Have Your Channel Partnerships Sailed?
As our industry grapples with labor shortages and pricing increases, now is when we start to see manufacturers torpedo long-standing partnerships with their sales representatives and distributors. It is happening on a nearly daily basis now, where some manufacturers’ reps are being let go and brands are making distribution next to impossible with increasing purchasing requirements that make stocking cost prohibitive.
Anyone who has been in building material for more than a decade has seen this movie before:
Manufacturer cuts out partners to sell direct to customers, temporarily seeing an increase in margins as they service demand created by their partners. Years later, after expensive sales reps rack up meals, travel and automobile expenses, they decide they can best leverage a distribution or third party rep strategy to cut those expenses and create demand.
Rewind, repeat. The problem is that nobody forgets that you cut them out. And they don’t want you back. We are elephants in the building material space. Screw me once, shame on you……
If you are a sales person: direct or at a rep firm or distributor in the building materials space, the last year has highlighted the necessity to evolve. Many have not done that, and it is understandable that cutting the dead weight is going to make a company more successful. But make sure it is indeed dead weight.
The term ‘channel partner’ is woefully underused, but it is also poorly understood in its true meaning. A channel partner is a company that has widened your channel, by increasing demand and awareness of your products through current media and selling conditions. This past year tested everyone and traditional “sales techniques” were off the table. Backslaps and ‘brewskies’ were not getting the job done in 2020, and companies had to get creative. Those that did not are getting the axe, as brands start to realize that an online presence gets you most of the way there, and that last mile sales guy is a thing of the past.
But a channel partner was prepared and had the infrastructure in place to offset the boots on the ground demand with other activities and functions. We have put together a list of the top ten things channel partners should have done in 2020, and why they should not be kicked to the curb in 2021.
Social Media Presence – Seems obvious these days, but Facebook is not social media itself. Instagram and LinkedIn are the minimum platforms for a business account to be visual and influential. In lieu of in person, these channels were critical to stay informed and relevant.
Data Platforms – In the absence of lead generation in person, investing in data platforms that could be successfully mined for project information as well as contacts to reach out became increasingly important.
Data People – There is zero point to having data platforms if you don’t have resources to mine them. You think you have the time, but you don’t. You need people whose job it is to get into the nitty gritty data and pull it out into usable leads for follow up and to capture information for future outreach.
Samples Platforms – Investing in platforms like Material Bank, Swatchbox and Source was pretty timely for early movers, as designers quickly flocked to these platforms when they needed an online library that would quickly get them samples and take back what they did not want cluttering their “at home” office space. Distributors and reps that embraced these platforms were quick to reap the benefits.
Eliminating Barriers – BIM models, transparency documents, spec documents and information in online databases like mindful materials and Sustainable Minds make it WAY easier for architects to not have to root around websites trying to find relevant information. Distributors and reps who provide the information readily and know where to find it were infinitely more valuable that firms or people that just past the request on to someone else. As a channel partner you have a role in letting manufacturers know what is needed and helping them get the right documents and information in the right places.
Website upgrades – It used to be the case that customers did not mind sitting on your website reading documents and navigating to the contact page to fill out a form and twiddle their thumbs patiently waiting for you to get around to them. That ship sailed, Noah. You have about 15 seconds to get me what I need, on my phone, or I will go somewhere else. Channel partners have streamlined, easy to navigate, easily loaded websites that serve not themselves, but their customers. 2020 and 2021 websites should look very different.
Analytics – Often relegated to big tech firms who use words like “blockchain” and so on, data analytics has become very relevant to building materials. Partners who can offer you a distilled report of your products in their market, including market share, competitive data, pipeline conversions etc. are more valuable than order takers and lead follow-upers who are just looking for commission checks. Push your partners to the next level. Excel does not live up to its name, it should be relegated to the likes of Internet Explorer.
Communications – Good partners aren’t afraid of bad news. There is a lot of bad news for customers right now. The best partners are the ones that step in front of their manufacturers and take the blows. “Scream as loud as you like and tell me how incompetent I am. That is a very effective tool for reducing lead times and securing shipping containers.” It sucks, but reality is reality, and you should choose channel partners that don’t disappear from the conversation when it gets difficult.
It is hard to find ways to claw back margin in times like this, when lead times are extended and sales that should have been booked in 2021 are slipping into 2022 due to material shortages.
It is easy to eye those companies in the channel between you and customer and see removing them as an effective way to eliminate some of the added costs. But evaluate the value that they are bringing. If it was simply as “bodies” dropping off samples and dogging projets, it is entirely possible that they are expendable. But, if they have evolved, they add incredible value in this post pandemic pandemonium. You can change the strategy, but don’t change the channel partners.