Author: Niraj Pattarkine
Key factors to look for in a Channel Partner (Part 11)
In the previous article we have covered the “Personal Profile” of the Distributor, which is the softer part of the assessment while appointing a new Channel Partner. Now, let’s discuss the “Business Profile” part, which would vary greatly based on product, industry, market strategy etc., however, generic factors are covered below.
Business Profile
Motivation
Though the obvious motivation may seem to be to grow business, enter new lines of business etc., it may not always be the case. One should, therefore, be vigilant from the company’s side and check if the real intentions are different. The intentions may be favourable or unfavourable to the Company’s interest and should be carefully assessed while making the decision.
Related business
When looking at related product lines, it’s not only important to gauge if the products are from similar Trade, but also whether the existing products of the Dealer complement, compete with or are neutral to your company’s product lines. The Dealer accordingly may be from the same Trade or different Trade -viz either a Trade Dealer or a non-Trade Dealer. The efforts required to understand and perform in a relatively new product line may be considerably more and should be kept in mind while making the decision.
End user Profile
Some of the questions to ask here are – is the end user catered by the Distributor is in line with your Target customer segment? Is there a set of fixed customers with repetitive business, one time customers or a mix of both of them. Is there too much dependence on a few customers?
Mode of Trading
The Dealer may focus on one or more of the following activities while conducting business:
• Distribution or Wholesale
• Retail – withor without showroom
• Institutional business
While all the above serve different purpose, which type of Dealer profile is suitable would depend on the company requirement, type of product, alignment with marketing objectives etc.
Investment capacity
There is no denying the fact that businesses need investment and so is the case for Distribution. The company needs to assess if the Dealer has sufficient funds to run existing products, invest in new products, expand the business etc. The Dealer may be offering some credit in the market, which is market outstanding and the collection may not be regular. Irrespective of the Dealer’s holding, market outstanding and company’s commercial terms, it is important that the Dealer should be able to arrange funds for procuring the company’s products on a regular basis and also source additional funds when there isa spurt in demand or a new product.
Business network strength
There are majorly two factors to be considered here – numerical strength & quality strength. Further, the company needs to assess the geographical spread of the Dealer network. One more factor that needs to be considered is the future growth/ expansion plan of the Dealer and whether they align with the objectives of the company’s objectives
Share of your business in the Dealer’s total turnover/ profits
This is the last factor, but not the least. Higher the share of your business in his overall turnover/ profits, more would be the dependence of the dealer in your business. Accordingly, his interest & efforts would also be proportionately higher. Also, if your company’s product offers higher ROI, then the interest of the Dealer in your product would be higher.
(To be continued …. )
