In many of Axiom’s core market practices – including agriculture, horticulture, building materials, landscaping, healthcare, retail – the distribution channel is continuing to consolidate and flatten, while technology is increasing the ability to customize and deliver exactly what the customer wants when she wants it. We find that many of our clients wrestle with marketing through channel partners and look to us for discussion about how to increase power with channel partners.
So, What’s Happening
Geographic consolidation is creating fewer distribution sites for many manufacturers. That is allowing economies of scale, fewer layers in the distribution process and shorter pathways from manufacturer to end-use customer. Ideally, less movement and fewer hand-offs means increased profit for manufacturers.
The problem? The traditional market path has been manufacturing to distribution to dealer to customer. Therefore, the direct customer relationship has been owned by the dealer. With the advent of manufacturers capable and willing to customize products many also want to get to know their customers better – much better. Some are developing or buying their own distribution, which has spurred the consolidation mentioned earlier. But its not an all or nothing strategy for most; their creating a mixture of direct and tradition channels, which is sometimes creating tension in the ranks of traditional channel partners.
How to Increase Power with Channel Partners
What can manufacturers do to meet or exceed customer expectations while maintaining channel partner relationships?
- Manage Your Product Portfolio – How are you managing your product portfolio? Do you have strategies that target certain products, delivery methods, etc., to certain market segments based on projected growth rates, pricing structures, end user purchase patterns, etc.? Does your team have a system to maximize profitability, profit margins and product quality? How does big data play into your portfolio management? Manage your product portfolio by first gaining insight into your channel and market segments.
- Quantify Brand Value – Do you know what your brand is truly worth and do your channel partners know too? Can you communicate it in a way that is meaningful and actionable to each market segment? Have you quantified the value of intellectual property, research and development, customer service and your other capabilities into your brand equity? Answering these question will help quantify the value-add of your brand.
- Improve Voice of Channel – Can you identify value within each layer of your channel and in each market segment? Can you prioritize and analyze which things can be provided to market segments that provide the best ROI? Is your channel team aware of underserved needs that aren’t being filled by competitors? Knowing your channel and the markets you serve will pave the way for meeting their expectations and anticipating their needs.
- Offer Better Services – Are you offering value-added services for increasing channel profitability? For example: furnishing customer leads and lead nurturing content and services may help channel partners make the sale. Funding value-added specifier education programs, search engine redirect marketing, pay-per-click campaigns, etc., supports channel partners and drives end-use customers to them.
- Increase Channel Profitability – Can your order and service data help you identify ways to increase profitability of your products? Are you offering product configurations that are unique to each market segment? Are you proactively providing new and innovative value-added features and configurations that increase margins? Can you find barriers to success, and if so, is there a solution to overcome them?
Our channel strategy team has helped our customers gather insight and data to help solve these issues and more. For addition reading, this Harvard Business Review post may be of interest.
For more information, please contact Stacy Einck at seinck@axiomcom.com.