Most component suppliers use distributors as the first point of contact for customers. Initially, lead time, sales, and technical queries will go to the distributor, which then gets in touch with the supplier. This works for the supplier, because the distributor acts as a “filter,” blocking trivial queries and freeing up valuable engineering time. The distributor can also respond to many questions without the supplier's help, because they've been asked before. A supplier gets involved only when necessary.
All this makes perfect sense from an efficiency point of view. However, this system causes headaches and frustration for the customer when the distributor is unwilling or unable to do its job. More importantly, the supplier may not even learn about the customer's frustration, and its business could take a hit due to problems in the channel.
Last week, a colleague named John told me about his unpleasant experience with a well-known distributor. We won't be using actual names. We'd like to use this situation as a lesson in how things can work better.
John’s client is a big European company that subcontracted the feasibility phase of a project. This phase will last roughly five months. If the client is happy with the results, the product development phase will commence. The product volumes can be 100K-plus a year, so this project is quite important to John and his employer.
Recently, John was investigating suitable chip sets for the feasibility phase of the project. He decided on a set from a company we'll call X-Tech. John emailed one of X-Tech's distributors, X-Sale. The X-Sale rep asked John about the details of his project and the volumes. John provided all the information he was able to give without breaching his NDA with the European client. X-Sale was happy with John’s response and said it would provide him answers to his technical questions, as well as access to restricted technical areas of its Website (after he signed an NDA).
After four days and several reminders, John had received no response. Since he was facing a deadline, he contacted another distributor, X-Buy. The X-Buy rep was helpful enough to chase down the status of John's NDA and sort out the logon issues in less than an hour. X-Buy also provided the email address of X-Tech’s technical support team, so John could get answers to all his critical technical questions. He forwarded his questions to X-Tech directly and got a prompt response. X-Sale was also copied on X-Tech’s email. X-Buy was not.
John decided to purchase some X-Tech development kits and tried to contact X-Sale regarding price and availability. After two days, John followed up with a phone call. The X-Sale rep was out of the office, but another rep passed on the message. Several more days passed, and X-Sale still did not respond.
John was left with no option but to get back in touch with X-Tech directly. He sent X-Tech a complaint regarding X-Sale’s incompetence as a distributor and how it was delaying his project. The following day, X-Tech responded by expressing its regret and saying that from then on, the alternative distributor X-Buy would be John’s point of contact.
Within an hour of X-Tech’s email, X-Sale responded and asked John to forward any remaining questions he had. John never did. He bought the development kits from X-Buy and still deals with it.
As this case shows, distributors are a critical link for customers. They can make or break a project, and they can cost the customer time and money if their service is substandard. Does a distributor’s size and reputation give it the right to ignore small customers?
In some countries, a supplier has only one distributor, and the customer is utterly at that distributor’s mercy. I know companies that avoid using a supplier’s products because of difficulties with a distributor. My personal experiences, as well as those of others, indicate that the arrogance of a distributor is directly proportional to its size. Do you feel the same? More importantly, are suppliers aware of the grief their distributors cause? Or do they simply care about the annual sales volume a particular distributor achieves?
Using a distributor as a customer filter may be efficient in terms of operations and profitability. However, the same filter prevents suppliers from noticing how badly a distributor is mismanaging its business.