Most companies describe their “customers” as people who buy products and services from them. Distributors, however, have another kind of customer – the manufacturers they represent – to whom they must sell themselves – and their value as a distribution partner. Their manufacturer partners are true customers in every sense of the word.
For a manufacturer, a distributor sells its services in getting goods through the channel to the ultimate end user. Manufacturers pay for these services in the form of commissions and with marketing development funds, or marketing co-op dollars. Distributors use these funds, hopefully but not always, to promote the products of the manufacturer supplying the funds. These funds are often the core financial support for the distributor’s marketing efforts.
Failure to recognize its manufacturer partners as important customers can have effects that ripple through a distributor’s entire business. The first likely consequence is a drop-off in co-op dollars. Those funds are crucial fuel to the distributor’s sales engine. Losing all or part of them can result in a drop in overall revenue — a significant blow to the business. The manufacturer could move its business to another distributor. None of this is worth the risk.
Conversely, treating the manufacturers like the super valuable customers they are can have an extremely positive effect on the distributor’s business. Co-op dollars should increase; the flow of leads will probably grow; and the distributor will be viewed as a key partner. And it’s easy to do.
To win favored partner status, a distributor must meet the manufacturer’s needs. Beyond selling more goods, the request we’ve heard most often is for manufacturer visibility into how the funds are being spent and what results the funds have produced. In other words, better reporting.
The first step in improving this situation is for a distributor to ask its manufacturing partners if they are getting all the information they need. If the answer is no (and it usually is), give us a call. We’ve been working with distributors for a decade, and we’ve developed some terrific solutions to this problem.