Advice For Manufacturer Trying To Get Distribution?
A manufacturer asked for advice about getting distributors to sell their products to integrators.
What do you recommend?
At a high level, there are 2 paths: distributors and manufactuer reps (and certainly they can be combined). Besides going after regional reps and the handful of bigger distributors (Anixter, ADI, Tri-Ed, Scansource, PSA etc.), what are the key drivers?
Why do distributors pick certain brands but not others? Why do distributors push certain brands rather than others? My understanding is that discounts and manufacturer marketing payments are both important elements? What else, besides sheer product quality / competitiveness?
Here are a few points my experience would indicate:
- Clear and unique value proposition, where the product has a strong play and the manufacturer can easily highlight the strengths versus similar products. In this sense, quality and competitiveness is important as you state
- Margin and profitability (then price)
- The elevator pitch - something tangible you can provide (to either rep or disty) which can be given to their sales teams to position your product
- Complementary products and ability to package with other lines in their portfolio for a solution sell. Check what else they have, check and stress your relationships with those complementary technologies
- Marketing $s available
- For distribution -> a clear channel strategy. Let them know what direct accounts you maintain and if intend to turn any over. Turning over some initial accounts will obviosuly help.
- Clear project registration. The extra margin possibilitiies are important, and also protecting the channel with price protection. For distribution, distributors will ask if they can will be protected as well with registration.
- For distribution -> inventory requirements and stock rotation
I used to work as a sales rep for a manufacture (not in the security industry) when I wanted to get into a distributor (which I found to be very difficult) I would call around to a lot of dealers and would ask, "what distributors do you buy from". I would then ask if it was ok if I could give the distributor their name as a reference for getting in the door. We would also talk about how much of our product they would buy from the distributor on a monthly basis, if it was avilable to them. After I got a good list together I would reach out to the distrubutors and would show them the list of their customers that were interested in our product. It worked extremely well as I had done a lot of the leg work for them.
We were a really small company but grew rapidly because of this approach, from nothing to 350 million in just 3 years.
The key driver is demand.
Distributors are not a magic bullet, they will not push or promote your product or otherwise get you to an audience that you could not previously get to.
In many cases the only value of a distributor is so that you do not need to extend credit to your dealers and handle pick/pack/ship operations. If you're looking to get picked up by a distributor as a sales strategy, you need to seriously evaluate that strategy.
Most distributors are happy to pick up a product that has clear demand. If you have more demand than ability to fulfill, distribution is a good option for you.
Most distributors are not happy to pick up a product that is low demand, has a complex sales cycle, or takes a long time to explain or sell over the phone. They are all about high volume/low margin (generally speaking).
Keep in mind too that most distributors will want or expect you to also do some marketing with them. You can easily spend $5,000-$30,000+ annually with each distributor to get featured in email blasts, print catalogs, lunch-n-learns, or other similar programs. I honestly think some of them are marketing firms with a warehouse attached. You need to evaluate the incremental business you will get, versus the cost of doing business.
I'm not saying distributors are bad or useless, they can be very helpful in scaling your sales when you understand their true purpose and potential. But, simply getting Anixter to carry your product won't result in any incremental sales simply by virtue of being in their system.
Here are a few key points that we look for:
- Unique value or reason to pitch the product line. It doesn't help the distributor or the supplier when the sales reps have multiple lines that all serve the exact same purpose... the message gets muddied. It doesn't have to be a completely unique pitch, but there has to be a standout reason or product within the line (IE, more advanced biometrics capability on readers, differential 360 view technology).
- Partnering with other suppliers in the ecosystem. We like selling products that partner well with our other key product lines as it keeps everyone happy. (ie, Milestone and Axis integration)
- Clear dedication to supporting the channel. It is very demoralizing to our sales reps and our integrators when they work on a deal for months and then lose it to the supplier who decides to take it direct to the end user (bypassing the distributor and the integrator) after we build it for them.
- Not overly distributed. It's difficult to sell a line when it can be purchased from 30 different distributors and directly from the supplier.
- Fair and clear pricing across the board. When a distributor gets favorable pricing over other distributors and they decide to pillage the market on price, nobody wins.
- Existing demand and marketing dollar support.
I'll put on my 'former integrator hat' for a minute: There were zero times I rang the distributor looking for a recommendation. If the distributor ever DID recommend a product, I immediately questioned the motive behind it and ignored it. No one tells the chef what his menu should be at the point he is cooking it.
In my area, this attitude is not uncommon. Maybe in some areas, distributors have a distinguished 'B2B sales' influence, but for many, they are order takers.
I strongly agree with 'Undisclosed B' comment's above, and from the buyer's perspective not just the prospective supplier.
If you want to sell, invest in salespeople/reps. Don't expect it to start raining because the disty's counter guys will ambitiously push your product.
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