Channel sales is always tricky. This is because your dependency on other people is double that of corporate sales. In corporate sales, you might meet the purchase manager once or twice in a month, but in channel sales, you might meet the channel dealer once or twice a week. Plus you will have to regularly meet the retailer and small dealers which the distributor handles.
Due to the repetitive nature of the job, and the dynamic nature of distribution, channel sale has its own sets of challenges. These challenges have to be taken head on by your distributors and dealers. And hence, keeping motivation of channel dealers high, is the key to success in distribution.
Why should you motivate channel dealers?
1) A motivated channel dealer can give far higher turnover than a non motivated one.
2) Your channel network below the distributor also gets motivated, due to which liquidation of stocks happens faster.
3) Defection rate is lower. Channel dealers become loyal to your brand and brand switching is restricted.
4) Channel can become the differentiation factor – Because of a strong distribution channel, you might beat competition due to better reach.
Thus there are many advantages of motivating channel dealers.
So how do you motivate channel dealers so that they perform better?
1) Use proper segmentation – Most common segmentation in distribution is geographic. Thus, if a dealer is given freedom to operate exclusively in a certain geography, then this can motivate the channel dealer because of the business he can generate from that geography. But you can also alter the mode of segmentation based on your product. In the end, the dealer should get a fair share of ground to play with.
2) Set targets – A dealer is an entrepreneur and not an employee. Thus in general, they do not have targets. It is the work of the company to set targets for the dealers and ensure that they achieve them. Communication of these targets is important so that the channel dealer has a definite goal in his mind.
3) Be available – Many dealers need constant support of the company in day to day activities. For example – Whether the company has stock available, whether any special discount is possible, what steps can be done to defeat competition on field, so on and so forth. The best support a company person can offer their dealers is to be available for them, if not in person, then at least on phone, at all times. Sales can drastically increase just because you are always available for the dealer, and he can rely on you, whenever he needs support from the company.
4) Fine tune channel operations – One of the most time consuming and demotivating factor for your dealer is improper operations. For example- deliveries reaching late, service not being given promptly etc. However, as a channel manager, you have to guide the dealer towards better operations. He might have to recruit some people, or transfer some of them to a different job. But overall if you also keep an eye on the productivity of operations at dealers end, then this can motivate channel dealer to give better performance.
5) Train dealer staff regularly – Trained people can help the dealer to do more business and generate more revenue. However, you will get to know the real capability of dealer’s staff and executives only when you ask them product questions and sales related questions. If the executive answers correctly then he can be an asset. However if your dealer sales executive is unable to grasp the sales process, then he is a liability and can cause loss of sales which will ultimately affect the company too. So help the dealer in selling more by training his staff for better sale of products.
6) Visit end customers and sub dealers – As a company guy, your visiting card always carries weight. So it would help the dealer immensely if you visit his key customers and sub dealers along with him to boost his morale as well as the morale of sub dealers and customers. With your visit, the key customers and sub dealers are likely to have more confidence and are likely to promote / buy your products in better quantities. This also helps you with word of mouth which is till date the best form of marketing in the New world.
7) Support dealer with schemes and discounts – All above qualitative measures are right, but what about money? The single most motivating factor in channel sales is the money your dealer earns from your brand. If the money is good, he will run more. If the money is less, he will switch over to another brand. And if the money is adequate, then he might keep multiple brands to keep his cash register going at all times. So to keep a dealer motivated, you have to offer him good schemes and discounts so that money goes into his pocket. At the same time, you have to demand targets too for the money to be given. This is beneficial for both the parties involved. However, ensure that you give monetary benefits only to the best performing dealers. If you are giving it to everyone, then it is not a “special benefit”.
8) Take immediate calls against price penetration / bad business – There are always bad fishes in the market who would drop the prices and bring the market down. When you ask such dealers why they are doing such a thing, they would say “their target is acquiring customers for the long run”. The truth of the matter is that these dealers do not have any respect for the brand and when they cut prices in the market, they are actually bringing down your brand value and creating internal competition & internal problems for the company. It is imperative that the company should take action against such channel dealers immediately. The market is controlled by you as a company. Don’t let bad fishes muddy the water.
9) The three R’s – For those who are not aware, the three r’s are reward, recognition and remuneration. As a company, to motivate channel dealers, you have to use all three R’s. Reward the best performing dealers by keeping a prize for them. Recognise them with authority letters, listings on company websites. And renumerate them with monetary gains. These three R’s are most effective in motivating channel dealers, or even employees for that matter.
10) Have empathy – Empathy cannot be learned. It is a natural thing. But once you become empathetic towards your channel dealers, they too will disclose their problems to you. And learning their problems can help you as a company to solve them and keep the channel dealer motivated. Note that the channel dealer has put his own money in your company. You have to be respective and empathetic towards him.
Overall if you see, performing in channel sales is more qualitative in nature then quantitative. This is because you are going to be dealing with the same channel dealers over time. However, when it comes to earning money, the game turns quantitative and competitive. Thus it is important that you use the right tactics to motivate channel dealers.
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B Chandran says
Whar are the solutions for the below problem ?
ake immediate calls against price penetration / bad business – There are always bad fishes in the market who would drop the prices and bring the market down. When you ask such dealers why they are doing such a thing, they would say “their target is acquiring customers for the long run”. The truth of the matter is that these dealers do not have any respect for the brand and when they cut prices in the market, they are actually bringing down your brand value and creating internal competition & internal problems for the company. It is imperative that the company should take action against such channel dealers immediately. The market is controlled by you as a company. Don’t let bad fishes muddy the water.
Hitesh Bhasin says
Yes. If one single dealer is cutting the whole market and not maintaining minimum operating prices, then the brand should take immediate action against such dealers. Otherwise they will demotivate their other channel members.
One of the worst things to happen to a company is to become dependent on a few dealers to their majority business. In such a setup, the dealer has too much power over the company and the company loses touch with the customers needs and focuses on the dealers need.