Distributors & Sales Agents Part II - Managing Them Effectively

In my previous text, I talked about my experience selecting new sales channels. I inherited a non-performing territory and some limited budget, so sales channels were the only option then. 

First, I needed to find great distributors. But then, they needed to be managed. Here is what I learned: thinking that sales cases will be magically closed by the channel with little to no effort from your organization is setting yourself up for failure. That magic show will likely turn out to be a vanishing act, and what will disappear will be your sales. 

Here are a few things to consider based on my experience.

The more, the merrier? Not so fast!

Remember the case I discussed where a channel proved ineffective because they did not have a sense of urgency? One way to prevent this is to sign up many resellers. The idea is that the most ambitious will rise to the challenge - and the others whittle away.

However, suppose several channels are representing your solutions in a given market. In that case, there is the real chance they end up poaching deals from one another – that is, one channel will attempt to snag a sale away from another by offering a better price.

Should you care? If your solution requires a fair amount of marketing and sales efforts to be spent upfront to land any business, you definitely should. Suppose resellers are allowed to snatch away accounts from other channels that spent months building them up. In that case, no sales organization will have an incentive to put in the time and effort required to build future sales opportunities. That will put a chokehold on sales.

Multiple distributors in one country? That can work.

That doesn't mean that several resellers cannot operate successfully in a single market. But it requires some strategic thinking. How are these sales channels different? Do they address different types of clients? Would it be feasible and judicious to reserve one industry or geography to one channel? 

It is sometimes possible to divide up the market according to an objective criterium (industry, geography). If it is not possible, a system of account registration can work well. If a particular channel wishes to invest time developing a sale opportunity, they register it with the OEM. That gives them a period of exclusivity on that account (I found six months to be reasonable). Of course, if they cannot be successful within that time frame, the exclusivity period can be extended, or the opportunity can be open to other channels.

You get what you pay for.

But whether they are exclusive or not, one thing is for sure: actively managed channels are much more likely to deliver. 

Remember my star distributor from the first text? That was a team success story. I did not leave them alone to figure it all out on their own. I spent significant time in their territory, showing them what worked elsewhere on the planet and opening their minds to our solutions' multiple capabilities. 

The fact is, they loved my visits. And they ensured a fully loaded schedule during each of these. One can understand why: my visits conveyed to their clients that my employer valued their business and that they would have a voice in our tool's evolution.

I call this tactic "showing the flag", and I found it to be tremendously effective.

As Reagan said: trust but verify.

Conversely, frequent visits and contacts may help you identify non-performing channels and see how to fix them. Is the local sales team aware of the best practices on how to sell your solutions? Are there a few integrations that could be game-changers locally?

Again, attitude is an essential indicator of future success. If a channel expresses doubts that a visit would be useful, if they prefer you leave them alone because, as a foreigner, "you wouldn't understand" and yet fail to deliver big on their promises, it should raise several red flags.

When in doubt, see for yourself. 

What to do then? Testing the local market on your own can sometimes be the correct way to evaluate the situation.

I once got a channel that specialized partially in government sales. You would expect local salespeople to be more successful with the local government than any foreigner, right?

However, when pressed for a report on current activities, the representative of this channel would always say the same thing: "in my country, things take time. Be patient. It will come". But it never did.

Government sales can be slow, for sure, but ultimately even the government ends up buying things they need! 

So one day, instead of passing on a government lead to the channel, I engaged with them just as I would have done for any other business. After a short proof of concept and multiple snail mails to their store officer, the sale was ours. It took six months in total. But not before the local channel tried to snag the deal for itself at the last minute - which I blocked. 

Sales is not something that just happens - it is something you work for. 

A gateway to building local teams?

Remember from the first text that my business ownership did not believe in my territory's potential. My success proved otherwise. Not only was it not a barren wasteland, but it was also a potential gold mine. So the owners provided me more budget, which enabled me to start hiring an ambitious and industrious crew of business developers and sales engineers. 

Our sales grew explosively from that point onward.

Of course, that is one possible outcome of signing up channels – enhanced revenues justifying brand new local offices. As a result, sales channels must sometimes be terminated. But the coexistence of direct and indirect sales in the same territory can sometimes be optimal.

Likewise, some countries may always remain on the fringe for your business and never support a local office. In such cases, keeping even humble sales agents around to provide a modicum of coverage may pay dividends.

Do you have a different experience? Please feel free to leave me comments: they are always appreciated!

This article is part of a series of articles on international sales in the Software and High-Tech industries. Next: Distributors & Channels - Part I - Finding The Right Ones