By Walt Boyes
Many companies use third-party distribution channels—distributors and representatives, or reps. Some use them because they appear to be less costly than factory-employed salespeople. Some use them because they believe reps and distributors are an efficient way to provide distribution channels. Over the years, companies have built strong rep and distributor channels, both in North America and globally.
So, what is a newcomer to do? How do you start building a rep or distributor organization from scratch? First, you look at your competition. Analyze their distribution organizations to see what key features their reps and/or distributors have. See if you can determine their top 10, and concentrate on analyzing them for similarities. Don’t forget to look for differences, too. Rep firms and even distributors are sometimes highly idiosyncratic—and what works, works!
Dial the numbers
Call several of your competitors’ best reps, and tell them who you are, and ask them if they’re interested in changing. They’ll probably tell you “no,” but they will talk to you. You can get real information that you need from talking to them. During the conversation, get them to tell you why they think so highly of your competitor, and what they think it takes to sell that product line. Then, call a widely diverse set of end-users and specifiers of your product, and ask them what they look for in a local rep or distributor for your type of product and second, for a recommendation of who might be a good rep for you in their area. You ought to call at least 50 customers, big and small, in your search.
Now, put together a profile of the kind of rep or distributor you need for your company from the information you’ve collected by talking to your competition and your customers. As a reality check, match your competitors’ reps and distributors against this profile, and see what similarities or differences you find. Change your profile accordingly. Put together a spreadsheet that ranks these criteria numerically because it’s a good way to deal with criteria that are sometimes quite subjective.
Finding the ‘ideal’
Once you know what your “ideal rep” or “ideal distributor” looks like, you can start looking for them in each of your territories. This is where the calls to your customers really come in handy. There’s no giant database of names of rep and distributor companies that you can match electronically with the profile you’ve constructed. Depending on your market, you’ll have to find them; and, in many cases, reps and distributors don’t list themselves in national or international directories.
As you’re looking for reps or distributors, you need to decide what you’re going to do for them so they’ll decide you’re a good bet. You see, taking on a new principal for a rep company is a bet. It’s a calculated risk that the product line is so good it will be worth the 12 to 18 months of “missionary work” needed to introduce a new product line into the marketplace. So, your objective is to put together a deal—both financial and technical—that will convince the rep or distributor to take your products and run with them to the customers.
One of the most important parts of the deal is the amount of support you can offer the rep or distributor. How much technical support can you furnish? How much training? Will you come out and help them sell? Can you help with order editing? Do you have inventory buy-backs for distributors? The more you’re willing to do for a new rep or distributor, the more likely they are to take your products and race off to sell them. This is especially important if you’re setting up global distribution channels. The fact is, the more you serve your reps and distributors, the higher your sales will be.
About the author
Walt Boyes, co-president of Spitzer & Boyes LLC, of Maple Valley, Wash., has more than 25 years of experience in sales, sales management, marketing and product development in the controls and instrumentation industry. He provides strategic planning, organizational development, business re-organization, and electronic business re-engineering services for both profit and not-for-profit businesses. Boyes can be reached at (425) 432-8262, email: firstname.lastname@example.org or web: http://www.spitzerandboyes.com/Walts_writing/.