Friday, December 11, 2009

Recession Driven Changes

Changes in the Distributor Environment

Earlier this week I was asked about some of the unrecognized effects of the recession on wholesale distribution. Then the question came up a second and third time in a matter of hours. Apparently, this is the time for reflection. Besides creating stress for business people – recessions drive the acceleration of change. I thought it might be interesting to use this forum as a vehicle for exploring some of the generally uncovered changes in our industry and their ramifications.

Change Number One (not necessarily in any order)

The super “skinnying” of Vendor / Supply partner sales teams
Think about your vendors. In some industries it’s getting darn difficult to keep track of the players. Downsizing, right sizing, whatever you call it – distributors are reporting major changes in the sales teams who support their efforts. If the manufacturer had 5 guys in an office serving the market, today there are three people working out of their houses. Suddenly distributors discovered their old guy was gone (or had twice the territory).

This affected the combined sales efforts. Loss of continuity within the territory meant everything had to be explained… again. Customer connections were lost. History of applications - all gone.

Here are a few of the effects:
----->Product quality issues were handled by the distributor – if at all.
----->Expediting connections were lost.
----->Special pricing agreements were offered to the wrong distributor.
----->Field planning sessions were more difficult to facilitate.
----->Vendor led training went away.
----->In some instances, vendor sales people fouled distributor/customer relationships by promoting direct sales opportunities at customers. This happens mostly because they were worried about their own job security or commission levels.

For the most part, distributors were asked to pick up more of the slack. As the recession ends, distributors who know exactly how to explain their value to supply partners will prosper. To do this right, distributors need to understand exactly how to communicate this in a non-threatening and scientific way.

Let us know what you think.....

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