributors wouldn’t exist if manufacturers could perform the same role at a lower price. They don’t understand that distributors serve many masters, from other suppliers to a massive amount of customers of all shapes and sizes. Here are a few functions that distributors perform that every supplier rep should understand:

  • Distributors serve as market makers by acting as selling agents for suppliers and buying agents for customers in geographically defined markets.
  • Distributors can fill a cost-transfer role through various elements of physically distributing products.
  • Distributors can add value through product customization to the customer.
  • Distributors act as banks, playing a large role in financing the growing economy by taking risks.
  • Distributors provide post-sale service and support.
  • Distributors fulfill a very valuable information transfer function.

Help the Distributor be Successful
Once the reps have a better understanding of the distribution business, they can begin to understand that the more successful the distributor is across product lines, the more successful the distributor will be managing the rep’s particular line. There aren’t many distributors that can be successful selling one supplier’s line—if they were, the supplier would have just cause for “going direct.”

Any help the rep can give the distributor will be paid back in more ways than a rep could ever imagine. In situations where the customer chooses the distributor before the brand, the preferred supplier wins all the ties. Reps often have key inside information about products that the distributor could offer that would add to their success without actually diluting the supplier’s sales. If a supplier rep is perceptive, he or she will know that introducing these products to the distributor will only enhance the relationship. Realizing that distributors need a wide variety of products to sell to their customers will help a rep solidify his reputation as a business partner.

Asking for “manufacturer-like” discounts or rebates doesn’t make sense in the world of distribution. In spite of that, many distributors are often asked to “participate” in programs that make no economic sense.

There are Legitimate Cross-Purposes
Business partners often operate in a world of cross-purposes. Remembering that the supplier rep’s priorities and those of the distributor are often at cross-purposes and publicly acknowledging this fact will help the rep strengthen the relationship. Even though these are legitimate, they can be a source of irritation. The more the rep understands the distributor’s business, how a distributor makes money, the more these cross-purposes can serve as a springboard to a stronger relationship. For example, a point of gross-margin is often meaningless to a manufacturer, but it is the difference between a profitable line and a money-losing line to a distributor. Asking for “manufactu-

rer-like” discounts or rebates doesn’t make sense in the world of distribution. In spite of that, many distributors are often asked to “participate” in programs from their suppliers that make no economic sense. When supplier reps make unreasonable requests that expose ignorance in how cross-purposes work (or in this case, how the distributor makes money), there is a dampened ability to influence the distributor, and the relationship suffers. Other examples include requests to take on products that are, in fact, simply line extensions where the distributor already has an established solution. Understanding cross-purposes presupposes understanding the true economics of distribution. This should be included in the manufacturer rep’s training under “distributor management 101.”

Keep MBAs to a Minimum
Minor but aggravating requests (MBAs) often become very serious sources of aggravation for both suppliers and distributors. So, don’t overload the distributor with MBAs. MBAs are those minor, and usually aggravating, requests from the supplier that eat up a distributor’s limited resources and time without providing a financial return. Examples of these are territory audits and reports that, as everyone knows, never see the light of day. Especially onerous are mandatory requests from the distributor to the manufacturer for special pricing that, after unnecessary time and paperwork, are always approved.

Distributors Serve Many Masters
The supplier rep must realize that he or she isn’t the only arrow in the quiver, the only master of the universe. Distributors serve many masters, from suppliers to customers. If the supplier rep wants a dedicated sales force, he should go hire one…otherwise realize that he is only as important as his bottom line contribution. If the rep’s goal is to get more attention from the distributor, add more value and profit to the bottom line while removing many of the aggravations.

The supplier reps are so important to the quality of the relationship between the supplier and the distributor that they can make or break it. The more the supplier rep knows about the distributor’s business, the more effective he or she can be in guiding the relationship in ways that benefit the supplier or manufacturer. To put it simply, if the supplier rep manages the distributor as a true channel partner, the rep will have a business partner for life.

Gases and Welding Distributors Association
J. Michael Marks Meet the Author
J. Michael Marks is co-author of Working At Cross Purposes: How Distributors and Manufacturers Can Manage Conflict Successfully and is principal with Indian River Consulting Group located in Melbourne, Florida, and at www.ircg.com.

 

The Partnership Principle