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Numerous manufacturers and service providers make the same errors in judgment over and over again when designing their go-to-market channel strategies. Market Strategy

The following are the most common repetitive misconceptions in business-to-business markets selling through distributors, wholesalers, dealers, etc. Distribution

Mistake #1—Expecting Distributors to Generate Demand for Your Product

Distributors service markets and rarely develop them. Demand generation is the role of the manufacturer. Some channels classified as “technical specialists,” will help to educate end users relative to new product and technologies and, therefore, can contribute to demand generation but ultimately demand creation is the manufacturers responsibility.

Mistake #2—Expecting Great Performance by Providing Distributors Exclusive Territories

The only good reason to grant a channel an exclusive territory or market for your products is the territory is new and requires the distributor to invest and you want the distributors to feel they will have an opportunity to recoup their investment. Even with this situation the timeframe for the exclusive should be limited.

Mistake #3—Expecting Your Partners to Sell to New Customers

Dealers and distributors focus on servicing their customer base. They evaluate new products and services to determine the best ways to grow revenues in that set of customers. While they may add new customers, typically you can expect 90% to 95% of the distributors’ revenues this year will come from the same customers they sold last year.

Mistake #4—Expecting broad business objectives to work equally well in every market.

Let’s say you have a “selective” channel strategy, wherein you select the best distributors in each geographic market. Based on our experience, this approach may land you distributors in secondary markets (think Des Moines, Dayton, and Fargo) that control 40% to 50% of the market. However, in major urban markets (Chicago, Detroit, and Los Angeles) this selective approach may get you distributors that individually deliver 5% to 7% of the market.

If your plan is to grow your overall market share from 25% to 30% you have a problem. You have 15% share markets and 45% share markets and managers often articulate similar growth strategies to your distributors in both. Using one number for everyone never describes the market accurately for everyone.

Mistake #5—Expecting your investment in various Strategies/Tactics will motivate Distributors to Promote Your Tertiary Product

If your products are tertiary to the channel, that is, the category represents ?1% of channel sales, then you have to adjust your expectations of the channel and avoid spending money on things that the channel will not utilize. We describe tertiary products as those that are “bought not sold.” Therefore, don’t invest in training programs for the distributor’s sales force, or worse, certification programs.

Mistake #6—Treating All Partners as if They Perform the Same Functions and Have the Same Costs

A common mistake made by many manufacturers is offering a discount structure that “treats everyone the same.” Clearly not all channel partners are the same. Those that perform more activities on your behalf will tend to have a higher cost structure and therefore require more margin. Those that perform fewer activities can afford to lower the price of your products to their customers if you are “overpaying” them.

Our philosophy, as succinctly summarized by one of our clients, “Do what it takes to serve the customer, and pay the channel that does the work.”

Mistake #7—Failure to Enforce Your Own Policies

Manufacturers are in the business of selling, not in the distributor termination business. We understand that. But many manufacturers have clearly defined expectations of their channels they fail to enforce. There are many other penalties that can be levied prior to termination but manufacturers must have an effective and functional penalty process. Channel Workshops

Channel partners are very observant. If they see that XYZ distributor did not put in the showroom you require and nothing happened to them, then it will be assumed that your requirements are requests.

If your requirements are really “required,” then enforce them. If you don’t, your channel partners will decide which policies they will support, for you.

Take a look at your channel strategy and see if you find any of these seven common mistakes that may be undermining your effectiveness with channel partners and jeopardizing the results you expect to achieve. If you would like our help in correcting these mistakes contact me at jhenderson@franklynn.com or visit http://franklynn.com

Utilizing external consultants in keeping with your strategic objectives improves the standard of the decision making, the productivity of your teams and also profitability of the company.

At ConsultantFORCE, firms and organizations can connect with qualified, dedicated consultants from every field and find the right consulting firm through our unique matching process. We will effectively make sure you find the best consulting firm. Personal account managers work with clients to explain consulting project requirements and be sure that only consulting firms and individuals with the know-how and relevant levels of expertise will be considered, providing the absolute best options for consulting solutions.

Utilizing a consultant correctly means aligning their project goals considering the longer-term goals of your business. While looking into a market opportunity, for example, or seeking to branch out, you need to make up a complete outline of all of the talents, assets and information required to finish the assignment successfully. Several of those could possibly be offered by you and other people inside your internal organization. Then again, you may also determine your core competences won’t give you the required skills or expertise to engage in these business opportunities. You might benefit at this time by employing consultants from a high quality consulting business with the talents to work with you to conduct feasibility research, set up your strategic plans, work out and implement certain projects to permit you to grow your business. These details will assist you to determine the consultant criteria and qualifications required to achieve your long-term objectives as well as strategic objectives you need to take.

Consultant Capabilities, Talents and Expertise

Consultants’ levels of competence, background and experience will vary. The value they can bring to your business might be reduced if consultants are taken out of their individual areas of expertise. Decide:

- The consultant’s areas of experience: Go with those with what you would like them to accomplish. Verify they have have been effective on related projects within your industry. Choosing the right consultant will cut down outlay and reduce potential challenges. Asking consultants to work beyond their areas of expertise will lead to difficulties and project delays.

- The consultant’s understanding of your business: Has the consultant have been effective as part of your industry? Does the consultant be aware of the current trends and emerging opportunities? Deciding on a consultant who’s up to date with events within your industry will enhance the quality of your decision making and reduce the amount of time required to accomplish the outcomes you desire.

- The consultant’s ability to study your industry: Will the consultant present a sensible and factual opinion determined by concrete research findings?

- The consultant’s expertise: Request reports and other documented confirmation the consultant has completed assignments just like your requirements. Check the tasks were fulfilled effectively, on time, and within budget.

Applicable Qualifications

Specific project deliverables may possibly demand the consultant to possess the appropriate qualifications together with the abilities to manage and finish the project. Examples may include:

- Project administration

- Quality control

- Financial Control

- Instruction and Development Needs Analysis as well as business and functional qualifications such as:

- Advertising Management

- Manufacturing Control

- Supplies Management

- MBA’s

- Facilities Management

Professional Recommendations

Consultants will generally offer recommendations from previous assignments. These professional recommendations, however, might not comprise the client organizations where the outcomes were less than successful. The input from those businesses may possibly prove invaluable in choosing the appropriate consultant for your business.

If the consultant doesn’t offer you personal recommendations, ask for them. If the work completed for all those individuals matches your own requirements, those references can offer you valuable information about the consultant’s work, management skills, people skills, attitude and so forth. Ask the reference if they were fully satisfied with the work and desired outcome of this assignment. As long as they were satisfied, determine why. If they were not satisfied, understand why. Check multiple references to achieve a balanced perspective on the consultant’s experience and abilities. Discuss with clients that have not been listed by the consultant. Take some time and effort to find and contact these clients. They may provide insights that were not provided by the more satisfied clients.

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