In the previous article we discussed ways to filter and qualify potential sales partners candidates for the purpose of reselling your 3D printing solutions. After completing this process and choosing the first channel partners you wish to recruit, now comes the second step of taking onboard and managing your channels. How do you do that successfully whilst making sure your channel performs well and stays fully dedicated?
Challenge #1 – Singing a distribution agreement
The purpose of a good distribution agreement is setting the right expectations between you and your sales partner. In addition to including various legal aspects, it should include a detailed description of the business relationship between both sides. Here are selected topics that are usually covered in a distribution agreement:
The products the sales partner sells
Territory the sales partner covers
Exclusive/none-exclusive terms
Partner business model
Price list of: products, spare parts, training, warranty
None-compete terms
Marketing and lead generation plan responsibilities
Yearly sales targets
Trademarks use guidelines
Confidentiality terms
Effective period and termination terms
It’s highly recommended to set such an agreement with the help of a legal advisor that is familiar with all aspects of doing business outside your country. Once you have agreed on the terms and conditions, it’s time to sign and kick off the business!
Challenge #2 – Setting a yearly business plan
A business plan can be an appendix of the distribution agreement and should be formulated and discussed each business year. Setting a good plan will help you and your channel prepare in advance to the coming year, understanding each other needs and preparing the right resources accordingly. A good business plan should be composed of the basic following four elements:
Point of contacts – agree on the point of contacts from both sides for ongoing communication in the following topics: marketing, sales, technical support, finance and logistics.
Demo unit/software demo license – when the sales partner will purchase a demo unit and in which price/terms.
Marketing & lead generation plan – what are the responsibilities of each side in promoting the brand and products, required resources, online lead generation activities, and participating in trade shows.
Sales goals – what are the yearly sales goals, split into quarters.
Technical & sales training - to ensure your sales partner is equipped with the right knowledge and tools, you need to certify his technical team in installing and repairing your printers, support your software, and train their sales people in the right way to sell your products: know which industries they should approach, what the possible applications are, offer competitive analysis, and give support in strategic deals.
Challenge #3 – On-Going channel management
Now comes one of the most important tasks: working together with your sales partner to ensure it has all he needs to generate good business in the short and long term. Here are the key points you need to pay attention to:
What type of reseller he is – independent with vast experience in promoting and selling hardware equipment, specifically 3D printers, or from a background of selling software solutions, with minimum experience in selling 3d-printing solutions?
How many products does your partner sell and how you can you ensure he will keep the focus on yours?
Does he fully understand the value your product offers compared to the competition, and does he have enough knowledge to approach prospects?
Did you set weekly/monthly follow up calls to make sure the right pipeline of potential customers is generated, and does he need your help? How much is he engaged?
At the end of the day, a good relationship and communication between a vendor and his sales partner is the best way to drive business. Lack of interaction between both sides is a guaranty for low performance.
Challenge #4 - Cultural differences
It’s important to understand that cultural differences can be a critical factor for any company looking to conduct business globally. Business codes vary from one country to another and from one culture to another. Failing to address them properly leads to misunderstanding and miscommunications and results in damaging the trust on both sides.
The first step is to be aware of these differences and to find a way to bridge these gaps by learning how to avoid common mistakes. This can be achieved by searching for the right information online or even conducting a short training course for your team, especially for the ones that communicate often with business partners outside your organization.
Good luck!
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