Pro-active management of retail channels by product producers requires blood, sweat and tears, as well as imagination. Dan Matthews reports
Using agents, distributors and resellers to help shift product and boost revenue is a sales strategy used to great effect by big brands for decades. But the relationship between brands and their retail channels is becoming increasingly complex.
Vendors have to compete for attention within their network of retailers and, increasingly, the
business-to-business-to-consumer (B2B2C) model of selling relies on an intricate partnership approach where a good amount of the power rests in the reseller’s hands, not the vendor’s.
If they want to shift stock – and of course they do – vendors must cuddle up to channel partners. They must equip them with the tools to sell, provide brand collateral promoting their own products ahead of others and create a support structure that helps partners and makes them feel important.
This will not come as news to brands, but what might do is the sheer blood, sweat and tears that some vendors are devoting to their reseller network. In 2014, best practice is a relationship that is formal, prepared for, well resourced and, critically, two way.
For David Ellis, director of strategy at Arrow ECS, UK and Ireland, this means starting at the beginning with an individually tailored business plan outlining mutual goals that are agreed upon by both parties in the deal.
“Successful channel managers are the ones who really get to know what motivates their channel partner and their staff, and who understand that this may vary greatly, even among partners that on the face of it appear to be very similar,” he says.
“The key to effective channel management is gaining executive ‘buy-in’ from both parties at the outset. To achieve this, both vendor and channel partners need to be very clear on their mutual goals.
“With a formal business plan created at the outset, should there be any areas of underperformance, they can then be reviewed and focus applied to address issues as appropriate.”
Creating a plan gives both sides the opportunity to set out what they expect from the relationship and what represents success as well as, perhaps more importantly, failure. Once the relationship is defined, the vendor needs to start a charm offensive.
Channel managers should remember that partners are businesses too and not just conduits for products
Andy Grant, managing director of Bowan Arrow, says brands must work hard to rise above others. “Partners like to feel valued and heard by the vendor, instead of being perceived as a means to an end to hit a number,” he says.
“Most partners will be working with as many as ten to twenty vendors at any given time, so the brands that differentiate their offering will grab the attention of those partners, while the others risk falling down the pecking order.”
Mr Ellis adds: “From the start, it will be key for the vendor channel manager to focus on helping the partner deliver some initial sales. This will ensure that the partner sees some early return on investment, and will make a relationship much more ‘sticky’ and viable for both parties.”
After the honeymoon period, it’s important to keep up the momentum. Brands should construct a package of measures that inspires resellers to do just that – resell. The ingredients of this bundle should include hands-on care, fluid communications and marketing support as well as regular contact underpinning everything.
AppRiver is a global software-as-a-service provider of e-mail and web security solutions. For its channel, the business has created the concept of “phenomenal care”, which basically means doing everything it can to make life easier for its retail network.
“That could mean asking our partners questions and doing discovery during the on-boarding process so they are equipped with the knowledge and right tools and products for their customers,” says Jim Tyer, Europe, Middle East and Africa channel director of Appriver. “All of it translates to us doing the heavy lifting so that our partners can focus on creating healthy profit margins.”
Channel managers should remember that partners are businesses too and not just conduits for products. They are often cash strapped and time poor, so brands are advised to make the relationship straightforward and demonstrate the value in every request for action.
“Make programmes simple and effective,” says Olivier Choron, chief executive of purechannelapps, a software company that provides channel marketing and sales tools. “Often brands forget to consider their partners have limited time, resources and knowledge to deliver marketing programmes.
“They also forget that these retailers cannot focus on just one brand and one product. Ask yourself how you can improve partner relationships. Is it all about margin or complimentary services and support? Look at the relationship proposition from the partner’s point of view, not just your own.”
The channel is an extension of your sales floor and, just like in-house salespeople, resellers need support, motivation and rewards, as well as a clear path ahead of them. By putting these elements together in perfect harmony, brands can build a relationship that adds zeros to the bottom line.