To maximize growth opportunities, consider developing a “holon.” A holon, as defined by Arthur Koestler in “The Ghost in the Machine,” is “an entity that is itself whole and at the same time part of another.” The electrical wholesaling industry has much in common with holons. The channel works most effectively when a manufacturer, their sales organization and the distributor are on the same page, while recognizing that each company has its own interests to satisfy. As a whole, the entity can deliver on customer wants.
Unfortunately, channel partners too frequently are in conflict due to self-interests. Earlier this year, Channel Marketing Group conducted a survey to identify some of the issues between distributors and manufacturer sales organizations. You may not find the results startling, but they shed light on where industry challenges lie.
An online survey was conducted with two e-mails sent to approximately 1,000 distributors, independent reps and manufacturer sales management personnel throughout the industry. A 16.8 percent response rate was achieved. Of the respondents, 79 percent were distributors and 21 percent were manufacturer personnel. For the purposes of this article, independent reps and manufacturers were grouped together.
Distributors were asked about their perceptions regarding their interactions with reps and manufacturers. Reps and manufacturer respondents were asked similar questions regarding interactions with their distributors.
Distributors expressed concerns in three major areas:
Only 25 percent of distributors have some level of trust in having a rep call on an end-user without a distributor salesperson in attendance.
According to distributors, only 33 percent to 51 percent of the reps either respond on a timely basis, provide adequate product training, or work as an advocate for the distributor with the manufacturer.
Respondents said less than 45 percent of reps share manufacturer marketing programs and materials on a timely basis.
Conversely, rep concerns included:
More than 65 percent of distributors contact reps for service issues when the distributor could easily gain the information online, or for which they may already have had the information. Reps believe this level of service support could be reallocated into revenue-producing initiatives.
Reps reported that almost 96 percent of distributors do not actively encourage their salespeople to conduct joint sales calls. (But 74 percent of distributors responded that they do support joint sales calls!)
Almost 70 percent of distributors do not adequately support manufacturer marketing programs or new product offerings, reported reps.
The survey also asked each audience, “If you could ask your distributor/rep to do one thing, what would it be?” Top responses, based upon frequency of mention, were:
Distributor requests of reps
- Establish trust
- Provide timely service and response
- Create demand through end-user focus, planning and lead generation
- Train salespeople
- Show new products
- Plan with sales
Rep requests of distributors
- Be proactive in selling
- Conduct end-user calls
- Support new products
- Be more self-sufficient for customer service (use Web more effectively)
- Be loyal
Manufacturer sales organizations seeking to grow their local business have a unique opportunity to redefine their relationships. Although the issue of trust may remain a challenge due to multiple relationships within a marketplace, companies that can develop a closer holonic relationship with their distributors should have a greater ability to capture incremental business.
Distributors have sales, service and support concerns that are core competencies for sales organizations. It follows that if a rep firm develops specific, marketable services, it can differentiate them in a local marketplace by providing distributors with an additional incentive to support one line versus another.
To gain greater support from manufacturer sales organizations, distributors need to consider how they can more visibly support efforts to plan and conduct joint sales calls, be proactive with customers and specifiers and support manufacturer new product and marketing initiatives. By being the most supportive distributor in the marketplace, benefits should accrue.
Additionally, manufacturer sales organizations feel that more than 56 percent of distributors seek manufacturer marketing support to improve profitability or reduce risk rather than increase sales. Distributors who seek marketing support should commit to developing and tracking marketing metrics. The results may not always be stellar, but they provide an opportunity to review the strategy and make enhancements for the future.
Each member of the electrical channel has vested interests that can reduce the effectiveness of each party. Through coordination of efforts, a commitment to selected partners, delineation of roles and setting of expectations, all parties can be more effective within the local marketplace. The result is increased sales, reduction of duplication of efforts and increased profitability for all parties. Or, in the words of my high school math teacher, “Sometimes the whole can be greater than the sum of the parts.”
For a copy of the survey results, contact me at (919) 488-8635 or via e-mail at [email protected].
David Gordon is a principal of Channel Marketing Group Inc., Raleigh, N.C. The company develops growth strategies for manufacturers and distributors.