Professional Distributor Management is a critical success factor for companies growing their sales internationally through a network of international trade partners like distributors, importers or agents (manufacturer's representatives) www.mcsmservices.com

1. “Professional
Distributor
Management”
November 27, 2013
Presenter:
Roland van Marlen
Moderator:
Yoav Amiri

2. About MCSM Services
• In business since 1995
• Consultancy firm with 2 partners and +/20 Freelance market researchers
• Assisted more than 50 companies growing
internationally
• Key specialization: “International
Distribution Networks”
• Europe and the America’s

3. Today’s Objective
How to manage
international trade
partners

4. International expansion models

5. Distributor Management

6. Traditional distributor management:
Catalogues, Telephone & Dinner

7. Professional Distributor Management
Performance
Management
Distributor
Motivation
The basis is
preparation

8. Working with your partner
Which panorama do you offer?
Hell
Paradise

9. Hell -vs- Paradise
for international trade partners
-
Long lead times
Ex-works (FOB) pricing
Currency risks
Undesired paralel imports
No guidance from vendor
No support from vendor
- Local/regional
warehousing
- DDP pricing
- Clear currency policies
- Clear sales policies
- Regular support

10. Preparation
Marketing & Sales
Program
Written
Agreement

11. The Program
Why a formal program?
A formal Marketing & Sales program will:
Increase your
credibility
Eliminate lengthy
discussions
Make sales people more
effective
Simplify
management

12. Elements of the program
SLIPP
Program
Pricing

13. Proposition Analysis
“The Golf Method”

14. Define the top elements of your
proposition one by one
Hole 1: Brand & Reputation
Hole 2: Product
Hole 3: Lead Time
Hole 4: Quick Ship Program
Hole 5: Return Policy
Hole 6: Credit terms
Hole 7: Customizations
Hole 8: Warranty
Hole 9: Training
Hole 10: Rebates
Hole 11: Awards
Hole 12: Marketing Support
Hole 13: Lead generation
Hole 14: Currency used
Hole 15: Local service
Hole 16: E-tail vs retail policy
Hole 17: Certifications
Hole 18: ???????????

15. Program content:
“On par means: You won’t win”

16. Rate the top elements of your
proposition one by one
Hole 1: Brand & Reputation +5
Hole 2: Product
0
Hole 3: Lead Time
-2
Hole 4: Quick Ship Program +3
Hole 5: Return Policy
-2
Hole 6: Credit terms
+2
Hole 7: Customizations
-2
Hole 8: Warranty
-4
Hole 9: Training
0
Hole 10: Rebates
Hole 11: Awards
Hole 12: Marketing Support
Hole 13: Lead generation
Hole 14: Currency used
Hole 15: Local service
Hole 16: E-tail vs retail policy
Hole 17: Certifications
Total:
Hole 18: ???????????
+2
+3
-1
-2
0
-2
+2
0
+2
-3

17. The last hole is.....Price
Hole 18

18. Contents of a
Distribution Agreement
•
•
•
•
•
•
•
•
Type of agreement
Territory
Term and termination
Targets
Pricing
Currency market effects
Credit limits
Communication and
Reporting
• Orders & cancellations
• Confidentiality
•
•
•
•
•
•
Marketing clauses
Non-Compete clauses
Direct sales
Cross territory sales
Warranties
Compliance with US export
laws
• Choice of legal system
• Language in correspondence
• Company entitled to direct
contacts

19. Principles of Distributor Management
1.
2.
3.
4.
Set objectives
Reporting structures
Measuring systems
Periodic evaluations
• Independent information sources
• Consultative approach

20. Marketing reporting
• Keep it simple
• Keep it brief
• Include market
• Include goals

21. Measuring systems

22. Activity Based Costing

23. ABC and measuring
distributors

24. Advantages & disadvantages
of ABC
Pro
•
•
It becomes very clear what
a distributor renders or
costs
Can be done without the
distributor’s knowledge
Cons
•
Only looks at the financials
•
Cannot be used in start-up
years
•
Can be quite a burden to
facilitate

25. Measuring systems

26. Balanced Scorecards

27. Balanced Scorecard methodology
(9 Steps to Success)
Robert S. Kaplan & David P. Norton

28. BSC and measuring distributors
• BSC is designed with the distributor
• Identify what needs to be improved in order
to generate (more) success
• Define KPI’s
• Make BSC part of the reporting structure

29. BSC example
Critical Success
Target
Status
Factors
Business benefit
Annual Revenue
Market Share increase
$
12,500,000.00
3%
MAT $ 11,750,000
2.60%
Organization
Staff expansion
1 Product Manager
1 Customer Service Representative
1 A&D representative
Logistics
On time delivery
98.5% On time delivery
96.23%
Marketing
Brand recognition
25% Increase
19%
Sales
Shelf space in retail outlets
New architect partners
1500 mtr.
1750 mtr
300 new architect subscriptions
32
20% reduction
6%
Customer
Complaints

30. Which KPI’s?

31. Advantage & disadvantages
of BSC
Pro
•
•
•
•
BSC can be used right from
the start
BSC is a flexible method
BSC also looks at nonfinancial criteria
BSC’s are easy to include in
a report
Cons
•
Distributors can be(come)
uncomfortable
with
the
process

32. Some results from our own research
• There is a correlation between
‘success’ and ‘having a reporting and
measurement process in place’
• Top KPI mentioned was ‘revenue’
• From the Top 5 companies, however,
only 1 company named ‘revenue’ the
leading KPI

33. Motivating Distributors

34. Top Turn-off’s for distributors

35. Motivating Distributors
Last but certainly not least:
Operational Excellence

36. THANK YOU!

37. Questions?