I was talking with an old friend of 25 years earlier this week. We first sold computers back in the 80’s, even before IBM invented the “Personal Computer.” Over lunch at Maggiano’s we recounted old sales stories about hunting and farming for business. My friend told a story about how manufacturers who sell to channel partners (dealers, resellers, retailers) don’t think the channel actually “creates demand” for the product. Management, he said, often sees the channel as a place to “park inventory” to get it off the manufacturer’s shelves before the end of the quarter. One company he described had a creative program they called a “risk ship” that did exactly that.
Here’s how it worked. A sales rep would say, “I’m 90 percent confident my customer will buy next quarter, but they’re just not ready now.” Management would reply, “OK, let’s risk ship to them at the end of this quarter. We’ll consign it to your customer and have the carrier (Van Lines, Freightways, etc.) store it in their warehouse until the customer is ready. Then we’ll release it from the warehouse when they’re ready. All you need to do is get the PO so we can ship.”
So the sales rep got on his knees and somehow managed to get the PO. The product was consigned to the customer and shipped to the carrier’s warehouse. The manufacturer realized revenue this quarter instead of next based on the PO and the fact that the product was no longer “in the house.” There was a lot of
due diligence that went into the decision to risk ship, and woe unto the sales rep whose deal fell through! When that happened the product had to be brought back and the transaction reversed.
Yet my friend and I both beg to differ with the thought that channel partners can’t create demand. Over the years we’ve both worked with channel partners who do an outstanding job of getting behind a product and making things happen. In fact, each channel partner sales rep in a B2B environment can bring scores of
new customers that a manufacturer’s sales rep would never be able to penetrate and cultivate.
Creating demand does not mean sell-in to a channel partner. It means sell-through to the end-user customer. If a manufacturer wants to take advantage of the relationships partners can bring in various niche markets, it needs to reward the demand creation work being done. There are many ways to do this – MDF
funds, special recognition, extra discounts for building sales volume in a defined niche, contests, etc.
If you’re a manufacturer sales rep, you can personally begin recognizing the work your channel partners are doing for you. Take a small, easy step and recognize your partners by sending an Ink-a-Note to thank them for the sales they’re generating for you. Start your own person campaign to say “Thank You.” Being appreciated goes a long way.