For companies that sell direct (internal sales reps), identifying and correcting for underperforming sales reps is a straightforward process related to aligning expectations, developing a plan and measuring performance. Everyone has equal access to company resources and is expected to perform at a level that both maximizes their individual compensation plan, as well as aligns with the company’s goals and objectives.
However, when you sell the majority of your products through a channel of distributors or independent representatives, both identifying and correcting for underperformance is incredibly difficult. Selling through a channel of distributors means you get all the benefit of scaled distribution but also lose elements of control, oversight and quality.
As a result, evaluating distributor performance and identifying problems requires a structured, methodical and repetitive process designed to quickly isolate performance problems and create an environment for success.
By implementing the following five disciplines into your distributor relationships, you will quickly identify underperforming sales reps and start to recover some of the lost revenue as a result.
Core to any successful relationship are shared expectations and constant two-way communication. All too often, distributors are on the receiving end of leads, sales opportunities, sales materials or promotions that may not perform as expected, but have no clear way to provide immediate and actionable feedback to their manufacturers — especially when they are managing multiple manufacturer relationships.
It’s important to provide distributors a way for accurate and timely feedback on leads, sales materials, products and promotions. Merely having a web-based “partner portal” is not enough to drive this communication. It must be frequent, actionable and in context so both parties know where any disconnects are present.
2. Training and Education
Rarely does a distributor know your product as well as you do so having a relevant, timely and in context training and education program is crucial. Email newsletters and one-off training sessions are helpful, but manufacturers with high performing distributors have embraced “in context” training and education where sales materials, technical specifications and frequently asked questions are mapped to each stage of the sales process and presented via a distributor relationship management system used to engage and convert leads to opportunities.
Manufacturers benefit because they replace tired and ineffective partner portals with proactive and relevant content presented when and where the distributor needs it.
3. Lead Quality
Ultimately distributor performance is measured by revenue contribution and if you are providing leads to your distributors you must have an agreed upon and accurate set of qualification criteria. Often a lead qualified by the manufacturer, a Manufacturer Qualified Lead, does not meet the needs or expectations of the distributor making it difficult for them to treat it as a Distributor Qualified Lead.
The conversion rate between these two definitions has a real and measurable impact on the sales pipeline and can become a source of confusion and frustration. Manufacturers continue to invest in and share sales leads with their distributors and distributors don’t follow up on most of the leads because they do not believe the leads are of high quality.
Manufacturers should start with an agreed upon definition of what a Distributor Qualified Lead looks like and work to create as many of those as possible in lead and demand generation efforts. Not all Manufacturer Qualified leads will be Distributor Qualified Leads and not all Distributor Qualified Leads will become opportunities, but using this approach and discipline will increase lead quality and conversion rates.
All too often distributor performance is viewed in the aggregate without an understanding of who delivers the most revenue, who requires the most resources and if the resource investment yields the greatest revenue contribution.
Distributor performance needs to be viewed by individual distributor, compared over time and compared to other distributors to get a true understanding of performance and to drive true accountability into the distributor network.
Essential to this is a shared set of data that both the manufacturer and distributor monitor and manage to which is often impossible due to separate systems and processes in the different companies. Implementing a Distributor Relationship Management (DRM) software platform brings this shared visibility and single source of performance so that accountability exists on both sides of the relationship.
5. Systems and Processes
None of the areas above are possible without a shared approach to systems and processes between manufacturers and their distributors. The fundamental challenge with a business that sells products through distributors is that people, processes and technology reach outside the four walls of one company and into the four walls of many others. Current Customer Relationship Management (CRM) tools and partner portals just don’t cut it.
Embracing a Distributor Relationship Management software platform aligns systems and processes in the places that matter the most — communication, feedback and sales pipeline reporting. It works with the systems on either end and bridges the information gap that occurs between manufacturer and distributor. Current approaches relying on email and spreadsheets are ripe for failure as shared accountability is lost, leads fall through the cracks and real revenue opportunities are missed.
The success of distributor relationships hinges upon a defined, methodical and repeatable approach to managing those relationships. To fully realize the benefit of a distributor-based sales model, underperforming distributors must be quickly identified and the right steps need to be put into place to remedy the situation. Leveraging a Distributor Relationship Management platform increases communication, accountability and overall distributor performance.
Justin Johnson is CEO of LeadMethod, Inc.