One of the most important functions your channel partner performs is customer service. For some customer accounts, your channel partner will be the “face” customers associate with your product. Sales channels are structured to serve a specific kind of customer base, and today we’ll look at the best way to reach the accounts your company wants to target.
Manufacturers’ reps: Reps can serve both large and small accounts, but they are most effective in targeting new or emerging customers. Reps can take the time to educate new users on your product or work with designers that integrate your product into a subassembly that’s part of an end-product. A good rep will sell product lines that are complementary to your product: in a simple electrical assembly that may mean a switch, wiring, a mounting device and an indicator light. Reps should also bring your newest products to market and assist customers in transitioning from an older product to a newer model. Sales volumes: prototypes to production orders.
Distributors: Distributors are the “warehousers” of an industry: they procure products in high volumes, warehouse those products, arrange delivery and manage many supply chain functions. Manufacturers reps frequently work with distributors: if a rep successfully books a sale, a distributor will deliver the number of products the customer needs. Often, a sales commission will be split between the rep and the distributor. Distributors primarily target purchasing agents that order products in high volume; but they may also have outside sales reps that call on designers; recommend or sell complementary products; or provide value-added services such as assembling product components into a “kit.” Sales volumes: medium to high.
Retailers: Retailers are the grocery stores, convenience stores, automotive after-market shops and department stores that target consumers. Retailers have the broadest reach in the resales channel but typically carry a number of competitive products or brands. Products are on the sales floor and in stock. Retailers work with brand owners on sales promotions, rebates and other marketing programs that target consumers. Sales volumes: small to medium.
Value-added resellers (may also be contractors): VARs assort and package products according to customer needs. VARs typically call on and sell to small businesses. This channel typically performs some kind of pre-sales service for customers. In the electronics industry, a VAR takes disparate computer components such as a hard drive, a monitor, a motherboard etc. and assembles them into a system and downloads the software necessary for the product’s performance. Volume: small to medium.
VARs, retailers and reps—which prefer to carry no to low inventory—may buy direct from manufacturers or rely on distributors for warehousing and supply chain management. The best channel for your product depends on how much volume you want to sell and manage and how much support your customer needs.