Manufacturer/Distributor Joint Marketing Plans
Lately, Manufacturer and Distributor Joint Marketing Plans have been on my mind. This time of year I generally take a lot of calls from distributors and their supply partners on the topic. Allow me to share a few random thoughts.There are two varieties of plans which seem to go by the same name. Let’s look at both of types:
Rebates designed to drive distributor behavior and reward performance.
These plans typically create an incentive which comes as a rebate based on the distributor following some guideline. For example, if the distributor carries all of the manufacturer’s products, they get a bigger rebate than the wholesaler who simply cherry-picks the best of the supplier’s product line. Other versions of this type of plan incent distributors for having a specialist, properly trained staff, the right level of demo equipment or the proper inventory. I like these plans as they drive the behaviors and incent the distributor for being more than just a logistics arm for the supplier.
Another common example is the growth incentive; grow your business by 5, 10, 20 or some other targeted percent and receive a fat check at the end of the year for your efforts. While this type of program sounds good on paper, I have reservations about using them. Here is why. Distributors have grown to depend on rebates. In the electrical industry, for instance, rebates account for something like 50 percent of the wholesaler’s bottom line. While everyone aims for maximum growth, there will be years when market conditions make substantial growth nearly impossible; just when the distributor needs the money the most, it goes away. The same holds true for the lucky wholesaler who enjoys a major project; there's a large temporary bump in business followed by a normal year. Year-over-year growth looks dismal because the pervious year was off the charts! For more information read THIS ARTICLE.
Non-rebate driven marketing plans
The variety of non-rebate marketing plans run the gamut of great to godawful bad. Some are just plain worn out. In the next few minutes we will rank them from mediocre to great. Before we do, allow me to say this. I believe the best joint marketing plans are customized to align the specific needs of the manufacturer and the distributor. Customized plans always end up better than plans that are laid down in a one-size-fits-all cookie cutter approach. Some very progressive supply partners have even developed departments whose main role is to interact with their distributors’ marketing teams and push the envelope forward.
Listed from “Just OK” to “Frank’s Favorite”:
10. Co-op Dollars for supplier-only logoed merchandise -
Wearing supplier-branded shirts and jackets is cool, but I have to wonder when the only option is something with just the supplier’s logo. Since there is nothing identifying the distributor, their use in “joint marketing” is kind of iffy. If you are a manufacturer, I would reconsider this as a plan.
9. Co-op Dollars for manufacturer-distributor joint logoed merchandise –
Sticking with the subject of shirts, jackets and other apparel, I feel this makes for a better option for employees. Since our industry flipped from business suits to casual back in the 1990s, jointly marketed clothing has become a big hit. I do believe there is value in providing this to distributor employees. Perhaps there’s even some marketing value as customers see the supplier and distributor logo side by side. Providing this to customers as a reward for loyalty or as a premium for attending some distributor/manufacturer sponsored event makes sense. However, I see the real marketing value of this practice lessening over the next few years.
8. Co-op Dollars for customer events where the supply-partner participates –
When done right, local trade shows where training is a component are growing in popularity. I believe “Training is the New Marketing” and needs to be expanded at most distributors. I have mixed emotions about some distributor outings. For instance, some of the big picnics, turkey fries and other events probably favor the distributor more than the
7. Co-op Dollars to cover training events for distributor people –
Trained people sell more. Sellers who understand their supply-partner's overall strategy drive even greater sales. I believe this is one of the better uses of co-op dollars. When the manufacturer foots the bill, they should expect much from the distributor attendees; things like prompt attendance, ready to learn and having lots of good questions. The class needs to be well thought out and truly designed to meet the needs of a distributor.
6. Co-op Dollars for demos and training product purchases –
Trained distributor sellers need demos. Distributors providing customer training (Training is the New Marketing) need professional quality demo equipment; as opposed to a home-made cobbled up pile of parts. Under the heading of “training product purchases,” I see things like large screen TVs, electronic whiteboards, projectors and other tools. These might be tied to the number of students attending training tied to the supplier’s product.
5. Supplier provided newsletters or blog messages –
Most industries are on their third or fourth generation of such messaging. We’re not talking about the insertion of some old ad or product announcement into a worn out newsletter just to provide filler; with a little effort we can do better than that. Instead, it will take just a bit of tuning to make the information pertinent to the distributor’s geography and customer mix. Further, measuring customer interest via web opens and click-through activity will put you into the modern times.
4. Customer Training with expert trainers provided by the supply-partner –
Expert trainers provided to add some extra oomph to the distributor’s training, and perhaps used to attract customers who wouldn’t normally attend such an event, are great for uncovering new leads and jump starting the sales process. I like this type of marketing event.
3. Funds for web content to be uploaded onto the distributor’s site –
Attracting customers to the distributor’s website is good for everybody. Distributors need to post new, relevant and exciting content onto their site about your products. Experts tell us videos are excellent SEO fodder. When distributors feature their own salespeople and specialists in demonstration and troubleshooting videos, customers are impressed. It also reinforces the notion that these are trusted experts in the field.
2. Highly focused web-based advertising to uncover new customer contacts –
One very innovative new joint marketing plan involves the use of LinkedIn paid placement of teasers onto the pages of select potential customer contacts in the distributors territory. The distributor and their supply-partner set parameters for geography and titles of contacts to be targeted. The contact sees the teaser and seeks more information. Product data is sent via the manufacturer followed by a well thought out presentation from one of the distributor’s sales teams. I particularly like this because it engages both distributor and their partners to build new business. I expect more advanced digital marketing will be part of our future.1. Co-funded employees –
This works especially well with specialists and others who are designated to focus on the supply-partner’s product line. Here, the new distributor and supplier set specific guidelines as to how the new employee will be used to drive sales growth within the distributor’s territory. Things like number of calls, training, reporting structure and other rules of engagement are laid out ahead of the actual hire and goals are set for growth. The distributor and manufacturer see marked increases in activity and sales. This program meets all of our criteria for a great joint marketing plan. We have seen this work well for dozens of our clients and feel this is something which deserves consideration in many instances.
A few final words on Joint Marketing Plans
Joint Marketing Plans should use the power of our supply-partners who generally have greater expertise in pure marketing and the distributor’s innate understanding of their customers. We should also understand most manufacturers have deeper pockets for exploring new technologies. For example, our reference to LinkedIn might be something where the manufacturer has the expertise to determine the best type of teaser to get a strong response. Their (manufacturers) costs of developing such talent is spread over a wider customer base than most distributors.
Joint Marketing Plans work better when customized for the individual distributor. What works in large metropolitan areas doesn’t necessarily work in the cornfields of Iowa.
Salespeople aren’t always great at developing marketing plans. There is a difference between marketing and selling. I know, I have been on the front lines of both.
Finally, I would appreciate hearing your thoughts and perhaps learning about some of the best Joint Plans you have seen. Feel free to drop me a line here with your thoughts.
We have been thinking a lot about marketing for our kind of distributors and manufacturers. Here is a little infographic to get your juices flowing.
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