What Leading Manufacturers Are Doing To Accelerate Channel Sales Today

Things have changed for distributors, but many suppliers are using the same old playbook. James Dorn, John Gunderson and Jim Perdue discuss what the top performers are doing to grease the skids for their channel partners.e.

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Video Transcript:

Jim Perdue: Because distributors are hungry for that. They’re no longer interested in selling only products and components. They’re looking for these solution sales because that makes their life easier. It’s what the market wants and so the manufacturers who are going towards that approach are seeing greater gains than the ones who are doubling down on legacy tactics.

James Dorn: So guys, we’ve been seeing a lot of changes that are occurring with how distributors actually go to market. Their selling teams look very different today than they did three years ago. I think that’s a really important point to illustrate here, guys, but more importantly is how have manufacturers reacted to these changes that their distributor customers are making? I think in large part, most manufacturers that we’ve seen, they haven’t really changed the way in which they’re interacting with their distributors with the types of programs they’re focusing on and even the types of support that they’re giving to their distributor customers.

So, John, help us understand a little bit more about what’s happening at the distributor with their selling teams. What’s going on there?

John Gunderson: Yeah, I think, James, we’ve been talking about it for years. When I first started in distribution selling 20 years ago, it was very outside-sales-focused, where your inside sales team would support that person. And it is really evolving into where it’s less outside sales, more inside sales.

You’ve got some hunters, some people out doing business development, and you’ve got farmers who are managing accounts, and then really a digital selling team, using your website, all your marketing programs. So the distributors we’re working with are really sort of redeploying their sales resources for the modern reality. And as we were talking earlier I think a lot of manufacturers are still going to the old playbook. Hey, I got to go support this outside salesperson. I don’t know if they’d necessarily recognize the change that a lot of distributors are trying to make.

JD: Yeah, agree, John. We’ve been seeing a lot of that.

Jim, when you look at some of the manufacturers we’re talking with, what are you seeing there?

JP: Yeah, thanks, James.

A lot of what I’m seeing is some of the same behavior. So there’s two key areas that a lot of manufacturers are trying to work through with their distributor partners. One is there’s still a lot of technology upgrades that are happening. So looking at making sure you’re feeding your distributor’s proper content, upgrading your systems, improving PIM projects. We’ve all been there. They’re a big headache but manufacturers are focused on that because they’re trying to just get up to speed.

The other issue that we’re seeing is a lot of manufacturers are double downing on… or doubling down on current efforts, so more promotions, more rebates, more backend deals, because they’re trying to get the attention of their distributors, but they’ve failed to recognize the evolution of where distributors are going. So some of these legacy activities are not as effective but they’re just as costly as they’ve ever been. So those are two little pitfalls that we’ve noticed over the last 18 months or so.

JD: Yeah, and I think it’s important, guys, to denote like, this is what we’re seeing in large part, but there’s a segment of manufacturers and distributors out there who I’ll bucket into this top-performing category, who have moved beyond some of these aspects, right? They’re no longer stuck in the day-to-day of getting content into distributor’s systems. They’re no longer just focused on backend deals and rebates. They’ve moved ahead to say, “Hey, we’re going to focus on accelerating the way in which we’re going to market here.”

Jim, what are some of the key things that these top performers are doing?

JP: Yeah, the very first thing they’re doing is they’re segmenting their distributors. So they have a really good understanding of who national accounts are and how to go to business or how to go to market with them, how to do proper business. You know, looking at, do they have a E-comm segmentation? How do you work with your buying groups? So really having a solid grip on your segmentation allows you to deploy your resources properly. The second thing that they’re doing is they’re moving away from maybe the legacy rebate approach in moving to how can I add value-added services? What are my secondary capabilities that are important to my end users, the end market, because distributors are hungry for that. They’re no longer interested in selling only products and components. They’re looking for these solution sales because that makes their life easier. It’s what the market wants, and so the manufacturers who are going towards that approach are seeing greater gains than the ones who are doubling down on legacy tactics.

JD: Yeah, that’s really, really insightful, Jim.

And some of those activities that they’re now focusing on are generating larger results. So John, how about you? What are you seeing some of these top performers do?

JG: Yeah, I mean, we talked about a little bit earlier and Jim covered a lot of it. I think the distributors that are really reconfiguring their sales go-to-market plan are the ones that you’ve got to partner with. Those are the ones that are going to grow. I think Jim really talked about it earlier. If you’re a distributor who is telling your manufacturers, “I’m just going to make more calls “next year with my outside sales team “and I also want more rebate,” then you don’t have a growth mindset to help that manufacturer. The top-performing distributors are really looking at, how can I use all my channels inside? How do I change that? What do I do outside? How do I have a digital selling channel? Those are the ones that are going out and taking share from those that are just, hey, we’re going to make more calls and we need better rebates.

JD: Yeah, yeah, and I’ll add one in here, too, guys, is I think a big part of this is today the manufacturer needs to provide the distributor with more support because the distributor in large part is under-resourced of these larger programs of developing the market feasible. So John, the old days of, hey, we’re going to do quote-unquote joint selling, right, with the manufacturer and distributor, and it never actually happened. Today you need as a manufacturer to provide that distributor with really strong market data. Who are the key targets to go after? What is the potential with those key targets? And then arm them with really robust turnkey programs. And these aren’t just programs that saying, “Hey, here’s what you need to do, Mr. Distributor, “and here’s what we’ll do, Mr. Manufacturer.” It’s playbooks. It’s down to what is each function at the distributor level going to be doing in the first 30, 60, 90 days level of activity that a manufacturer is now bringing to these distributors? Because it makes it easier for that distributor to actually deploy it. So that’s another great idea that we’re seeing the top performers really embrace at both the manufacturing and distribution level.

Well, guys, thanks for the insights. Great ideas.

If you’re a manufacturer out there who is focused on channel marketing, understand that things have changed for your distributors. Understand how their sales and go-to-market approach is changing and adjust your programs and the resources and the programs you provide to those distributors to help make them more successful and help you capture more market share.

Thanks for the insights, guys.

JG: Thanks, James.

JP: Yeah, thank you.

JD: Thanks for watching today. If you liked what you heard and you want to put some of these ideas to use with your team, reach out to us at dorngroup.com. If you want to continue to receive more insights like these for manufacturers and distributors, follow us on LinkedIn and YouTube.