The Distributor Channel

A couple of weeks ago, one of our  articles  covering sales compensation and commissions ran in two major industry trade publications.  Never in the previous 12 years of writing for this type of publication have we received anything even vaguely resembling the outpouring of thoughts and ideas.  Thinking more about the situation, it seems our industry is reconsidering and re-evaluating a six-decade old compensation plan. Many readers asked us to expound on the topic.  This is an attempt to provide some additional thoughts on the topic.  Do you pay commission on accounts where the salesperson does very little work? One of the biggest lies in our industry comes by way of the assigned account list.  Sometimes it’s geographical and other times it comes under the heading of “covering all the available accounts," but we continue to see sellers responsible for 100, 150 and even 250 customers.  Either way, it’s more than they can physically support, influence or actively p

Most distributor salespeople identify themselves as solution sellers.  Yet, experience dictates only a few dedicate the time and resources to truly comprehend the drivers behind customer decisions.  When questioned, most struggle to understand customer issues outside of their own products.   Truth is, their version of solution selling is mostly service and support wrapped around the technologies they sell.  While this wrapping of service and support probably does justify the “solution seller” mantra, I believe we, as sellers, will soon be obsolete if we don’t move our attention to providing solutions which push beyond supporting our line card.  Many agree with this opinion, but just don’t know how to get started. For years, I have advocated for distributor sales professionals reading the trade publications covering their customer’s industry.  Because so many of our readers are actively calling on manufacturing facilities, I thought I would share some comments from Plant Enginee

Last week, we explored the distractions presented to management during solid growth economies. Process breakdowns and loss of strategic initiative focus were on our minds.   This week we cover a couple of people related topics which can create roadblocks to success in distribution.  Since people represent the biggest single expense for distributors – actually something like 60 percent of our gross margin dollars go to employees – it’s prudent to explore the potential pitfalls. Issue Three:  Good Economies Drive up People Costs One byproduct of growth economies is an overall increased call for good people; the law of supply and demand kicks in.   Since distributors are notorious for poaching employees rather than developing themselves, the prevailing wage goes up.  Sales departments are heavily affected because the business level gives commission paid guys a lift in compensation.  Hiring someone during the upswing mostly sets a new base-line for future compensation.  The up

Last week Industrial Distribution Magazine’s Jack Keough put out a recap the Alan Beaulieu economic report as delivered to the National Association of WholesaleDistributor (NAW) Executive Summit.  I was immediately attracted to the article for three reasons.   First, Alan and his team at ITR Economics actually tracks indicators tied to our industry; we’re not talking pie in the sky stuff political puffery (as seen on TV.)  They have no political axe to grind.  For instance, they continue to make the point, the winning President has almost zero impact on the economy for the first 18 months they are in office. Alan and ITR Economics are accurate.  I have been following them for something like twenty years.  During that time, they have accurately predicted the ups and downs of our industry with the greatest of ease.  Further, they called the “Great Recession” of 2008 to within 30 days and very accurately predicted a number of other ups and downs in the business cycle.  Thi