Progressive Distributor - Advice on running a successful Distributor Advisory Council

Advice on running a successful Distributor Advisory Council

by Ed Runner

Bill Younger, former head of sales at Allen Bradley, is fond of saying, “Using Distributor Advisory Councils is a great idea that often does not work.” A fair number of manufacturers and distributors would agree.

Much has been written about Distributor Advisory Councils. Over the years, many manufacturers have had council meetings with varying results. Why are some successful? Why do some fall short of their potential? What makes a council successful?

For the past 21 years, I’ve consulted full-time helping manufacturers and distributors work together more successfully. I’ve organized or sat in on a large number of Distributor Advisory Council meetings. I’ll share some thoughts.

What can the distributor do to help ensure participation in a council can lead to better joint success? First, there are 10 suggestions the distributor can follow to help make the council more successful. Second, the distributor needs to be discerning when deciding in which manufacturer’s council to participate.

How can the distributor contribute to joint success?
1. Participate in “working” councils. Try to get the manufacturer to avoid holding the council at a remote exotic location. When a small number of distributors are invited to participate in a council, others feel left out. If the location is exotic and plush, this adds to the rift. If this is a working council, make it work during meeting time. Golfing and fishing can come before or after the meeting. If this is a reward trip, it should be called a President’s Club, Goal Busters, or something else. Most distributors can afford their own vacations. Mixing rewards and working councils tends to confuse people.

2. Come prepared to work. If there is prep work, do it. Try to identify the big issues for distributors prior to the meeting. Read over notes from previous meetings to see what issues have been left hanging. Some years ago at a council meeting, a distributor told me their Hanging Issue List had not changed in five years. Talk to other distributors before the meeting if you have time. Don’t wing it. The manufacturer needs your best thoughts on the network and the market.

3. Listen behind what is being said. In complex issues and relationships, often the articulated comment is a symptom of what needs to be uncovered and dealt with. Look for the idea the speaker is trying to articulate. Listen to the comments of the manufacturer and other distributor participants for the important or underlying issues. We don’t always speak clearly, especially in open discussion.

4. Speak from what you see and know. Distributors tend to be very good at stating their personal view. I do not find distributors to be particularly good at designing a manufacturer’s market or channel strategy. I also do not find most distributors are good at speaking on what is best for the whole distributor network. My belief is that distributors are generally action-oriented entrepreneurs. They are very good at speaking for themselves.

5. Focus on what’s best for the whole network. This is not a meeting for personal issues that do not affect others. Try to balance what you’d like for your firm with what might be best for the manufacturer and the network. Joe Spedale, national distributor sales manager for Omron Electronics Factory Automation Products, says, “In my experience, councils can become a forum for adversarial negotiations if one party is looking to impose their will on the other.” Look for compromises that help joint success. Look for ideas or solutions that can help the system get better.

6. Speak up to try and make the council responsible and productive. Be willing to get up and leave if the council is not productive. Sitting passively in a meeting that is not productive or that is ignoring big issues allows others to think progress is being made or critical issues are being handled.

7. Avoid simplistic thinking. Too often both manufacturers and distributors have a naïve image of how things are or how things need to be. There is often an overwhelming tendency to look for a quick or easy answer. Beware those who propose overly simplistic analysis or suggestions. In distribution channels, almost everything is a trade-off. Try to identify the trade-off cost to each idea.

8. Don’t take advantage and lobby for special treatment. Avoid using the council seat as an opportunity to gain special treatment or an unfair advantage that can undermine the council and might be illegal. This damages the trust in the participants, the council process, the manufacturer, and the network.

9. Try to deal with substantive issues that can really improve network performance in a significant way. Try to avoid having the council deal only with irritations or minor issues. Both sides may feel more productive solving simple problems and correcting irritations. The problem is, when all the irritations are corrected, no one is really stronger, motivated or improved. Be a positive participant and avoid negative behavior. Included in negative participation would be gossip about factory field people or distributors who are not in the room.

10. Don’t do anything illegal. In discussions with the manufacturer and with other distributors, make sure you are not participating in any illegal discussions or agreements. You may not get in trouble with the law, but you may risk your participation on the council and your place in the network. If you support other competing manufacturers, honor those relationships.

Which manufacturer?
Distributors should be encouraged to give careful thought as to which councils they serve. The distributor’s time is valuable. It might be productive to try to participate on councils where the manufacturer demonstrates the following:

1. Listens. “Too often some manufacturers just talk at the distributors. This doesn’t accomplish anything,” says Interlynx Systems’ Larry White, who consults with companies on improving the performance of their selling organizations.

2. Is pledged to take action on some council recommendations. Few things are as discouraging as participating in a council where there is little positive follow-up action. Distributors love to talk about and support the suppliers that take action on council recommendations. It helps if the manufacturer has demonstrated an ability to differentiate between normal irritations and issues critical to joint success in the market.

3. Has a commitment to distribution. A high level of commitment by the manufacturer fuels a healthy and proactive network. One of the more popular questions right now in annual channel partner surveys is: “How do you rate us on our commitment to distribution compared to your other suppliers.”

4. Demonstrates an understanding of the distributor’s view of his or her business. One of the most frequent complaints from distributors in annual surveys is: “This manufacturer does not understand my view of my business.”

Good councils can have impact
There are many examples of good councils that have helped both the manufacturer and distributors gain both market share and improved profit by pooling information and ideas collectively. Accomplishing this takes leadership, cooperation, clear roles, agendas that meet the needs of both sides, and open sharing. A Distributor Advisory Council is one of the manufacturer’s better tools, if it is well run and productive. Today the business tendency is to focus on improving efficiency. Instead, the better councils often focus on improving the effectiveness of the channel or transforming the channel.

Often, the wrong manufacturers use a council. A council is not a good tool when the manufacturer lacks a market strategy, a clear channel strategy, or a strategy on how to successfully sell using multi-channel efforts. Sometimes the manufacturer’s other communications tools are more appropriate.

My observations lead me to believe that manufacturers with world-class selling channels can make good use of a Distributor Advisory Council. But, often they do not need one because they make good use of sales calls, joint calls, conference calls, surveys, regional meetings, newsletters, Internet boards, and letters to the field. Joe Spedale of Omron offers: “If a manufacturer is truly interested in partnering with distributors and their customers, they should seek feedback more often than twice a year. They should utilize input from different sources and levels of the network. More frequent input from a variety of sources is probably more valuable than the feedback from a meeting of a small number of distributor principals in a council.”

I am a fan of Distributor Advisory Councils if they are well run and productive and if the manufacturer is prepared to lead. It’s hard to summarize the potential of a good Distributor Advisory Council better than Larry White has: “If it allows both parties to benefit, it can be a very good tool.”

The Distributor Advisory Council has the potential to improve cooperation between the manufacturer and the distributors. It also has the potential to energize the network. A council is one tool that can help eliminate duplication, misunderstanding, and improve joint success in both market share and profit.

Ed Runner is president of E.C. Runner & Associates Inc. in Illinois. Since 1984, the company has worked to increase the profitable performance of industrial distributor sales networks, improve multi-channel selling efforts, and conduct confidential distributor network surveys. He has facilitated more than 60 Distributor Advisory Councils. Reach him at edrunner@ecrunner.com.