Commercial department and distributors: it's all about communication and coordination
6 years ago, John (*) started a small company, providing a clever and affordable tracking solution for the solar industry. His product clearly responded to a specific need and soon demands were coming in from Europe, North-Africa, the USA and Asia. In order to tackle orders outside home market, he built a distribution network. Soon the sales through the different distributors represented more than 70% of the company's turnover. Business was booming and the company expanded rapidly, investments were made in buildings and production tools and new employees were hired
Then 2 years ago, for no clear reason orders started to slow down gradually, especially in some markets while in other markets orders were still increasing. And a little more than year ago, there was a global decrease in orders and as one bad news never comes alone, one of his major distributors decided to end the collaboration. John approached us to analyze the situation and to help him work out a strategy that would avoid having to downsize the company.
First of all we analyzed the company's current sales, marketing, business development and customer service activities as well as its distribution network, a traditional structure offering advantages but also a number of severe flaws:
Due to the rapid growth the sales, marketing, business development and customer service departments were in constant change and evolution. They were coping with the growing demand, without putting in place clear and well defined processes. The company did not have one central CRM but different databases operating in parallel. All of them were incomplete and inaccurate, using different parameters and non-coherent reference values. Even put together, these databases were certainly not fit to provide reports and strategic information.
In order to cope with increasing demand for the product, John decided his sales team would focus on the historic markets in Northern Europe and the UK. For the other regions John signed distribution agreements on a reseller basis: distributors order and stock products and then resell them to their clients. Clients that were totally unknown to the company.
The lack of clear and well defined processes also resulted in poor communication within the company and between the company and its distribution network. Distributors were not providing feedback on local competition, did not escalate client requests or complaints. Distributors were often selling only the tracking solution but not selling the associated services and other products offered by John's company. The company was not updating and coaching its distribution network on product updates, possible upgrades and new products.
Once the illness was diagnosed, we transitioned into the second phase and worked out a global action plan to restructure all the commercial departments in the company as well as the distribution network and give the company the tools to avoid similar situations in the future. To achieve durable results, deep changes were needed in the organizational structure of John's company:
Sales, marketing and business development policies and strategies as well as customer service were carefully reviewed, streamlined and realigned to create a coherent unit.
A centralized CRM system together with clear processes and objective metric standards was introduced in the company but also to the distributors.
We also developed the recruitment and management strategy of the existing and future resellers and agents. This involved the revision of the contract and putting in place strong and workable targets and revenue models, defining marketing support and expectations - on both sides and the commitment for training and upgrades. As part of this process, we also helped in identifying the right sort of partners in the right regions, based on market demand and local logistics.
Our team was appointed to manage the distribution network and coordinate proper reporting between the company and the distributors.
We also introduced a new communication policy with and across the distributor network and within the company.
Marketing materials were adapted.
New products are being developed in response to client feedback.
This new organization has now been operational for a little more than 6 months. After 2 months we started to see the first positive results of this new organization and sales have been growing for 4 consecutive months now. It will take another 18 to 24 months before the full benefits of this new structure can be taken in.
Would you like to know more about our intervention?
Do you have issues with your distribution network?
Is your commercial department due for a complete due diligence?
(*) the name has been changed because we keep client plans and interventions confidential and we like to keep our work highly discreet. Leaking information, no matter how small, can cost fortunes in missed opportunities.