There’s no Money
Second Best Friend
Way back when and a very long time ago, I was talking about my sales exploits with Troy, a friend and mentor in the business. I told him about my efforts developing a new distributor – training, prospecting, joint calls, inventory programs, the whole nine yards. He asked me to explain my “position” at that wholesaler and I didn’t know. He asked me a whole set of questions. Where there other products similar to mine on their line card? Did they have loyalties to product lines other than mine? How open were they about sharing sales information about their very best accounts? Was I given full access to their sales team? Did the customer service and inside sales people welcome me or treat me like a vendor? After we talked about each of these he said, “Frank, you’re their second best friend. And, life is hard when you’re the second.”
I was just a little taken a back; so on went my selling hat. I retold my progresses, I relived how I was working hard and I recanted the distributors promise to let me earn my way to the front of the line. Troy looked at me and said, “Yep, you are their second best friend. You better set a time line on getting to the front or you will always be the hard working guy with no money.” That was many years ago, but the message continues to ring for me. “There’s no money in being the second best friend.”
Far too many people don’t consider this issue as they develop a channel strategy. Their thought process drives them to search for distributors who are well known in the industry they serve. For example, a manufacturer introducing a new line of electrical fuses might target electrical wholesalers as their primary channel. We will call this manufacturer
The Hurting Fuse Company. On the surface this makes great sense. This group of distributors call on the right people, understands the fuse concept, and can bundle the sale with other products. Everything is a go right? Not exactly – because most members of this group already sell one or two lines of fuses. They already have relationships and resell agreements in place. The Hurting Fuse Company’s new fuse line is destined to be the second or third best friend. (And, I believe third best friend is worse than second best.)
So what happens to poor Hurting Fuse Company of our example? Well they get used:
- Used when the primary lines can’t meet a tough pricing situation.
- Used when Hurting Fuse manages to get their product specified.
- Used when the distributor needs to “cherry pick” the one or two fuses available only through our fuse making friend, Hurting Fuse.
- Used as leverage to get special deals from the primary supplier.
- Used against himself. This happens when the distributor salesperson says, “We are a Hurting Fuse Company distributor, and I can tell you that ACME is really a better made product.”
So what exactly would I recommend for The Hurting Fuse Company?
My first recommendation would be to find channel partners who are merging into their market. The wholesale world of today is in an ever constant state of flux. More and more wholesalers are crossing over lines of trade focusing on expanding their sales of products to existing customer. Market research tells me two things:
- A great many fuses are sold in bin stocking agreements
- Industrial and Fastener-based wholesalers are crossing into electrical products
Many of the new comers to the electrical product line have yet to establish relationships with existing fuse manufacturers. And, many of these companies are leveraging their existing bin-stocking programs into sales of electrical products. This could be an opportunity for The Hurting Fuse Company to be somebody’s best friend.
The number one concern about this approach comes from uncertainty of these new comer distributors to actually sell fuse technology. This is a valid concern and one that should not be taken lightly. Here are some litmus-test points you should consider:
- Do they have a Specialist?
- Who are their company’s strategic and target accounts?
- Do they have a marketing plan for putting your products into existing customers?
- Have they put a dollar figure on the growth? Is it believable?
- What other lines touch up against yours?
- Do they have a track record with launching new product lines?
- Are some of these new product lines outside their “core” (or historical) business?
Once Hurting Fuse explored these questions, they can begin to determine whether the new distributor presents an opportunity for growth or an opportunity to waste sales efforts.
But what if I have inherited distributor relationships?
In a perfect world, channel managers would be allowed the luxury of starting their distribution plans with a clean slate. Leonardo DaVinci started his works with a clean canvas but our masterpieces will most likely fall over the top of someone else’s scribbling.
So what happens if we assume a new role and find we are somebody’s second best friend? Evaluating the relationship can be “tricky and mean”. Feedback from your local sales team can be skewed – especially if they helped select the distributor originally. I recommend a six step process for developing these wholesalers:
Step One - Evaluate the distributor situation
In this step you look at the distributor and the relationship you currently enjoy (or don’t enjoy). During this step you examine their historical performance, company philosophy, key accounts, targets and openness to work with you.
Step Two – Evaluate commercial situation
Individual commercial situations will play a role in your future plans; so to will the health of the economy and the strength of your local field sales team. As a side note I recommend getting your own house in order before you work on your channel.
Step Three - Meaningful conversation
After gathering data and analyzing the commercial and market conditions, its time to have a meaningful conversation with your existing distributor. They need to know what’s on your mind. Data is your friend. Human understanding is a very good thing when facts are involved (as opposed to emotions and accusations).
Step Four – Set a mutual plan
They agree to work to make you a better friend, maybe even their best friend. Make absolutely certain that any plans mutually agreed upon milestones and measures of success. I like to have these initialed off in writing.
Step Five – Time based re-evaluation
The plan must include regular re-evaluations. Without these I would question your chances and commitment to success.
Step Six – Save or Delete
Fish or cut bait; Sink or swim? There needs to be a measure in place that defeats the human tendency to give friends a 37th “second chance”.
The other side of the channel
This whole second best friend thing is not a one sided affair. Distributors often wake up to discover: their suppliers have promoted someone else to best friend status. I recommend they too consider the concept of this article – there is no money in being someone’s second best friend.
And, if you want to talk about the 6 Step program give us a call. We can help get you started.