How to Sell to Distributors: Best Practices for Manufacturers

Distributors act as the go-between for manufacturers or suppliers and downstream entities, like homebuilders, designers and professional remodelers in the building materials industry.

While you can sell directly to retailers, construction companies and even consumers, distributors have a valuable role to play in the industry. Plus, because they tend to purchase in large volumes, signing on a few distributors can create greater stability for your company.

If you’re new to selling to distributors or trying to come up with a more effective strategy, here are some actionable tips and insights to help you tap into this integral part of the supply chain.

There’s an age-old rule in sales: If you try to reach everyone, you’ll resonate with no one. Now more than ever, customers want to feel like your product is the perfect match for their needs, and speaking directly to their needs and challenges is the only way to prove that it is.

When laying the foundation for your sales strategy, you need to spend a great deal of time in the discovery phase where you’re defining exactly who your ideal customer is and what their pain points are. By doing so, you’ll be able to reach more qualified leads more easily, with a lower acquisition cost and higher conversion rate.

Part of identifying your ideal customer starts with understanding the many different types of distributors who could buy from your company like:

• Wholesale Distributors

• One-Step Distributors

• Two-Step Distributors

• Specialty Distributors

• Buying Groups

The discovery phase may involve combing through your current lead list, surveying existing customers and conducting some general market research in the form of questionnaires and consuming industry reports. It can take some weeks to nail down exactly who your ideal distributor is, but it’s an effort that will pay off.

As you go about this discovery process, remember to ask:

• What are the key factors these distributors consider when deciding to work with a new manufacturer or supplier?
• What are the challenges they face in making a sound decision?
• How do they prefer to consume information about their options?
• How soon in the process do they like to speak on the phone or in person with a sales representative?

In addition to understanding your potential customers in this way, you should also use this opportunity to collect intel on your competitors. When selling to your target distributor, try to identify the common challenges that your business and others face and what you can do to overcome them.

With this foundation in place, you’ll be well-prepared to move on to the next step where you delve deeper into who your competitors are, who they’re targeting and how they’re effectively reaching and selling to those customers.

A competitive analysis is a strategic way to see how your company stacks up next to similar manufacturers. Given the higher cost of acquisition and longer sales cycle associated with manufacturing particularly in the building materials industry, any time you invest in a competitive analysis will more than pay for itself down the road when it comes time to actually target and convert leads.

As part of a competitive analysis, you will:

• Understand where your competitors are positioned in the market, giving you the information you need to differentiate your company and products.

• Consider the strategies and tactics your competitors are using to target a given type of customer, helping you narrow in on the most effective methods.

• Helping you build on the offers and content your competitors are providing in the industry, allowing you to stand out with content that goes one step further than the rest.

When conducting a competitive analysis, one important step that some companies tend to speed through is taking the time to select the right competitors. Not only do these competitors need to have similar offerings to your own, but you need to ensure they are of a similar size in terms of revenue in order for the analysis to be useful.

The actual analysis process can become quite complicated, especially if you don’t have an in-house team with an abundance of time and tools on their hands. Because a detailed and accurate competitive analysis can prove so valuable, it’s worth comparing what it would take to conduct it on your own next to the cost of hiring a team of experts.

If you’re interested in learning more about the competitive analysis process and how Venveo can help you execute an effective analysis, get in touch with our team.

When crafting a sales strategy for your company, the primary objective is to set metrics and milestones that are aligned with your company’s bigger goals. Of course, you cannot focus solely inward. To create an effective sales strategy, you need to make sure you address the needs of distributors as well.

Recommended read: How To Increase Sales With Distributors: 15 Tips

Some ways manufacturers can hone in on their target distributors include:

• Marketing exclusive products

• Providing exceptional support

• Promoting flexible payment plans

• Offering training and support

• Incorporating marketing services

When it comes to where and how to find leads, you’ll likely test a variety of methods both online and offline. For instance, leveraging industry events, trade shows and conferences can help you expand your distribution network while keeping costs down.

With costs in mind, a solid pricing strategy is also a key component in any sales strategy, as you need to ensure your business remains competitive and profitable with any tactic you use.

Mark Woolley, president and CEO of construction education firm Buildtec Solutions, conducted a survey to determine what builders and suppliers value the most in contracts. Relationship was most important to both, followed closely by communication.

In order to foster relationships with distributors, remember:

• Price increases, schedule changes and availability/deliverability issues should be communicated as far in advance as possible, even if it means you warn them about a potentially negative event that doesn’t happen. This builds trust and transparency.

