Advertisement

Blog

Channel Partners Should Help, Not Hinder

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.

8 comments on “Channel Partners Should Help, Not Hinder

  1. Barbara Jorgensen
    March 12, 2012

    Cagri, I was sorry to hear about your friend's experience. I hope it was the exception rather than the rule. Big companies can get arrogant and often ignore the little guys. After 20 years of covering distribution, I'll admit I have a positive bias toward the industry. But one mistake like this can harm what is probably a pretty good company. I hope X-Sales has since improved their customer service.

  2. Daniel
    March 13, 2012

    “As this case shows, distributors are a critical link for customers”

    Cagri, in most of the cases there won't be any interaction between the customers and manufactures. In such cases distributers act as a bridge between these two and in most cases they play well. Since there are some issues reported like this, now a day's some of the companies started their own distribution departments, which interacting directly with the users. So both the manufactures and customers have an one to one interaction.

  3. Cryptoman
    March 13, 2012

    I am sure most distributors do a good job. There are some distributors and sales representatives that are remarkably professional. It is a joy to work with them. This article is about distributors who fail to recognise the importance of all customers – big or small. I can say that are quite a few of them around unfortunately.

    There are cases where the distributor is aware that the customer's hands are tied without its assistance. Such distributors really make life difficult for the customer. They don't respond to emails, technical queries and leave the customer in a limbo in terms of decision making. (This situation gets worse especially when the distributor has a monopoly nationally.) I am not sure whether they do this to control the customer like a puppet by giving the impression that the distributor is king in all this and to remind that the customer is helpless without them or for some other reason.

    I think the manufacturers are to be blamed for tolerating such distributors. They need to show who the boss really is and more importantly that the customers need to be responded to promptly and with courtesy. They need to audit teir distributors using performance metrics other than just annual sales.

    I also think that the manufacturers should be the initial point of contact for all technical queries. This is because before getting to the stage of placing an order, customers always have technical questions on the technology and the nitty gritty detail of how things work. If this information gathering stage is too exhausting for the customer, they start looking elsewhere for alternatives and the manufacturers and the distributors become the losers in the end.

    The size of the distributors cannot justify their arrogance and ignorance. At the end of the day, the distributor achieves the target volumes because the manufacturer offers a good product that the customer is happy to pay for. Therefore, they should always keep this simple fact in mind and treat the customers properly – no matter how big or small they are.

    Successful businesses often start small and they expand and grow if they are nurtured properly. Distributors have not right to hinder this natural flow of business purely because small businesses may not be able to place millions of volumes in one go.

    One useful piece of advice for distributors is “Treat all customers while wearing the shoes of a small distributor who is always hungry for any business, and stay hungry (not greedy) to be successful and to be respected”.

     

  4. Barbara Jorgensen
    March 13, 2012

    Cryptoman: Good stuff. A now-large distributor once told me their litmus test for customer service: Treat your customer as if it were the next Apple.

    Good advice, i think.

  5. bfinnecy
    March 13, 2012

    Dr. Cagri:

    I am sorry that your friend had that experince, but I do not believe that is indicative of channel partners in general.

    I believe that the vast majority of channel partners are responsive and hungry and therefore do not let customer requests wait.

    I also have to disagree with your initial premise that customers call channel partners first.  I believe that with the proliferation of available information via the internet has in many cases allowed customers to go directly to the manufacturer's rep or the manufacturer.

    As a regional distributor we are seeing more and more where a manufacturer will take orders direct.  In fact, we are seeing manufacturers in some cases booking and fufilling orders in the <$1K range.  This is not the norm or everyday occurance, but it is happening and too often when we do get a customer call, the manufacturer has already had an inquiry from the end customer.

  6. bolaji ojo
    March 13, 2012

    The leading distributors would not be caught in this type of situation. These are companies that live by their word and customer service is a big part of their operation. That at least is the experience reported by many of their customers. Also, I believe customers tend to do a lot of their homework way before reaching out to distributors.

    In some cases, though, they put themselves in the distributor's hands and the service they expect here is value-added and would be expected to be exceptional. If the distributor does not deliver on this they lose the contract.

  7. Cryptoman
    March 14, 2012

    Hi bifinnecy (It's Dr Cagri writing btw).

    I do agree that this particular example should not colour all channel partners bad because most of them work responsibly and with courtesy.

    I also agree that in most cases technical data can easily be accessed via web resources and therefore the distributor's involvement is not required. However, the company mentioned here is very protective of every datasheet they have on every product. All the information is actually stored on the restricted area of their website, which can only be accessed after signing an NDA with one of the sales partners.

    Furthermore, when you download any information from the restricted area, they come in pdf format with a watermark on every page that lists the specific customer's name! Therefore, distributing such datasheets freely is not an option as every document is traceable to the original person who performed the very first download.

    The manufacturer 'forces' the customer to go contact the distributor in this particular case. The customer has not option like you have described in your post.

    I am one of those people who believe that the customer needs to have full flexibility in where to get the information from and with whom to do business. In a competitive world there is no room for such commercial restrictions.

     

  8. Cryptoman
    March 14, 2012

    Hi Bolaji,

    For your information, the distributor mentioned in the article is one of the largest ones.

    I was very surprised to find out that such a large distributor would display such incompetence. I also thought that the leading distributors were 'leading' because of their professionalism and great customer care. However, it seems there are exceptions to this rule.

    Regards…

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.