“Professional

Distributor

Management”

November 27, 2013

Presenter:

Roland van Marlen

Moderator:

Yoav Amiri

• In business since 1995

• Consultancy firm with 2 partners and +/- 20 Freelance market researchers

• Assisted more than 50 companies growing internationally

• Key specialization: “International Distribution Networks”

• Europe and the America’s

About MCSM Services

Today’s Objective

How to manage international trade

partners

International expansion models

Distributor Management

Traditional distributor management:

Catalogues, Telephone & Dinner

Professional Distributor Management

Performance

Management Distributor

Motivation

The basis is

preparation

Working with your partner Which panorama do you offer?

Hell Paradise

Hell -vs- Paradise for international trade partners

- Long lead times - Ex-works (FOB) pricing - Currency risks - Undesired paralel imports - No guidance from vendor - No support from vendor

- Local/regional warehousing

- DDP pricing - Clear currency policies - Clear sales policies - Regular support

Preparation

Marketing & Sales

Program

Written

Agreement

The Program

Why a formal program? A formal Marketing & Sales program will:

Increase your credibility

Eliminate lengthy discussions

Make sales people more effective

Simplify management

Elements of the program

Program

Pricing

SLIPP

Proposition Analysis

“The Golf Method”

Define the top elements of your

proposition one by one

Hole 1: Brand & Reputation

Hole 2: Product

Hole 3: Lead Time

Hole 4: Quick Ship Program

Hole 5: Return Policy

Hole 6: Credit terms

Hole 7: Customizations

Hole 8: Warranty

Hole 9: Training

Hole 10: Rebates

Hole 11: Awards

Hole 12: Marketing Support

Hole 13: Lead generation

Hole 14: Currency used

Hole 15: Local service

Hole 16: E-tail vs retail policy

Hole 17: Certifications

Hole 18: ???????????

Program content: “On par means: You won’t win”

Rate the top elements of your

proposition one by one

Hole 1: Brand & Reputation +5

Hole 2: Product 0

Hole 3: Lead Time -2

Hole 4: Quick Ship Program +3

Hole 5: Return Policy -2

Hole 6: Credit terms +2

Hole 7: Customizations -2

Hole 8: Warranty -4

Hole 9: Training 0

Hole 10: Rebates +2

Hole 11: Awards +3

Hole 12: Marketing Support -1

Hole 13: Lead generation -2

Hole 14: Currency used 0

Hole 15: Local service -2

Hole 16: E-tail vs retail policy +2

Hole 17: Certifications 0

Total: +2

Hole 18: ??????????? -3

The last hole is.....Price

Hole 18

Contents of a Distribution Agreement

• Type of agreement • Territory • Term and termination • Targets • Pricing • Currency market effects • Credit limits • Communication and

Reporting • Orders & cancellations • Confidentiality

• Marketing clauses • Non-Compete clauses • Direct sales • Cross territory sales • Warranties • Compliance with US export

laws • Choice of legal system • Language in correspondence • Company entitled to direct

contacts

Principles of Distributor Management

1. Set objectives

2. Reporting structures

3. Measuring systems

4. Periodic evaluations

• Independent information sources

• Consultative approach

• Keep it simple

• Keep it brief

• Include market

• Include goals

Marketing reporting

Measuring systems

Activity Based Costing

ABC and measuring distributors

Advantages & disadvantages of ABC

Cons Pro

• Only looks at the financials

• Cannot be used in start-up years

• Can be quite a burden to facilitate

• It becomes very clear what a distributor renders or costs

• Can be done without the distributor’s knowledge

Measuring systems

Balanced Scorecards

Balanced Scorecard methodology (9 Steps to Success)

Robert S. Kaplan & David P. Norton

BSC and measuring distributors

• BSC is designed with the distributor

• Identify what needs to be improved in order to generate (more) success

• Define KPI’s

• Make BSC part of the reporting structure

BSC example

Critical Success Target Status

Factors

Business benefit

Annual Revenue $ 12,500,000.00 MAT $ 11,750,000

Market Share increase 3% 2.60%

Organization

Staff expansion 1 Product Manager

1 Customer Service Representative

1 A&D representative

Logistics

On time delivery 98.5% On time delivery 96.23%

Marketing

Brand recognition 25% Increase 19%

Sales

Shelf space in retail outlets 1500 mtr. 1750 mtr

New architect partners 300 new architect subscriptions 32

Customer

Complaints 20% reduction 6%

Which KPI’s?

Advantage & disadvantages of BSC

Cons Pro

• Distributors can be(come)

uncomfortable with the process

• BSC can be used right from the start

• BSC is a flexible method • BSC also looks at non-

financial criteria • BSC’s are easy to include in

a report

• There is a correlation between ‘success’ and ‘having a reporting and measurement process in place’

• Top KPI mentioned was ‘revenue’

• From the Top 5 companies, however, only 1 company named ‘revenue’ the leading KPI

Some results from our own research

Motivating Distributors

Top Turn-off’s for distributors

Motivating Distributors

Last but certainly not least:

Operational Excellence

THANK YOU!

Questions?