Companies spend a lot of time thinking about how they can meet the needs of their prospective consumers, but have you as an exporter given thought to the question of the value you bring to a distributor? What do distributors want from manufacturers and would you score highly on the desirability scale?
Strong distribution partners tend to have more brand owners looking to work with them than they can handle. Consequently, distributors need to assess each opportunity carefully, as any new brand must be able to add incremental sales and profits without distracting from existing priorities with brands in the portfolio.
What tools do distributors use to assess a new brand?
It makes sense for the distributor to use a supplier (vendor) scorecard to evaluate potential new brands, however you as a supplier & brand owner can use these criteria to check if the value you are offering meets their expectations. Let’s go through some assessment criteria from the partner perspective – if you are not able to answer these questions for your brand (or if you would give yourself a bad score) then you need to think about improvement measures. A failure to recognise your own strengths and especially weaknesses is one of the most frequent errors that brands make when they are looking to begin exporting.
This process may be formalised in larger companies as “supplier relationship management” or SRM. What I’m covering here is more a kind of “know yourself” checklist to establish whether your brand is ready to export into that new market.
Why is this kind of assessment important?
Your performance as a supplier, has a direct impact on the financial results of your partners. Consequently a strong distributor wants to know in advance that any new supplier is going to add to his bottom line and not just be a drain on his resources, time and nerves. Not only that, but a great distribution partner in an overseas market wants to be sure that your products won’t damage his reputation in any way.
What do distributors want from manufacturers in the way of basic facts?
Actually the evaluation on the most basic level is similar to when you are evaluating a potential distribution partner as a brand. Any distributor worth his salt is going to want to know details about the size of your company and how is your reputation.
What kind of track record do you have in the market?
If you’ve already been active in a market for a number of years and you’re looking for an additional or an alternative partner, you need to consider that you already have a certain reputation in that market. People within an industry in any market usually know each other, so if your last distributor was well known for being inefficient or, worst-case, corrupt then you could find yourself tainted with the brush. (This is why it’s important to have as close a relationship with your distributors as possible so that you can spot anything going wrong as soon as possible).
What are your expectations?
What could be realistic expectations for the market? What do distributors want from manufacturers on this point? On the one hand, any strong company thinking about distributing your products is going to want to know if you know the market well enough to set realistic expectations. It’s no good setting a target of €10 million without any logic behind it.
More importantly, distributors want…
To know what your expectations for their market translate to, in terms of their turnover and margin. A distributor wants to work with your brand to earn money and if he doesn’t see the potential to achieve that, at least in the medium term, then he’s not going to be interested in signing a contract with you.
How about the brand?
Do you have a clear differentiating factor which resonates in the market which you are targeting? Remember, that might be a different USP to the one you’re known for in your home market. Your distributor isn’t only looking for a brand that will bring him profits, he’s also looking for something that will be easy for him to sell, and which he feels will resonate with his clients. Is your brand story relatable for the distributor and his team? How intense is the competition in this segment?
Success Stories in Reference Markets
Can you impress with a success story in the neighbouring country or in the region? what about in another market which counts as a reference for the country you’re looking to target? A potential distributor wants to know if you have what it takes to help him be successful. It has to be the right market though. There’s no point bringing an example that your target market has no respect for.
The sales team of a distributor are often heavily focused on this question. They are looking for great reasons to contact their clients and having a dynamic product portfolio, with frequent innovations probably comes somewhere near the top of their wish list.
Do the products correspond to the taste in our market?
If you produce modern light wood furniture, but the trend in the target market is for heavy darker traditional furniture then chances are you won’t score so high on this core aspect. The distributor is going to look to see if he can sell your products, or if you are prepared to make modifications for his market. This is especially important with consumer goods and food.
For more industrial products, the question as to whether the product meets the necessary technical standards is more likely to be asked.
What about the packaging?
There’s more to this topic than meets the eye, as I already covered in this post. The bare bones essentials are that it should protect the product and be legally compliant in the information contained, however ideally packaging should also be aesthetically pleasing to consumers.
How do the products fit with the rest of the portfolio?
Any distributor is going to classify your products based on whether they would form a core part of his range, or simply ancillary products. This will also have an impact on the question that you have to ask yourself about an importer: is he willing to give my products the necessary focus?
Is the pricing competitive for the segment?
How are your products likely to be positioned relative to the rest of the category in the market? There’s nothing wrong with being expensive, but there are limits. A product that counts as cheap in Switzerland would probably fall more into the expensive category in a market with low purchasing power such as the Cameroon. A potential distributor is not interested in setting himself up to fail by accepting Mission Impossible.
