Control your dealer structure

Control your dealer structure

When you need to sell your product in a foreign market, you can’t beat the help of a local who knows the game. The problem is you’re at the mercy of the local dealer’s tastes and expertise – not forgetting their individual agendas. Experience also shows, companies that actively promote and manage their relationship with dealers are more successful and earn more money.

Partners are essential for success, especially in countries where you do not have your own sales organization. They are an extension of your company. Agents, reps, distributors, dealers. They go by many names, but they share one thing: you’re in their pocket and there’s money to be made if you sit there comfortably.

Get a strategic focus

In too many companies the dealers are chosen randomly. Perhaps it started with a business card at a trade show five years ago. A fine beginning, but historically these types of relationship don’t often develop as you would like. Perhaps because there’s no clarity when it comes to the demands you make of each other, and what you get in return.

If your partner isn’t pulling their weight, it’s probably high time to make a few demands.

You must get to the core when assessing your retailers. Do you share a strategic focus? Do your dealers have the necessary knowledge and resources to reach your priority markets? Were they selected according to criteria and targets that no longer suit your business? It’s important that the dealers are dynamic and have the ability to evolve with your business. Take time to evaluate whether your dealers are on the same page – and keep doing it. It pays off!

Be selective

You must actively select your dealers. And, just as you would in your private life, you must have the courage to find new partners if the old ones have got a little too comfortable, or are misusing your resources and marketing budget. If you’re not careful you’ll end up spending all your time on the 20% who shout the loudest – and they may not be worth it.

Make demands

Most companies set sales targets for their dealers, but there may be many other ways to help you manage and motivate. You could be rewarding activity and effort instead! As part of the dealership you can, for example, request that your dealers send sellers to train with you, so that they are properly equipped for the job in hand. You can also stipulate that dealers create marketing plans for your product, or that you should be represented on their website. If you do not make demands, none of it will happen.

The rewards your partner receives should be based upon input and achievement. It may be economic benefits such as discounts and subsidies for marketing, or other rewards such as tools, additional support and service. This will help create a natural quid pro quo culture that’s easy to understand and follow up.

Manage with partner programs

A survey by Raffinaderiet among 25 major Danish international companies shows that over half do not have a formal partner program. Virtually all describe their relationship with dealers as “OK” or “bad”. Conversely, those with partner programs report that their relationship with the reseller channel is “good” or “very good”. And contrary to what one might think, greater control and strict management results in greater satisfaction among dealers.

One example of this is the partner program from one of the world’s leading producers of AV large screens, dnp denmark. In 2008, the company introduced a global partner program for its distributors and resellers. Since the introduction of the program, which among other things requires participation in sales and product training and certification, the dealers' satisfaction with the cooperation has consistently increased. In the latest satisfaction survey, dnp denmark scored 4.11 on average on a 5-point scale, with 5 meaning “Excellent”.

Build global programs

In a global world, it’s important that you handle partners using the same basic cross-border principles. Many of them already operate in several countries, so it makes your life a lot easier if there’s a uniform structure with common guidelines, for example: service, training, marketing, etc. Otherwise you risk discontent and disappointment, which can cost momentum in your markets.

Channel manager

Only moths come easily, as Danish folk poet Storm P once said. And so it is with successful dealer relationships. They must be developed and nurtured. Too often we see excellent partner programs start up, without being followed up of properly developed. If you really want to be successful with your retailers, you have to make it a priority. For example, why not appoint a responsible channel manager who can work with your key account managers of area sales managers to drive the process and monitor systematically?

Awesome, what now? Want to hear more about optimising your dealer structure? Write an email, or call (+45) 53 52 82 00 - We'll have a cup of coffee, and a chat about what we can do for your company.