Are You Thinking What I'm Thinking?

Four components of the channel partner relationship

By Peter Rice

Anyone who is or has been involved in a personal relationship of any significance is familiar with the hypothetical concept of men and women being from different planets. The point of the planetary metaphor is to suggest that men and women approach relationships from different perspectives. The same can be said for distributors and manufacturers when they attempt to deal with each other.

There are countless challenges fac- ing both manufacturers and distributors in today’s business environment, including domestic competition, the economy, pricing pressures, margin shrinkage and emerging foreign influences, among others. In any situation when an entity is threatened, there is a natural instinctual intuition to retreat to survival mode, become defensive and protect itself first. Not to be over-dramatic, but the same thing happens in the “heat of battle” when either a distributor or manufacturer perceives itself to be in a threatening situation. Survival will be achieved more successfully when a unified front is created and teamwork is applied to overcome challenges.

Just like in the days of prehistoric man, there is a lot to be said for gathering together for “the hunt” for the better of the group—not the individual. You don’t see a lot of paintings on cave walls showing a “lone wolf” caveman taking on a woolly mammoth alone. The result would be simple; the “lone wolf” would end up losing the battle.

There are four basic components that need to be focused on when setting out to achieve success in a channel partner relationship. They are: attitude, communication, planning and perspective.

Attitude for Success
Attitude is the foundation of anything. If either party goes into the business relationship thinking the other is a “necessary evil,” there is bound to be failure. We have all been exposed to the benefits of a positive attitude. If you don’t yet “get it,” then stop here and go read one of the thousands of books or listen to one of the thousands of CDs available to help shape your thinking and enjoy more success in everything you do.

It’s about recognizing that a partner is someone who can make you more successful. Understanding that you can have more success with that partner may just lead to you enjoying yourself and your job by working with some of the great people in this industry.

A positive attitude in anything you do will lead to greater success. In this instance specifically, counting on the partner to help, add value and achieve success will accomplish just that.

Communicate Directly
This is a big one. Too often, assumptions are made regarding what the other party’s motivation may be or how one might react in certain scenarios. Decisions are also made—and sometimes inaccurately—based on these assumptions. Ask the questions and don’t assume anything. For example, if you are unsure what markup will be added to a project and it may affect the success of the bid, then communicate and ask. Give the partner the specific reasons why you are asking.

Don’t begrudge anyone from trying to make the best living one can, but also don’t try to take an unfair advantage over the person who is trying to help write the business. Remember this: Whatever the margins are, when applied to a lost order, the result is zero. If a manufacturer is heavily discounting a project to give you an advantage, is it fair for you to make a hefty profit? Is this a formula for building relationships to work together on future opportunities? Too often, paranoia and defensiveness cause us to withhold valuable information from each other which can be vital to closing business. Instead of open lines of communication, there is a tendency to play our cards close to the vest.

This is just one example of the importance of direct and honest communication. Here’s another: How about a simple training meeting being set up for a distributor? How many times has a “lunch and learn” been set up where a manufacturer salesperson comes in excited to discuss a new product when all the distributor wants to learn is how or where to sell the existing products? With good communication, both parties can meet their respective objectives in training.

We must not be afraid to communicate and learn not to make assumptions, even if the answers we seek are not what we want to hear. Ask the questions.

Planning Mutual Success
It has been said that “the power of a positive attitude will take you 90 percent of the way to success, but without action the last 10 percent cannot be achieved.” However, even the best-laid plans don’t always come to fruition.

A partner calls a meeting to determine a course of action to increase sales and gain more profit. How often (if the meeting happens at all) is there a specific written plan put in place with scheduled follow-up and evaluation? What are the chances that a plan set today will still be feasible eight or nine months from now? How will you know when you have achieved success and to what degree? Without a specific course of action, a set schedule for follow-up, evaluation or adjustment and a way to measure the results, another year will pass without really knowing if the partnership is working or to what degree progress is being made.

Taking the time up front to lay out a plan with your key vendors is simply investing time in your mutual success.

Perspective of Both Sides
Ending where I began, the last component of a successful partnership is maintaining the proper perspective. How many of us who work with a channel partner truly understand the business of that partner? Unless someone has worked for both, it is unlikely there is an understanding of both. There is a distinct difference in how the other runs their business, the margins that are needed to be achieved, the reasons for writing business and the expectation of the roles that each should play in the process.

A recent MHEDA Edge article called “Whose Responsibility Is Product Application?” (September 2007) dis- cussed responsibility when a project goes wrong. To answer the article’s main question, the responsibility needs to start at the beginning of the specification process, and even then it is often complicated to establish roles during the process. Often the manufacturer wants to take on more responsibility in the beginning to help define the application and assist with the design of even the simplest systems. Often, too, the distributor feels either threatened or offended that the manufacturer feels this way. The manufacturer has a vested interest in making sure the product with its name on it is applied correctly and will work. The distributor sees the manufacturer being there to provide answers and get a price when needed. The end result is that both partners are frustrated because they don’t understand what the other’s motivation might be.

This particular topic goes way beyond the depth that can be achieved in this article. The details and effort required to make a channel partner relationship successful is like any other relationship and requires hard work from both parties. There have been many articles and books written on the topic of distributor-manufacturer partnerships suggesting that the “win-win” scenario cannot work any longer. I couldn’t disagree more. In the end, both distributor and manufacturer are working toward the same goals. Both want to increase sales profitably. Once we can take a step back and understand the goal is a common one between both parties, we can begin to sincerely build those relationships in a trusting, honest manner and truly become mutually more effective in the marketplace.

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The MHEDA Journal • Second Quarter 2008 • Volume 37, No. 2 • Contents are Copyright © Data Key Communications, Inc.
All rights reserved. • Nothing may be reproduced in whole or part without written permission of the publisher.