Distributors are one of the most challenging relationships for manufacturers. The strength of the relationship has a direct impact on product sales success. But many suppliers have a hard time getting a handle on those relationships.
Some have tried treating distributors like employees — similar to outsourced salespeople. But manufacturers really don’t have the same amount of control or engagement with distributors as they do with their own internal teams. And communicating with them poses its own challenges.
Others have gone the route of treating distributors like customers. After all, they often have extremely demanding requirements, much like customers do. If those demands aren’t met, they can easily turn to a competing product line, leaving your product faltering in the marketplace.
So which route is most effective? The Gallup organization has conducted research on supplier/distributor relationships in a number of industry sectors and found the answer is clear: at the very least, you have to treat them as BOTH employees and customers. But they also found that in the best relationships, suppliers treated distributors as true partners.
Gallup’s studies showed that in partner relationships, manufacturers utilized the same performance-improving strategies with distributors as they did within their own walls. That included focus on three areas: distributor sales talent; distributor employee engagement and customer engagement; and end-user customer engagement.
Although you don’t have direct control over who your distributor hires to represent your products, you can help impact the right choice. Share best practices and tools for recruitment with your distributors. They struggle with recruitment and retention, too. It can be the way to open the door to a partner-style relationship. And your competitors probably aren’t doing it, so it’s also a way to differentiate yourself beyond just the products you’re trying to get the distributor to sell.
Employee and customer engagement
Just as you’re rightly concerned with engagement levels with your own employees and customers, you need to pay attention to distributor engagement.
Gallup’s research shows that companies that successfully improve employee or customer engagement can gain a 70% boost in performance, but companies that manage both employee and customer engagement together can gain a 240% boost in performance.
There are plenty of measurement tools out there focused on employee and customer engagement. Sharing them with your distributors can help get a better handle on how those key groups are engaged with your company. Then, you’ll also be able to identify areas that need work, and put together a joint engagement strategy with your distributors to improve results.
End-user customer engagement
It makes sense to give your distributors all the tools you can to help sell your product easier and more frequently. That’s where end-user engagement research comes into play. It helps both you and your distributors understand what factors are influencing their purchase decisions, their satisfaction with problem resolution, and what attitudes might impact future sales. That’s some powerful data that helps put the focus on your products over those of your competitors.
All of this involves some risk and more work on your part. But as the research shows, the payoff is there. Gallup found that distributors with high employee engagement delivered 1.4 times more revenue than the average distributor, and those that also had high customer engagement outperformed others by more than $200,000 per distributor.
Those kind of results make it worth the effort.