How would you describe your relationship with your channel? Are they important customers whose needs you must meet? Are they small businesses that mostly do what you ask? Do you give them your product and expect them to do the rest? Or, do you provide them with a wide array of marketing, sales, logistics, and financial support?
Actually, none of these describes the ideal relationship between a manufacturer and a channel. The ideal relationship is a partnership. In a partnership, the two parties agree upon a split of responsibilities and profits. Furthermore, regardless, of the relative size and power of each company, long-term success in manufacturer-channel relationships comes from adhering to the following six elements of partnership:
1.Complementary skills – You want to find resellers that do something you need, but can’t (afford to) do well – sell to small companies, integrate products from multiple vendors, consult in market niches, deliver a multi-vendor order same-day or overnight, etc.
2.Shared vision and commitment – When recruiting partners, and at the beginning of each year, you and each partner should develop a mutual plan and establish “rules of engagement” – who sells to whom, who performs what roles, who makes how much investment where, etc. This will reduce channel conflicts, build trust, and eliminate misunderstandings. Strong partnerships are also built on extensive information sharing – new product plans, POS information, business plans, market analyses, financial results, etc.
3.Ethics and integrity – Resellers that sell a lot, but don’t stick to the letter and spirit of agreements will hurt your bottom line (and your relationship with every other reseller) . . . and the same applies to you
4.Takes responsibility and doesn’t need to be overly managed – Sure, you’ll need to meet frequently, make some joint sales calls, do training. But, a reseller that consistently shirks agreed-upon responsibility (inventory levels, qualified sales people, marketing campaigns, etc.) is a huge profit drain
5.Has compatible work styles – Business hours, use of technology, detail-orientation, risk preference, dress style, corporate cultures (individualistic, team-oriented, plan-driven, etc.) should match, or, at least, mesh
6.Track record – For potential partners, look for an owner’s track-record of success with other manufacturers or in previous business experiences.