Working thru Channel Partner Issues

Just back from a relaxing trip to my home state of Maine to see Mom, enjoy an ocean boat ride with my sister Louise and attend Maine Trade Day  http://www.mitc.com/.  It was an inspirational trip and I was able to reflect on channel partnerships

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We had the best response to date to our last blog about
the right distributor attributes  http://www.jimthomasintl.com/blog/archives/05-2016 .   The follow up question I have heard “Jim-I have a distributor that does not have that important attribute you described-how should we move forward?”

Don’t get discouraged.  Time to look in the mirror at the partnership, the key questions are really:

1. Why was this distributor hired initially?  What has changed since they were hired?
2. Are the partners’ expectations mutually aligned?
3. What will it take to get back on track?

You usually determine that you share some responsibility in getting off track.  An honest mutual assessment and a heart to heart conversation (not an e-mail) should soon follow.  I follow the simple 3T forward determination I borrowed and modified from my friend Mark Stump:

1. Train-a long term mutual commitment to change-hard stuff.
2. Terminate-a short term commitment-harder stuff, particularly if there is not a better solution on the near term horizon
3. Table-a pause of undetermined length

As I stated in my last blog it is really hard to find a motivated partner.  There are not scores of distributors waiting in the wings patiently to obtain your products.  Most of the distributors should be in the train category.  Unless the underperformer is damaging your brand with end users or not paying your invoices a supplier will usually reconcile that their lost revenue cannot be replaced by another and their current level of performance will be tolerated (the table). 

Make your decision about the 3 T’s and move forward. 
 
I prefer to have a bias to action, but you need to two parties to commit to reform and all cannot be reformed.  When is it OK to have a lower performing distributor that you put in the table category-you hold on and do not significantly invest in that distributor resource?

1. When they are best of the competition.  I have found some territories don’t have viable alternatives when it comes to distributors-there just aren’t a lot of good choices.  I remember having this happen to me when I visited a trade show in Sharjah in the UAE.  I thought our distributor salespersons were weak, and they were.  I learned that the competitors were even worse than my distributor.  They were the best of a weak field. That does not mean that a good one will not rise from the mist and present themselves as an alternative in the future.  They usually arise from the training ground of the best distributor and want to be their own boss and be independent.  This decision will be a tough one-where will your loyalties lie?
2. When you are in a very small market e.g. Guatemala, Uruguay.  The manufacturer will not want to significantly invest their time on this smallish opportunity.  The distributor may not give your products top billing, however, in a small market a full line distributor has to take on multiple lines to survive. 
3. When there are high import barriers to entry e.g. Brazil, India.  You usually find your toughest competitors are local.  Locals will bask in the light of protectionism, but this makes them weak-it is a false security.  It will be hard to find a distributor that will want that high value imported niche.  It is important to have a brand presence in this type of market in case the regulatory environment changes.
4. When no one else wants to carry your product or there is a bad manufacturer brand image already established.  I had been in a situation where we as a manufacturer closed our direct sales channel due to a lack of profitability.  We neglected the customer end users which left a bad partnering taste in any new distributor’s mouth.  This distributor was walking into a hostile customer situation.  Suck it up and support the new distributor as best you can-they are willing to build or rebuild your brand identity. 

There may be other table situations that you have uncovered-what are they?  The table or holding option does not mean that you “give up” on the market.  It should mean you are prioritizing your efforts in other markets until the options are better to train or terminate in the future.  Poorly performing partners can become better partners when: expectations change, there are better internal distributor champions in place, new distributor options emerge or governmental regulations change. 

LESSON LEARNED:  Stay positive and focus on continuous improvement. Always be looking for good bench strength and potential higher performing channel partners.

Good Selling!

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