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What's the Best Way to Monitor Your Distribution System?

October 18, 2012
URL: http://www.entrepreneur.com/article/224270

Q: What's the best way to monitor your distribution system?

A: It's hardly a hyperbolic leap to consider the entrepreneur-distributor alliance as a marriage of sorts. To keep the union happy, the parties must have a mutual understanding of each other's expectations.

"It's the absolute cornerstone of a manufacturer's relationship with the distribution channel," says Gary High, Atlanta-based vice president of sales at Landis+Gyr, which provides energy-management products and services to the metering industry. High has 20 years of experience setting up distribution channels for products ranging from plumbing supplies to software systems.

So if you're an entrepreneur hiring a distributor, outline precisely what you expect and set up a timetable for regular communication--a "cadence," in industry parlance. You might want to talk by phone every week or month, or make an on-site visit to the distributor every quarter. Whatever the cadence, make sure the distributor is in agreement with your plan, High says. Then stick to it.

It's all a part of keeping open lines of communication, which is key to the monitoring process. Give the distributor regular feedback, High says, and encourage the distributor to do the same for you.

"The more professional distributors are going to be very accustomed to that way of working, particularly if there are high expectations for the product line," High says. "They're going to expect the manufacturer to be involved. They're going to want the manufacturer to be involved."

Any set of expectations should be explicit, transparent and thorough, even covering areas such as marketing and training. In fact, High says, entrepreneurs often need to take a proactive role in training the distributor's sales force. "If you don't train the distributor how to resell that product, you will sell it once," he says. "You have to help the distributor make a market."

The monitoring process should be a matter of routine. Document your goals, then follow up regularly to make sure you're meeting them. Regular monitoring helps entrepreneurs stay abreast of their product's fate in the marketplace and pinpoint the source of the inevitable bumps in the road. Did sales dip last quarter because the distributor wasn't doing its job? Because of flaws in the marketing plan? Or because the product itself needs some tweaking?

"It could be a lot of things beyond just the distributor not working hard enough that caused sales to languish," High says. "The feedback loop needs to be generated through the distributor monitoring process."

Absent regular monitoring, High says, the distributor is more likely to stop pushing your product, leaving it to fester in the marketplace--an entrepreneur's worst nightmare.

Beyond the transparency of expectations, High believes the most important element in the monitoring process is consistency. "You can't say, 'I'm going to monitor you,' and never do it, and later expect something that was never followed up on," he says. "Everybody's got to be accountable in the relationship."

You know, like in a marriage.