• You should get to know your distributors and their use cases for your products. When there is an opportunity to lower their costs or improve outcomes by suggesting an alternative option, you should jump on the opportunity to communicate that with them.

• When distributors come to you with a request or problem, you should make it clear that it is a high priority for your team. Keep them in the loop as you decide on the next steps and give them options when it comes to resolving the issue or fulfilling their needs.

Communication and honesty are integral to making sure that your distributors feel they can rely on you as a manufacturer or supplier. While it takes legwork to reply often and strike up conversations, it is a fundamental activity that will pay off when it comes time to renew contracts. Plus, an exceptional experience can lead to more referrals.

Digital marketing goes beyond having a website or even being active on social media. To effectively utilize digital marketing to grow your business, you need to invest in high-value thought leadership content that builds authority, cultivates trust and generates leads.

Whether or not your company has an online presence, some of the ways you can increase the ROI of your digital marketing efforts include:

• Conduct a whole site audit that checks your content performance and site health, showing recommendations to improve page speed, fix broken links and address accessibility problems.

• Planning a content calendar that incorporates high-value keywords and allows you to address the key pain points and questions your ideal customer has about your products.

• Repurposing and sharing content across the web to increase your ROI. This includes getting on social media and creating actionable and engaging content, like infographics and industry reports.

Utilizing email marketing to engage, nurture and convert leads and keep active customers in the loop on what’s happening in the industry and with your business.

As you invest more time and money into digital marketing, make sure that you have established a handful of metrics along with the data analytics tools necessary to track them. Without those numbers, even an experienced marketer can easily become misguided and lose sight of what they should be focusing on.

Becoming a partner to your customers is an excellent way to distinguish your business from the competition and cultivate long-lasting relationships. In particular, providing marketing support for your distributors and, in turn, justify higher rates for your own services.

Some of the ways that you can provide marketing support include:

• Listing distributors as authorized providers of your products and referring potential customers to them.

• Providing marketing materials to your distributors, including product catalogs, brochures and sample products.

• advertising programs to help your distributors promote products and generate more Offering co-op advertising programs sales.

• Creating targeted marketing campaigns to reach specific customer segments that align with who your distributors want to work with.

These techniques can benefit both you and your distributors, creating a win-win situation where distributors are able to grow their own businesses as you strengthen the partnership, solidify your company’s value and even unlock higher purchase orders.

As you go about selling to distributors, there are some common challenges that you may face along the way — starting with the sheer amount of competition you face. As such, it’s important that you utilize the customer and competitive research you conduct to craft a unique selling proposition (UPS) to distinguish your business.

Once you know how your business is differentiated from the competition you’re facing, it will be far easier to create effective advertising and sales strategies that leave distributors with a clear idea of why they should work with you over anyone else.

You should also be aware of the logistical and financial challenges you may face, which can often be overcome with strong communication and negotiation skills. For instance, offering flexible payment options can help you sign on a wide range of distributors, but you’ll need to understand your target customer’s size and buying power during the early discovery stages so that you can sell accordingly.

Contracts are never cut-and-dry in the building materials industry. Typically, there’s a great deal of negotiation over pricing, terms and incentives, especially with the recent price hikes across the building materials industry.

As you go about securing distribution partnerships, getting comfortable with negotiation — and growing more effective at coming to favorable compromises — is critical to your success.

Some of the pitfalls to avoid when negotiating agreements include:

• Focusing too much on your own needs or making too many concessions. Coming to a mutually beneficial agreement is paramount to a successful and long-term partnership. Both manufacturers and distributors should walk away from a deal with the sense that they are better off as companies for doing business together.

• Falling for aggressive negotiation tactics. Some distributors will come to you with numbers promised to them by another manufacturer or supplier and try to get you to beat them, but this can be a red flag. Know your numbers before entering a negotiation to make sure you don’t underprice your rates, especially with inflation on the rise.

Failing to set precedence for rate increases. Distributors want to know that a given price is locked in for as long as possible, but failing to consider upcoming increases to your own overhead can leave you in a poor position. By setting precedence up front that rates will increase at a certain cadence like once a year, you can build trust and transparency into the relationship while preparing new customers for future prices.

Finding success truly comes down to targeting the right distributors from the get-go, but that’s often easier said than done.

The sheer amount of foundational research that you need to invest into the sales process to ensure a good ROI can overwhelm even large manufacturers and deter them from tapping into this vital part of the supply chain. However, if you do the legwork and design a solid strategy, it will certainly pay off.

For manufacturers looking to expand their reach amongst distributors, it might be time to turn to a team that can help you get pointed in the right direction. If you want to learn more about the process, get in touch with Venveo and explore some of the strategies you can use to move forward.