Selecting Distributors and Dealers

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Many firms are so relieved to get a distributor, they pay scant attention to finding out what sort of job that distributor will do before they place their future in the distributor's hands. Then they wonder why little or nothing happens.

Don't just jump in because you must have distribution. Don't assume just because they have done a good job for X they will do a good job for you. You have to vet distributors and direct dealers as carefully and reflectively as you do when you are hiring staff. The process of courting dealers and distributors is theoretically very simple. The practice is long winded; so start as early as practicable.

Ask yourself what kind of distributor wants a product like yours? Looking at distribution lists for similar products can provide you with a short list. You then approach them to carry your product. Their receptionists will normally be able to give you the name and extension number of the person to whom you should speak. It's their job and they know one day it might be the next Microsoft/Oracle or Cisco calling. If this proves hard, ask friends or colleagues who deal with the firm for the best person to speak to. Once you've got the name the real fun starts. These people are terrifically busy, dealing with suppliers, handling hundreds and occasionally thousands of products, writing reports for their managers, analyzing sales figures and trends, and so on, and occasionally having time to vet new products. Getting on the ladder the first time is the hardest task. Contact each of them, find out their selection criteria, and what they pride themselves on. Ask also what they can do to promote your product. What is their success? What do they charge?

Once you're accepted updates are a formality and new products can be fast tracked as you've already passed a lot of their acceptance criteria, but first you have to gain their ear to be able to explain the product, its benefits, its market, well-known users, and sales projections. You need to be able to do this in less than two minutes. Unless you are an old hand at this, practice on your colleagues to fine-tune your delivery; then try your pitch on a relatively unimportant firm first. You don't want to blow your chances with an ace distributor because you are under rehearsed. It is one of the most important presentations you will ever make.

Distributors need to see the following:

♦ Sample of finished product and its packaging

♦ Sales literature (PDFs are now acceptable)

♦ Product presentations (PowerPoint)

♦ Business cards

♦ A well designed, informative Web site

♦ Clients lists and references

♦ Sample ads (if applicable)

They might also request to see the following:

♦ Your sales and marketing plan

♦ Sales projections

♦ Copies of the last audited accounts

If you choose a large distributor you will have no real control over their dealers, which is why it is better, if yours is a specialized product, to hand pick your dealers yourself. Whichever way you go about it, it is important to establish that there is no conflict of interest with any competitive products. At the end of the day, distributors and dealers will promote the products from which it is easiest to make the most.

Good relationships with distributors and dealers are worth working at, because they can be valuable in their own right. Software firms are not always purchased for their products. They are sometimes purchased for their access to distribution.

While it is hard work, it gives you the infrastructure for your current and future products. Your dilemma is simple. There are few key distributors in any country; you have to win the ones that are important to your business. People normally get distributors in place first. Dealers are thicker on the ground. If one isn't interested there are always 10 others you can approach. Ultimately, all they are interested in is making money. This must be the underlying thrust of your pitch. One way to resolve the distributor impasse is to start selling through dealers first. When you have established a credible sales record you can approach the distributors with more convincing sales and marketing figures. The dealers aren't likely to take offense provided you keep the communication channels in place that they have previously enjoyed. They will almost certainly purchase from these main distributors anyway, so all they are doing is switching suppliers.

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