Copyright Manufacturers' Agents National Association Feb 1995A MANA member agent remembers his early days of representing a manufacturer of building products who was confused on just who his customers were. As the agent explained it to us, "This manufacturer, like most others in the field, sold through distributors to local lumber yards, and home and hardware stores. However, he thought of his distributors in less than friendly terms. In fact, he thought of them as necessary evils when, in fact, they were his customers. The distributors bought and paid for the products he manufactured. He didn't sell to the builders directly. However, he was always treating the distributors badly. In fact, I spent more time mending fences than I did doing productive selling."
Fortunately, the agent who told us this story said that the manufacturer did listen to him and he was able to convince him that his distributors were literally his customers. And he was able to institute procedures that helped the distributors do their job very well. But, the agent remembers, it was an uphill battle.
Today, as many manufacturers look for new and different markets for their products, many of them turn to a marketing path in which their independent agents sell to distributors, rather than to end users, or to retailers. The marketing strategy is as common in technical fields as it is in the retail field. But, for those manufacturers who are looking at distribution, through agents, for the first time, there are some important points to consider. We asked a few agents who sell to distributors to share their wisdom with us. And, as expected, MANA members came through again.
An agent who sells retail products to distributors told us that in her field, it's important for the distributor to take an active part in merchandising activity with his or her retail customers. She said, "A good distributor is a detailer in our field. He or she visits the retail customers regularly, checks on stock, and does whatever restocking is needed, often on the spot. A good distributor not only works with factory generated promotions for the retailer, but often sets up his or her own promotions for in-store use."
DISTRIBUTORS IN DIFFERENT FIELDS HAVE MUCH IN COMMON
Actually, the picture this agent painted of a good distributor in the retail field is not much different from the pictures agents painted for us in the industrial field. Probably the only difference is the extent to which the agents work closely with the distributor. An agent who sells fluid control products to industrial distributors told us that he not only does regular inventory checks of the distributors in his territory, but that he often makes calls with distributor salespeople on their customers. "Because our products are technical and require special backup before they can be specified as a component in a customer's product, I think it's important for me, as a factory representative, to back up the distributor salesperson in some customer calls. However, I always let the distributor call the shots. It's his show, and I'm there to back him up."
Back on the retail side, some distributors often provide training services to their retail customers on the products they sell. An agent trying to find strength in a territory for a retail product that might be complex and sold to consumers should probably look to distributors with a strong record in training. An agent who sells consumer electronic products told us that his most successful distributors are those who provide good and regular training to their retail customers. "There's nothing worse," he said, "than to watch a befuddled retail salesperson try to sell a CD player with all the bells and whistles when he hasn't a clue what the bells and whistles are for. The distributors I have sought out for my principals all have training as one of their strong suits."
Remember that distributors, unless there are special agreements in place, seldom are granted protected territories, as agents are. The distributor buys the product from the manufacturer, often warehouses it, and then sells it either to a retailer, or to another manufacturer as is the case with most industrial products. In some territories for some products, an agent can't be especially choosy. But in others, there might be quite a few distributors to work with. The agent's job is to locate the best distributors in a territory and try to get them to take on the line.
HOW TO SELECT THE BEST DISTRIBUTOR
But how do you know who is the best distributor? There are a number of dimensions that must be considered. One agent we talked with stressed that the distributor must be financially sound. He said, "Remember, the distributor is going to buy your principals' products. You want to make sure that he's in a position to pay his bills on time, and that he is in a position to buy enough of the product so that his or her customers can have what they need when they need it." He also stressed that the distributor should be in a position to pay his help well enough to attract good people. "Your distributor is the face the ultimate customer sees. If the people who work for a distributor are less than they should be, you can have problems."
CUSTOMERS CAN BE A GOOD SOURCE OF LEADS
Another agent explained that the way he got a line on the better distributors in his territory was to talk with people who buy related products from distributors. He asked them what they thought of the service they were getting from their distributors. "A customer's opinion can be quite valuable," he said. "However, you must be sure to ask very specific questions. Don't ask touchy-feely questions. For example, ask for specific answers to questions about service and delivery. Ask about follow-up, if the product you carry requires after-the-sale attention. Ask about pricing. Remember that a distributor, in most cases, can charge whatever he wants for the products he sells. He has bought them and taken title to them. Therefore, he's usually not bound by any factory restrictions about pricing. While price is important in most cases, don't always look to the distributor who low-balls customers. Look for a distributor who is flexible when he needs to be, but is more than willing to offer the kind of service that his or her customers need most."
LOOK FOR SPECIAL ABILITIES
As more manufacturers switch to manufacturing processes that require just-in-time delivery of product to keep their lines running and the storage costs down, they are going to be looking to distributors who can provide the service. "This means that a distributor is not only going to have to be able to afford a warehouse and the people who will run it, but they are going to have to finance inventory," an agent told us. "This means that the financial factors are going to be even more important than they are now. Any agent looking for distributors in this situation is going to have to be able to assess the figures and to make intelligent presentations to the principals he or she represents."
Distribution is not a cut-and-dried situation. For every rule you know, there are those who do it differently. To be most effective as an agent working with distributors, you must have considerable knowledge about the customers of the particular industry. More than a few agents, looking to expand into other areas, have found that their extensive knowledge, gathered in another field, was little help to them when they started working with agents. The message to read here is to know everything you can about the field and the way distribution works in it before you tackle any lines that require distribution.
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