Monday, October 7, 2013

Is Territory Expertise Your Main Tool?

Shouldn’t Distributors be Territory Experts?

Let’s talk selling; not the normal distributor to customer kind pontificated on by consultants everywhere.  Instead, I suggest we explore the backwards sale aimed toward our supply partners.  We never talk about it, but I think every now and again we need a refresher.

We distributors sell our value to supply partners in a number of ways.  For example, the gigantic catalog houses pitch their state of the art logistics team and their capability to get the manufacturer’s product from Port A to Point B in very short order.  For some mid-sized distributors, the supply partner sales story contains tales of supply contracts that “deliver” the MRO business of Fortune 500 manufacturing firms.

Knowledge-based distributors in the automation world tout the solution building prowess of highly trained sales engineers.  The implied story is this: we can create new and wonderful applications for your product at OEMs who will push your product throughout the world on their machinery.

Back in our dad’s generation everybody tossed in the credit risk distributors carried on behalf of their supply partner friends.  My own dad loved to stretch the bounds of credit risk by talking about the number of folks he helped out by giving them credit when they started out.  He crossed race and culture boundaries that big companies wouldn’t way back in the 1950s and created loyal customers for his suppliers.

Territory expertise is the Number One Value
Distributors select lots of value creation points for their conversations with suppliers, but the most common selling point is their extensive territory expertise. Distributors join in an almost Gregorian chant each verse carrying a common refrain.  I know my territory.  Sign us up if you want to cover the southern shores of the Great Gitchegumee.  Nobody knows the West Overshoe Market like our team.

With all this talk, wouldn’t it make sense for distributors to really know their territory?  And, this includes not only current customers but the ones you plan to penetrate in coming years.  There may even be a few you have made the decision not to pursue. 

Can you produce an expansive list?  Armed with all this hyperbole around territorial expertise, why do most distributors lack some of the basic tools?

Tool One: Manufacturers’ Directory

Companies compile and sell lists of manufacturers (by state, region, or otherwise.)          
Available in either book or electronic format, these directories typically show the following:
       Company Name
Product Manufactured
Number of Employees
Company Ownership (Public, private, subsidiary)
Executive Contacts

Let’s explore a hypothetical situation; suppose you want to quickly market a product to the buggy whip industry in your territory.  The information contained in the manufacturer’s directory allows you to quickly compile all the Buggy Whip manufacturers in your territory.  Armed with the cross reference, we discover NAICS 316998 (or SIC 3199) contains Buggy Whip makers.  In short order, we can easily identify all the prospects in our territory.

Once we had our Buggy Whip maker list, we could easily call the sales offices and companies too small to deal with via the number of employees.  A Buggy Whip maker with 300 employees is a reasonable opportunity.

The directory would allow us to know if a Buggy Whip company is part of a larger organization, for instance a division of Kraft Foods, General Motors or a stand-alone private company.

I don’t put much stock in the names or email addresses provided by these services.  Experience dictates that any sizable target will have a dozen gatekeepers between you and Mr. Big, but your team can get through the gatekeeper’s fence (or at least they should.)

These directories are a must for prospecting, important for developing new territories, and critical for building a marketing plan.  So let me return to my previous question.

Why do most distributors lack this most basic of tools?

These things don’t cost thousands of dollars.  The paper versions sell for under $250 per state.  Used copies appear on Ebay on a regular basis for under $25.

If you can’t tell, I recommend you spring for one.

If you've been keeping up with us for any length of time, there is a good chance you've seen a note (or two...) about Annual Planning.  Here we are in the 4th quarter.  You may want to get a jump on it!  Here's how we can help.

1 comment:

gracefultraveller said...

As usual, Frank hits the nail directly on the head. Manufacturers that sell through distribution see the value that a good distributor provides, such as the examples given. (Emphasis on the word "good.") A good distribute can act like missionaries, spreading the message far and wide about why your buggy whip is superior to someone else's. Hopefully, he or she does posses the relationships and knowledge Frank talks about. And, if you don't have the knowledge, someone else will.