January 20, 2017

7 steps to improve your distribution network

Distribution network

A set distribution network does a lot to take your company to new heights. A strong Distribution network works almost like automation, wherein you manufacture the product, and if the distribution is strong, the product reaches the end customers very fast. Setting up a distribution network involves meeting dealers and distributors and signing up a deal with them. But how do you design a high performing distribution network?

  1. Keep track of channel dealers: By keeping track of your distribution channel and your channel dealers, you can clearly see which areas need improvement, which areas could still expand and which areas you might have to abandon. You would come to know where you need more channel dealers. In case you have to abandon an area, get ready to open a new area so as to enhance your existing distribution network further; just so you are able to mitigate the losses you would have incurred.
  2. Inventory management and tracking: Meticulous inventory of your stock in different sales outlets and the subsequent sales data will tell you what your averages are. With that average in hand, you will see which areas are selling your products better, and which areas are not performing up to par. One more thing that could help is to have a record of your marketing histories in all regions where you have distribution networks. Through this history, you will find out whether all areas have been through the same marketing programs. If so, do you try to use more programs or leave it as it is? If you do try to use more programs, find out which programs you have not used yet. Try something new.
  3. Focus on local markets: In cases where the sale is great so not much marketing has been put in, remember to never rest on your laurels. Keep saturating your target markets with surveys and promotional surveys as a cover for discreet data mining. Just because you are selling well doesn’t mean everyone is buying. It could be a matter of local population density. That means you have more people to sell to. You have an untapped market, and left it so.
  4. Focus on segmentation (example geographic): When sales is below average, take a look at marketing history again. What has been done here? What has not been done here? If your marketing efforts are performed equally in the complete distribution network, then perhaps the low sales are a result of lower population densities. The grocer might be in a more affluent area of town. This means that lot and house sizes are relatively bigger than those found in the suburbs. Lower population density = lower sales. If you initiate marketing programs on an as needed basis, then look at marketing histories of other excellent distribution networks. It could be that something was done there, that was not done here.
  5. Marketing expansion or Product expansion: If after several years, your distribution channel remains stagnant, then you may have reached the limits of that market for that particular product. There are other products to market. Perhaps you were marketing 8 to 10 products regularly. Now you can add more. The only way the market will change in this situation is if population density increases; but just because the market isn’t growing, it doesn’t mean you should abandon it. You have saturated the market, after all. This is your success story, a shining example for all other distribution networks to follow. Just remember not to rest on your laurels. Competitors are ALWAYS actively working to take your customers away from you.
  6. Switch channel members when needed: Be aware of the leaders of your distribution networks in every area. Each of them will have their favorite methods to use. If their methods are failing, it would be unnecessary to force them to use other marketing methods. Simply switch leaders laterally to different regions where their specialization is most needed. Unfortunately for the rank and file, they’ll just have to cope.
  7. Keep a tab on market changes: A customer will buy a product to try from time to time, but they will mostly buy the same product they like over and over again. And they will keep on buying it, because a product has something they want. This is where surveys are necessary. Just because we like your peanut butter doesn’t mean we like all of its selling points. Some will have a taste for saltier, spreadable peanut butter, some will like sweeter, even softer peanut butter. I don’t understand those who like chunky at all. Guess they like to eat it off the spoon? Peanut butter with jelly. Yum.

Remember that your market is driven by external factors. If you can get truly up close and personal with your customer, then you’re halfway to building a successful distribution network. The other half is producing a product that will address the whim of the customer, and making sure the product doesn’t fall apart after a couple of months’ use. Expand your market through discreet data mining for other potential customers.

Have an analytical mindset, because your competitors are also always doing something. If you’re selling peanut butter to millions of customers nationwide, lord knows it won’t hurt to raffle away a car or two, to one-up your competitors and steal their customers from them. The cost is just for a couple of sedans against the millions of profits you are already making every month. Having stolen your competitors’ customers, target them with surveys. Try to retain them as permanent clientele. This opportunity is definitely worth more than a couple of sedans. It’s tax deductible too.

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About Hitesh Bhasin

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