Resale management

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More products are sold through resale channels...

... than through direct sale channels, except for the largest manufacturers.

Resellers' local market knowledge, significant customer contacts and marketing ability increase the importance of resellers for the whole company point of view, which is why export companies must be able to control resale. Manufacturers must:

•   Be able to create a powerful two-way communication channel with resellers
•   develop fair and clear agreements
•   establish an effective reseller motivation program
•   provide training and support when needed
•   participate in the reseller's internal planning and implementation of the strategy as well as
•   use effective control methods.

Resale Management is a complex entity that includes versatile tasks such as induction, control, communication, tracking, engagement and management of resale channel conflicts.

1. Induction of the reseller

The induction contents focuses on the following issues that are intended to increase reseller's motivation and improved performance:

•   Manufacturer's products and company
•   the ability to sell the manufacturer's products
•   product and marketing know-how
•   customer preference capability
•   understanding the customer strategy
•   market research
•   sales skills like
          -   Building a relationship with a customer
          -   clarification of purchasing
          -   screening of alternatives
          -   decide on the best product or solution.

Induction strengthens the foundation for loyalty on which co-operation and success will later be built. New sellers are ready and eager to speak on behalf of their service providers. During the first month, the company should be in close contact with a new reseller.

Induction can also be largely automated ("on-boarding"): giving recognition and attention to the reseller through this accomplished milestones during the process, while at the same time encouraging to commitment and additional activities.

2. Controlling the reseller

The control methods complement each other and are consistent. Effectiveness is based on:

•   An authority that rely on an agreement between the parties
•   expertise based on the manufacturer's knowledge of what a reseller appreciates
•   reference value where the other party appreciates the other and wants to be connected to this
•   a reward that must be large enough to achieve the purpose
•   compulsory, which includes the other party's ability to punish other.

We need to consider what the expected results of the control effort are compared to the expected costs.

Control can be performance-based (tracked goals) or action-based (the manufacturer ensures that the reseller works in accordance with the manufacturer's view). However, performance-based control results in better sales results.

Unilateral and compelling control means work best when in the markets there are no alternative manufacturers for similar products.



3. Communicating with the reseller

Open communication and the reputation of the manufacturer as a fair player raise the level of commitment, reduce confusion and increase trust.

•   It is good to have joint planning of measures, a deep discussion of the prospects for the future, an attempt to create certainty of long-term commitment
•   good communication helps the manufacturer to understand the customer needs of the target market, the business environment and culture
•   good co-operation with the reseller increases flexibility in the sales channel, it increases productivity; however, it is imperative that both the manufacturer and the reseller are willing to invest in training, learning and the ability to solve the problems generated by export together
•   close communication aims to develop:
          -   sales demand campaigns in co-operation with demand control
          -   deliveries in co-operation with developed supply chains
          -   the process of increasing efficiency in the development of integrated systems.

Questions and problematic situations can be gone through the phone. Via e-mail are also communicated needed documents, such as price lists, technical information or news updates. In connection with meetings and fairs, the subject concerns more often the market situation at a general level.

4. Following up the reseller

The manufacturer must regularly monitor the performance of his reseller such as:

•   Achieving Sales Goals
•   average stock level
•   delivery time to customers
•   handling of lost and damaged products
•   ability to cooperate in mutual marketing campaigns.

Usually measured:

•   Sales volume
•   value of sales
•   achieving a new business
•   market feedbacks
•   customer service
•   how well the reseller has held his commitment
•   how much the reseller paid for the costs
•   how profitable the reseller is for the manufacturer.








4. Following up the reseller (continue)

The monitoring metrics can be divided as follows:

•   Performance-based monitoring metrics:
          -   Sales value
          -   reseller outcome
          -   gross margin
          -   inventory turnover
          -   market share
          -   Customer satisfaction
          -   sales expenses
          -   return on investment
          -   inventory expenses
          -   Customer service
          -   Volume of sales
          -   sales per product
          -   sales per seller
          -   sale by tender
          -   new business

4. Following up the reseller (continue)

• Activity-based monitoring metrics:
          -   Services
          -   guarantee process
          -   premises
          -   employee incentives
          -   coverage in the market area
          -   product expertise
          -   sales skills
          -   business plan
          -   Marketing programs
          -   Customer feedback
          -   credit management
          -   accuracy of the sales forecast
          -   sales profits
          -   number of product presentations
          -   commitment
          -   compatibility.

5. Commiting the reseller

The manufacturer should deal with the reseller in the same way as the end customer i.e. defining the needs and desires of the reseller, as well as molding his or her offering to give him or her special value.

Trust gives the reseller the opportunity to focus energy on achieving results.

The reseller's commitment consists of a number of factors such as:

•   Product sales
•   ease of sales
•   targeted investments in resale relationship such as product training, product specialists, promotional or advertising campaigns and demo products
•   effective communication
•   a vision of reliability
•   manufacturer's strengths
•   dependence and influence.











6. Resale channel conflict management with the reseller

Today, distribution channels are complicated. For example, sources of channel conflict can be:

•   Differences in expectations when making common decisions
•   the use of compulsive influence
•   the intersection of the goals, for example, the manufacturer seeks to increase sales at low prices and low profit, while the reseller may be happy with the current sale and strive to increase his or her profit
•   unclear roles and rights relate, for example, to agreements on marketing areas and their boundaries or the related exceptions.

Managing and minimizing channel conflicts can be affected by eg:

•   Being careful in designing the resale channel so that channel conflict is causing overlap as little as possible
•   ensuring that the manufacturer, for example, distributes its product range among different resellers, so that resellers who are at risk of falling into conflict do not sell the same product
•   paying resale compensation or part of the profit if the transaction is made outside the pre-agreed limits.

Channel conflicts can be avoided e.g. by:

•   Creating simple channels with fewer sources of conflict
•   granting regional exclusive distribution, which is the most popular tool for reseller's motivation, but does not have a significant impact on the reseller's commitment.

7. Challenges encountered in co-operation with the reseller

Here are some main challenges that usually appear when co-operating with a reseller:

•   The reseller does not properly understand the product and its value creation. The manufacturer's sellor must be able to argue the problem correctly and sell the reseller the necessary belief and enthusiasm for the product

•   when communicating the resale growth target to the reseller, the information to the reseller how big and fast growth expectations for the addressed sales results remains unclear. The reseller may experience growth targets unreasonable or impossible to reach.

Does your company need further information on resale management and our related services? Do not hesitate to contact me:

Or leave us a message, thanks:

info@ouluntietotaito.com

Contacts

Oulu Know-how Cooperative
P.O.Box 17
FIN-90101 Oulu
Finland

+358 40 159 3490
info@ouluntietotaito.com