What are distribution channels?
Your distribution channels to market are simply how you get your products or services into your customers’ hands.
It may be at the present time you operate your own stores and your customers visit those stores. If your objective is to achieve significant sales growth then the question becomes one of, do I open more stores to grow my business and if so where?
Maybe I should build my online business so customers do not have to come to my store but can buy my goods from anywhere in the world? But how does this interact with my existing distribution channels? An online strategy will help me understand why I’m going online, how I will do it and what I expect to get out of it. This all comes before simply building a website.
Possibly a franchise model may allow you to grow your business without the need for additional capital to open new stores, add vehicles or employ more field staff?
What about finding agents or distributors in other markets who could sell your products for you?
Or getting better performance out of your existing dealer network. Surely not every dealer or distributor in your channel network at the moment is doing a great job. And how much could your distribution channels’ performance improve if you improved your management?
Which distribution channels are best for you will depend on what you are selling, who your customers are, where your customers are located, what their needs are and how best to meet their needs in a competitive marketplace. Many of these characteristics are regularly changing. Are you?
How do I improve my Distribution Channels’ performance?
Your channels to market may include agents, dealers or distributors. If you sell through such third party independent channels you certainly cannot set and forget your partner management with the belief that your channel partners will rake in the sales for you.
Third party distribution channels must be continually invested in to develop their capacity, capability, expertise, commitment and ultimately their performance in selling your product in preference to any other options they may have. You must choose your channel partners carefully, train them well and continuously work with them to identify and pursue opportunities that help grow both their business and yours. Consider your partners like your most important employees and work with them to achieve success for both of you.
We find that the common pitfalls business owners make in working with channel partners are:
- Not working with channel partners to plan for, and implement improvements in such areas as their business planning and sales skills
- Failing to fully train partners in the product/service attributes so they are able to sell effectively
- Not providing market intelligence to assist partners in identifying sales leads
- Not developing new products/services to help drive customer demand
- Forcing product onto channel partners and leaving the ‘problem’ of achieving sales to them
- Not providing sufficient incentives (financial and non-financial) to drive sales
Do any of these sound familiar to you? There are a number of methods for evaluating channel partner performance and each will give you insights into how you can improve individual or overall partner performance. Uninspiring channel partner performance is not a problem you have to live with.