Managing a distributor

In a previous article we looked at the process of selecting a distributor, and it was stressed that this can be one of the most important success factors in any market. But we also noted that choosing the distributor is just the start says Tim Hiscock.

In my experience, managing and motivating a distributor can be one of the most challenging tasks for any manager. There are a number of reasons for this, but there are two in particular that we need to consider carefully: First, my distributor isn’t my employee, and second, he is a long way away. This makes many of the routine methods of managing and motivating staff unsuitable, and hence I need to find other ways of seeking the results I need.

When we choose a new distributor, it’s vitally important to get a clear agreement of the expectations and plans of both parties. That’s one of the most important benefits of negotiating a contract. Our contract is effectively a formal description of a shared plan. It sets out what both parties will do, and anticipated outcomes. As the exporter, we undertake to supply the agreed products in the agreed manner and at the set prices. The distributor undertakes to actively promote and sell the products in their market in the manner agreed. We agree to help him. He agrees to pay us as agreed.

So far, so good. But our distributor doesn’t usually just distribute our products. His motivation will be a matter of priorities, and this is initially challenging because, in most cases, I have found that effort devoted to established products is likely to bring a better return in the short-term than time spent on products that are new to the market. It varies according to products and markets of course, but in general, my distributor is obliged to think about the short-term for his own survival.

So, I need to compete for my distributor’s time. It’s vitally important to start as we mean to go on, which is why I like to have an action plan for the start of the relationship, typically a 90-day plan. This will consist of specific actions, responsibilities, deadlines and anticipated outcomes. I will expect the distributor to have an immediate plan for introducing the products to his existing customer base. I encourage him to think about which of his contacts are likely to be the best leads and why, what the best method of contacting them is and how anticipated objections can be handled.

I have spent a lot of my career working with medical products. They were not particularly complicated, but to get the best results with patients, practitioners needed to understand how to use them. This meant there was a need for training, and the distributor needed a trainer, possibly more than one. One of my initial responsibilities would be to train the local trainer. Not all products need this level of support, but it’s really important that sales teams understand the specifications of the product, its intended use, its unique selling points (USP’s) and how it compares with competing products on the market. By undertaking to visit the territory, train staff and work with them on initial client visits, presentations, etc, I am also getting the distributor to commit time to my products and to taking them to prospective buyers.

A commitment like this is often key to getting the distributor to himself commit specific time and resources to our business. I’m offering to come to work with his team, possibly meet some key customers, explain the products and their benefits. It’s hard for him to refuse. What we’re doing is establishing the nature of the relationship. I am showing absolute commitment to him, a real determination to make the venture work. If I chose my distributor well, he will surely want to do the same?

This brings up the question of trust. Typically, distributors like to maintain a firewall between their supplier and their customers. This is understandable. A common fear for distributors is that the supplier will cut them out of the loop and go direct. If my distributor is not happy at the idea of me or my colleagues having direct contact with customers, I need to respect this. Perhaps it will come later. I must never forget that the end users are primarily his customers, not mine.

I need to demonstrate my commitment in this early period, both by showing an active interest in how things are going, and offering practical support. I’ll often go the extra mile if it makes sense to me. Some extra samples? No problem, that customer is going to be important. Some negative feedback? OK, let’s deal with that now. Marketing materials? He really needs to be developing what’s right for his market, but in the interim yes, we’ll do whatever we can.

Most importantly, I need to be proactive. We expect our distributor to be the same, but what I do in this early stage can be very influential. I’ll spend time looking at what seems to be happening in his market. What are our competitors up to? What’s developing in the target market? It’s so much easier to at least get a notion of these developments in the digital age, and the important thing here is that I am showing an interest. Perhaps I’ve seen that our biggest competitor has launched his new product in this market, what has the distributor seen? Is it going down well? What should we be doing? And of course, what can I be doing to help him?

Our 90-day plan (or whatever period we agreed on) will have some targets and outcomes. I need to make sure we are taking notice of them. Have we both done what we said we were going to do? If not, why not? When will it be done? Or have we agreed to change our minds? The best laid plans go wrong sometimes, that’s life, but we need to recognise when events haven’t turned out as planned. If a deadline is missed, retime it, but make sure it’s formally agreed and this time do everything to stick to it.

The distance between us is a major challenge in developing a positive working relationship. All this talk about deadlines and outcomes can seem a bit formidable. I need to find ways to keep the relationship a happy one. I can do that by sharing good news about our company, other distributors etc. By knowing when my distributor’s birthday is and sending him good wishes. By knowing who his favourite football or other sports team is and congratulating him when they do well. In exporting, the rise of digital communication is a godsend for engaging in these “soft” aspects of building a constructive engagement.

Too many exporters seem to think that the job is done when a new distributor is appointed. As a matter of fact, that’s where the real work starts. Take steps to ensure start the journey with a clear understanding of the destination, how we are going to get there, and what each of us are going to do. If it goes wrong (face it, it usually will, sometime), share the problem and work out a solution together. My distributors are members of the team. The venture will only work if everyone works as a team player.