Incentives to Get Distributors to Sell Products
Typically, there are three ways B2B companies sell their products or services through distributors:
- Sell directly to customers via your website
- Sell to retail stores, which then sell to customers
- Sell to a distributor, which sells to retail stores that then sell to customers
In order to successfully push products through the distribution channel and, more importantly, maintain the flow of those channel sales, you have to sustain positive relationships with distributors. You can better earn distributor loyalty and trust by understanding the sale from their perspective.
A distributor is mostly concerned about:
- The level of profit they can make on your product
- The cost of stocking and fulfilling your product
- Whether your product is scalable
- Whether you sell multiple products
- The reasoning behind the first two points is obvious. Retailer or distributor, profits and costs are paramount.
- You need to view your distributor not as your customer, but as your “channel partner” who is, in effect, your teammate in making sure the needs and expectations of the “true” customer are met
- You need to structure the relationship you maintain with your distributors in a way that will enable you to best meet the customer’s needs and expectations in a way that’s profitable for both you and your distributors.
- You need to work closely with your distributors to clearly identify what you expect of them and what they can expect from you. By carefully defining each other’s specific roles and responsibilities together, you can maximize your respective profitability by avoiding costly duplication of effort and preventing the problems that frequently arise from unreasonable expectations
- Distributors frequently respond by offering their customers more and more services from which to choose. But in today’s highly competitive, fast-paced marketplace, more choices may be one of the last things that customers want
- Real value for customers comes from helping them reduce their overall costs and/or improving their own performance.Therefore, before you and your distributors can truly begin to add value for your mutual customers, you need to gain a clear understanding of the customers’ businesses — especially those activities that they perform as they acquire, store, use, and dispose of the products they purchase. Then you and your distributors can tailor your service offerings accordingly.
- Most distributor salespeople understand the importance of learning about a product and how to sell it. But if you take into account how many different products the average distributor carries and how much training would be required to effectively prepare them to sell all these different items, you’ll see that your distributors’ ability to effectively sell your products may be minimal at best.
- Too often, a distributor salesperson’s approach to sales is to wait for the phone to ring and ask, “How many do you need?” When it’s a customer on the line. That method may work very well for a distributor with a lot of products that tend to sell themselves. But if your product involves considerable pre-sale work or a complex sell, you need more than a bunch of order-takers.
- The key is to build distributors’ commitment to your company. You can do that by taking steps to make your products more important to the financial success of the distributor while at the same time reducing the costs and “hassles” incurred by the distributor when selling them.
- Incentive programs are a staple of many manufacturer-distributor arrangements. A well-crafted incentive program can be instrumental in helping a manufacturer boost sales, expand its market share, and increase its leverage with its distributors.
- Programs offering discounts, junkets, merchandise, and other spiffs to distributors should be structured so that they encourage distributors to continually sell your products rather than simply build their inventories when they can get a better price. Another important element of a good incentive program is to reward distributors for improving their sales proficiency
It’s also important that any incentive programs be tied directly to your company’s goals and the strategy being employed to realize those goals. And even more importantly, remember that spiffs alone aren’t enough. They have to be supported with customer-oriented marketing efforts, training programs, and other support.