Working with high performing distributors is critical for exporters, particularly right at the moment when the ability to travel is reduced and the conditions do not make it easy to recruit a local sales team.
In the last 18 months, European distributors in the B2B space have taken a hit. In this article, I will first describe some of the challenges they have faced. However, some smart distributors have managed to keep thriving with difficult market conditions. This is why I will share with you the key attributes to look for in a European distribution partner in order to succeed in Europe.
European distributors have faced many challenges. First of all, some of them have struggled to get access to products, for the one sourcing most of their products from Asia. During my daily conversations with distributor sales representatives, some of them were completely disillusioned with their jobs and quote “were sick of promising products that could not be delivered to the clients’. EU manufacturing industries have indeed been impacted by short-term supply shortages and have recovered quickly during the third quarter of 2020.However, this is still fragile due to some uncertainties such as the efficacy of the vaccines and further mutation of the virus. The most affected industries include the automotive industries and aerospace, whereas the digital space and the healthcare industries were rather positively impacted.
Other challenges included the impact of long and multiple lockdowns on mental health. Particularly in very traditional industries where the reps are loving to drive to their customers and that’s what they do all week long. I am surprised to observe the current European ambience during this summer. It sounds like a “we’re fine, we are over this. Let’s all party together in Ibiza”. In the background, I get from my daily conversations with worried hospital workers across Europe quite a different vibe, as they are already starting to gear up for the next round. After this side-track comment, I can foresee that this issue of maintaining happy and mentally healthy reps will stay a key issue for distributors in Europe in the medium term. If they don’t operate a shift away from their traditional ways of working they will continue to struggle keeping their team motivated.
Based on these challenges, here are the key attributes of successful distributors and channel partners in Europe. Here is my take on which attributes to look for when selecting the best European distribution partners. They must:
1- Serve multiple industry sectors and be across several regions or national. In sectors that have received a positive impact, such as such as healthcare and pharma, distributors have moved from a ‘just-in-time business models to “just-in-case’ as underlined by the European Healthcare Distribution Association in their annual report. The association also mentions that they now are seen as an investment rather than a cost.
They have generally done well and even though they have had to grapple with the mitigation of shortages. Overall, if they are supplying healthcare essentials, they would have benefited from a positive or neutral impact from COVID.
If healthcare is not your sector, you need to watch out for distributors who are fragile. As seen earlier, some industries such as transport and automotive have been heavily affected. In countries, such as Germany, Italy or Poland, this has had a huge impact on an entire ecosystem of businesses supplying this mega industry. As I recently discussed with distributors in Poland and Germany, both CEOs made the exact same comment: they had not so much been affected by COVID-19, because they had national coverage. Therefore, they were not heavily reliant on one specific region or industry. As a result, they did relatively well.
2- Create ‘stickiness’ by providing high-value added services. When things get tougher, companies are more selective with their suppliers. European distributors that are able to create some ‘stickiness’ with their customers by offering value-added services do better. Strict box movers are much easier to get rid off. An example of this is to offer leasing and financing. If you need to purchase a piece of equipment or a device, and you lease it from your distributors, you are much more likely to stay with them over the long term. You have to stay with them for the length of the contract. During that time, there is plenty of opportunity for distributors to upsell. Another example is for a distributor to provide additional services such as maintenance services, extra warranties or any type of technical support with the support. ‘Stickiness’ can also be achieved if your distributors also provide any direct access to online portals to place orders, online catalogues and ordering capabilities or any connection to the ERP of their customer.
3- Have a sustainability programme. In Europe, there are clear compliance requirements on the topic of sustainability. European multinationals and government bodies request their suppliers, in other words, your distributors, to have a clear sustainability policy. It is clearly specified on tender documents. It means two things for you as an exporter to the European market: 1) Your distributor in Europe needs to comply and must have an actual policy in place 2) Your distributor in Europe, as a result will turn back to you and also ask you for your sustainability policy. In addition, it is interesting to note that demand for sustainable products has increased. Europeans are concerned about climate change and demand greener products, so do corporations and governments.
4- Have moved to hybrid selling. The distributors that still don’t know how to engage with their customers both online and face to face will struggle. In Europe, many multinational companies and government institutions are not authorising visits on site to sales representatives. There is still a risk of lockdowns in the coming months. If distributors have been unable to continue selling during the lockdown, that is an issue for you as a manufacturer. If you are in the digital solution provider, this won’t be an issue, Most of the software industry would have had no problem adapting, as doing business online is already part of their business model. Channel partners in the IT space have had relatively little disruption in pandemic times. Distributors embracing the new way of selling via digital congresses, online engagement and via webinars are more successful.
Here are some of the four attributes that I feel are quite important to recruit the best European distributors and succeed with them. If you would like to know more about our process to recruit and secure European distribution for your product or solution, contact me to book a time to discuss.