19 May Keys to a Successful Distributor Partnership
Following on from our previous blog ‘How to Build a Partnership with your Distributor.’ Here we are going to build upon that and discuss the keys to a successful partnership.
Support and Investment
It is essential to demonstrate a solid commitment to distributor partnerships early on by supporting their efforts in-market. Investing time in nurturing relationships by sending in technical and sales personnel or offering training is a great way to ensure reciprocal collaboration and shared goals. Our experience shows that early commitment of resources leads to better, more productive partnerships with local distributors, thereby enhancing strategic fit and business performance. We have seen many cases of distributors feeling neglected and reporting a lack of managerial attention, and the knock-on effect on productivity and working relationships can be profound.
Control of Marketing Strategy
Some of the most successful manufacturer and distributor relationships are built on a foundation of solid marketing leadership. While independent distributors should have the autonomy to adopt a marketing strategy to local conditions, it’s important to work together as a partnership. Take the time to help advise on which products to sell and how to position them. Companies should consider sending employees to spend time with the local distributors in the early phase to keep a close watch on both distributor performance and customer needs. This, however, can be an expense that companies haven’t considered. At OCG, we have already built up these relationships with many distributors internationally. Our team visits many of these distributors and keeps a close valuable relationship.
Market and Financial Performance Data
In many countries, distributors are often the main sources of market information and can be integral in helping a company to realise their competitive advantage. When we advise on distributor contracts, we often recommend that the distributor be required to provide detailed market and financial performance data. Not having this kind of information can lead to serious problems down the track. How a distributor responds to a request such as this can reveal a lot. Some distributors view information like customer identification and pricing levels as key sources of power in their relationships with suppliers and can, therefore, be reluctant to share it. Several companies that we have represented have said that the willingness of potential distributors to provide transparency with such data is a key indicator of whether successful relationships can be achieved.
Build Links Between Distributors
Encouraging distributors to talk to each other leads to the sharing of ideas within local markets, which can improve performance as well as the execution of international strategies. We have seen that once distributors are in communication with one another, they start to make plans and even regional initiatives for existing and new products.
OCG firmly believes that companies with aspirations to expand their business into new markets should pay careful attention to the initial selection of, and ongoing working relationships with local distributors. They must understand that distributors are implementers of a marketing strategy, rather than their marketing departments in the new market. The result will be better working relationships, fewer plateaus, and more consistent growth in market share and sales revenues, meaning that they might also find longer-term roles for local distributors within a regionalised approach to global strategy.