Successful,Distributor,Plans,H business, insurance Successful Distributor Plans: How to Motivate Sales Channel
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Those that requiredistributor plans often struggle--either to convince distributors tocreate high-quality plans or to assure that the plans are followed.To understand a typical distributor planning process, Smart Business spoke with Bob Segal, a Principal at Frank Lynn & Associates.Why should a manufacturer require its distributors to create written plans?Thesuccess of many manufacturers hinges on the actions of tens or evenhundreds of independent, mostly small, distributors. However, eachdistributor has different customer targets, different product mixes,and different sales and technical skills. Many lack strategic planningskills and marketing departments. As independent businesses, they'refree to do what they want.A manufacturer can hope for the best or use distributor plans to gain greater control over its distribution destiny.Is it realistic to expect or require plans from each distributor?No.Most manufacturers don't have the capacity to handle hundreds ofindividual plans. Furthermore, most manufacturers experience the 80:20rule, where 80 percent of their revenue comes from 20 percent of theirchannel partners. At a minimum, suppliers should require plans from keypartners.Not all manufacturers have the clout to demanddistributors create a plan. A small company selling through Wal-Martmight face an uphill battle to get a detailed, written plan. Still,vendors should "think big" and not retreat unless facing a truenegotiating mismatch. Even in those cases, scale back the scope of theplanning request instead of giving up altogether.What should be included in a distributor's plan?Obviously,these plans should have highly customized content. However, the typicalitems a manufacturer should expect, or even require, in a distributorplan might include:Business background- a short strategy statement, review of market conditions, acompetitive summary and a list of the distributor's key financial,sales and technical objectivesProduct/services summary - a list of (existing/future) services the distributor provides and complementary product lines carriedCustomer mix - sales by market segment; a list of key/major accountsMarketing plan- a listing of specific marketing activities including start and enddates, people assigned and resources required (of the distributor andof your company), covering trade shows, seminars, mailings, Web site,publications, advertising, etc.Training/personnel plan- a schedule of which distributor personnel will attend what trainingsessions (yours or third party) over the next year; hiring plans thatwill affect your product lineSales plan - major/key account activities, joint sales expectations, telemarketing plansLogistics plan - warehouse/technology investmentsFinancial plan - agreement on sales targets, forecasting frequency, etc.How big do these plans get?First,it's often helpful for the manufacturer to create a template. It's alot easier for a distributor to fill in a formatted form than to createa plan from scratch. Furthermore, this assures the manufacturer it willget the type of information it seeks (in a consistent format).Fora major supplier, distributors often want to dedicate significant timeto create a comprehensive plan. Sometimes, the document becomes theoverall strategic plan for the distributor. Regardless, most plansconsist of two to three pages of text with five or six pages of tablesor forms. Distributors often attach appendices with sales spreadsheets,forecasts, trade show listings, etc.What is the role of the manufacturer's channel sales team in the planning process?Thechannel managers should establish an annual planning calendar withannual account plans completed in December; formal, two-way reviewseach quarter and informal updates monthly. Provided with atemplate, distributors--not the account managers--should write thebusiness plans. The account managers can add commitments from theircompany to the plan during the annual planning meeting.Theannual meeting should take place between the account manager and theowner or senior executive from the distributor. The actual meeting, toreview last year's results and revise the plan for next year, willlikely require two to four hours. In preparation, the account managershould review, in detail, the distributor's sales history, local markettrends/conditions, the manufacturers' fulfillment of past commitments,new product plans, etc
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