Distributors play a vital role in keeping the lines between manufacturers and users operating smoothly. They can expedite response times, enhance a company's reach and even create value-added packages.
"Distribution is the single most viable alternative to complement and supplement a direct sales organization," says Phillip L. Peck, director of sales for EagleBurgmann, US. Even the most efficient companies will find it virtually impossible to be all things to all people at all times. A strong distributor network can help make that scenario viable.
Manufacturers should recognize and treat distributors as an integral part of their teams. "Distribution plays a unique role in that they are both a business partner and a customer at the same time," says Peck. Manufacturers should look at distributors as they would their best customers-build relationships with them, and take the time to educate them about the product.
Peck adds that most distributors are looking for "manufacturers that view them in a positive light and support them with marketing tools and strategies to ensure they are competitive in their markets." Manufacturers who take care of their distributors will find that they take care of the manufacturers.
The Role of Distributors
Given the size and scope of the U.S. economy, distributors have long been relied on to serve as a bridge between manufacturers and customers. In today's increasingly globalized marketplace, this link becomes even more important. Today, wholesale distributors make up an estimated 5.75 percent of the gross domestic product in the United States and Canada, and employ 3.3 million workers.
One of the most resounding arguments for a solid distributor network is the speed with which manufacturers can respond to customer demands. It is crucial today to be able to respond to customers quickly and in real time. Because they are more localized and nimble, distributors can typically offer a faster response. "To truly be customer-driven, manufacturers need to adjust their businesses to meet the needs of the customer, which in today's marketplace means local service, local inventory and technical sales people," says Skip Giessing, a division vice president for DXP Enterprises, an industrial distributor.
A network of distributors often has greater ability to offer face-to-face service. "Good, solid geographic and account coverage is crucial to success no matter what the economic conditions," Marty Gass, regional manager for EagleBurgmann, says. With distributors in key geographic areas, manufacturers can service customers on a level that would be difficult or even impossible for a main-office sales force.
There is also networking potential. Because they often represent several companies, distributors can have access to new accounts for the manufacturer's sales force.
Distributors do not only offer benefits to manufacturers-they can also be a boon for users. Because distributors represent multiple products and companies, they can bundle. If they are selling the pump, the coupling and the mechanical seal, they can provide a system. The user's buying process is streamlined, and costs are often lowered, as well.
Distributors also have the benefit of reducing inventory and service burdens for both the manufacturer and the user. This is especially crucial now, when many users have been forced to cut back on in-house inventories and service staff. "Distributors, now more than ever before, are service providers," says Giessing. "They do not just provide products. They provide aftermarket services, cost reduction and process optimization strategies, as well as inventory management. Distributors create value by providing total solutions for their customers."
Working with Distributors
Instead of simply handing off C- and D-level accounts to distributors, manufacturers should treat them as an equal part of the sales force. Manufacturers should build open relationships, and make distributors part of the team. "View the distributor as your own mini sales organization, which needs your time on a regular and consistent schedule," advises Peck.
Distributors also need to be knowledgeable about the manufacturer's product to sell it. Because they are not employed by the manufacturer and also represent many other products, this knowledge is not innate. Manufacturers should take time to teach them about the product. "Think of how you would deliver a presentation at a sales meeting, and be like that all the time with distributors," advises Gass. "Be excited about your product and excited about their opportunities."
If the manufacturer criticizes the distributor for not working hard enough to sell its products, it should ask if it is supporting the distributor appropriately. Is the manufacturer easy to do business with, and does it offer the distributor opportunities to make money? "Complicated pricing and discounting policies, cumbersome order entry procedures, and slow or non-responsive organizations will find it difficult to grow their business through distribution," says Peck.
When the manufacturer is a new item on a distributor's line card, it should ask the distributor how it can move up. The manufacturer needs to discover what the distributor needs. Without a sales and technical staff to support the distributors, manufacturers must have materials and resources that distributors need easily accessible online.
More often in this industry, specialized, small-scale distributors are needed. During the last decade, many plants and mills have consolidated and reduced the number of suppliers. In many cases, the industry now turns to distributors to provide these services.
Specialized distributors are a good fit in this capacity, as they have the knowledge to deal with issues like specifying or taking a size fitting. "It is a common misconception that we just take orders and stock shelves," says Mark Pettibon, sales manager for EWProcess, "but our people have a lot of technical expertise. We can provide engineered solutions for tough, complex situations using the best available technologies." Couple this trend with the reality that many plants have lost some of their technical staff, and an experienced, knowledgeable distributor goes from an asset to a necessity.
"The idea that distributors are just middlemen overlooks the true value that distribution offers," says Pettibon. "We are so close to the customers that we can actually help drive sales, not just deliver the product. We are able to solve problems, as well as identify market trends and pass this information back to the manufacturer. In many ways, we are their eyes and ears to the industry and their customers."
Five Questions to Build Distributor Relationships To build relationships with their distributors, manufacturers should start by asking themselves these five questions:
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Pumps & Systems, August 2010