It’s quite simple to answer what do distributors want to know about your supplier contributions in marketing: what are you prepared to invest and pay for? Do you provide materials for marketing, sales and social media?
However, if you dig a little deeper into the topic that can be split into several aspects:
Will the supplier (brand owner) be willing to invest in marketing and in the trade? And if yes how much? You have to be prepared to answer that question from a potential partner. A partner will want to know if you have realistic expectations about the necessary investments needed to launch and push your brand.
Do you provide the necessary materials for marketing?
Or will the distributor be forced to reinvent the wheel? Do you have everything in a compact format – best of all in a single database, or do you supply these kinds of materials as far as you have them as email attachments??
Will you as a supplier offer support to boost operational efficiency?
Acting as a distributor is a complex task, if it’s to be done well, so as a supplier you need to think how you can make the task as simple as possible. That can include providing a data base of product and marketing information that is always up to date. Ideally this should be downloadable in an easily accessible and usable format. It could also include an API (application program interface) to allow the distributor to integrate his ERP system, thus avoiding mistakes with details about products. Any tools that can help to save time and avoid errors can be helpful here.
Ease of doing business
This is a huge part of what a distributor wants to know before he starts to work with you as a supplier. If the money is right and you are easy to work with, that can go a long way to mitigating weaknesses in some of the other areas. Honest and transparency of course should go without saying.
How easy is the Export Manager to work with?
Having a great (or rubbish) International Business Development Manager for a region can make or break your success. Brand owners don’t like to admit it but having the wrong person in this position can sour a whole distribution agreement.
Longer Term Perspective
Any distributor is going to want to know about his prospects for growing together with your brand in the market. Whilst a certain test phase in a relationship can be acceptable, a distributor is likely to be reluctant to invest his time and energy into building a brand for which he has no long term security of sharing in any success.
How difficult are the products to launch?
Whilst in theory it maybe possible to sell anything to anyone, all sales come at a price. When that cost exceeds the value that the distributor perceives he will be able to earn (& remember it is his perception which will govern his scoring of this question) then he may decide that this point is a critical factor. He isn’t invested in your brand in the way that you are, so if you are not able to offer a product which is easy to launch, he may decide not to try at all.
Do you offer the necessary training and FAQs for a distributor to feel confident of his ability to launch your brand more easily than whichever of your competitors is also pitching him?
How does your Back Office make him feel?
If your customer service is a mess, or treats importers like they have no idea about what they are talking about, you likely won’t score highly here. If there are problems with every shipment due to mistakes in the paperwork then you won’t be a great supplier to work with. In short, do your team do everything in their power to make life easy for a client to be successful with your products?
Can a Distributor be proud & excited to work with your brand?
This is probably the most emotive subjective question on this list, but it’s an important one.
So how would you score?
If you had to give yourself points out of 10 for each of these questions? Do you have what it takes right now to be a great supplier? Is it crystal clear to everyone in your company what do distributors want from manufacturers?
In the end, everything you do for your distributors benefits you as well so this is a win-win if you can better serve their needs from day 1. Being able to gain a high score on all of these points, means that you are better placed to find the top potential distributors in your target markets. You also have the tools and mind set to work in a cost-effective way, which translates into lower costs of doing business and higher margins for both of you.
Both you and your distributors are more successful — and with happier customers as an added plus.
Once you have established, a supplier – distributor relationship you can move the relationship management (SRM) onto a more formal scoring basis. this would involve clearly defined KPIs laid down in a joint two-way performance scorecard. However for a start, examining the questions detailed here, will allow you to analyse how your company may appear to a potential distributor.
If you are interested in working with distribution partners in your export markets, you might find these posts also interesting:
- Define Your Ideal Distributor Company Profile to Succeed Internationally
- Carrying out an Annual Distributor Performance Review
- Factors to Consider when Deciding on Payment Terms
- Advantages of Working with a Distributor in Export Markets
- Making the Best First Impression in International Business Meetings
- Finding the Perfect Partner: Distributor Dating in a Hybrid World
- Store Checks in International Sales: a Retail Audit Example
- How to Make an Export Plan Part 1
- How to Make an Export Plan Part 2
- Starting to Think About Your International Distribution Agreement
- An International Distribution Agreement Checklist Part 1
- A Distributor Contracts Checklist Part 2
- The Legal Requirements in an International Contract 3
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