By Bridget McCrea
A three-part series that examines the key stages of the distributor-supplier relationship and how to create alliances that endure the test of time.
They say all good things must come to an end, and unfortunately even the most promising business alliances can wind up souring and leaving everyone wondering “what happened?” Whether expectations were misaligned from the outset, or brought down by poor communication, an uneven commitment (i.e., one was more “into it” than the other), or an unequal contribution between partners, the bottom line is that the alliance didn’t work out and now it needs to end.
“In a strategic relationship, a distributor doesn’t just push product; it also provides feedback: customer feedback and insights, possible product improvements, and new products to meet demand identified in the market,” writes Johnny Marx in “The Manufacturer-Distributor Relationship.”
“In a strategic relationship, broader long-term goals are being met,” Marx continues. “Maybe the manufacturer-distributor relationship allows the manufacturer to introduce product into new markets. Maybe the distributor is able to expand into carrying new types of offerings. In either case, there is a benefit to one or both parties that extends beyond simply selling more product.”
This may all sound great on paper, but we all know that good intentions and even the best-laid plans don’t always work out as intended. So what happens when the original parameters of the alliance aren’t met and both parties decide to go their own way? Or when one partner is disenchanted and tired of “pulling all of the weight” in a partnership that hasn’t met expectations? Making a clean break is important in any situation, of course, but it’s particularly important in the “small world” of electrical sales, where the odds that you’ll run into and/or work with that supplier again at some point are probably pretty high. Put simply, you probably don’t want to leave a pile of smoldering embers in your wake when you burn that bridge and move along to the next opportunity.
Instead, aim for an amicable breakup rooted in the understanding—by both parties—that the intended alliance simply didn’t live up to expectations. To make sure you’re doing the right thing in breaking up, Dirk Beveridge, founder of Chicago-based UnleashWD and author of INNOVATE! How Successful Distributors Lead Change in Disruptive Times, says distributors should first take a step back and look in the mirror.
“Before you start evaluating your supplier’s performance, evaluate yourself; look carefully at whether you’ve truly lived up to your commitments and held true to the spirit of the partnership,” Beveridge advises. And don’t just look at the “law of the partnership” (i.e., the actual signed agreement and partnership details), but truly consider whether your firm and its employees have acted in a way that supports the alliance.
“Before you cast stones or point fingers, take an internal survey,” says Beveridge, who adds that the partnership’s champion (that person who is in charge of the alliance and the details that go along with it) should be the one who conducts that survey. “Ask the executive in charge—the person who structured the partnership in the first place—to lead the conversation, rather than approaching it from the ‘bottom up.'” (In other words, don’t expect the outside sales rep who picked up on the problem to manage the remediation and/or eventual breakup of the alliance.)
During those “internal reviews,” Beveridge tells distributors to explore the root causes of the problems, and not just the symptoms (e.g., lower-than-expected product sales). What are the root causes that are leading to the friction? What’s creating those issues? And, what role did each partner play in creating these roadblocks and sticking points?
“Remember that any partnership is a 2-way street,” says Beveridge, “and that your partner is probably not the only one that’s dropping the ball.”
Nothing is Forever
So, what happens if, even after all of those introspective meetings and root cause analysis activities, the partnership needs to be terminated? Depending on the way the arrangement was structured in the first place, there are probably contractual and legal issues that need to be worked out (you’ll want to talk to a corporate or contract law attorney for advice on how to manage this aspect of the split). Ideally, you’d like to move away from the situation without damaging the reputations of either firm—and without alienating any of your customers.
“Distributors should go into any partnership with the understanding that nothing is forever,” Beveridge points out. “Markets change, customers change, business executives change, and any number of other forces can impact the health of what at one point was a successful alliance.”
Beveridge says one of the best approaches is to simply acknowledge the fact that nothing is forever. If both partners adopt this philosophy, he says, then no one has to be bitter or angry about the breakup. “Appreciate how you’ve contributed to each other’s success up until now,” he says, “and think about how you can continue to set one another up for ongoing success, despite no longer partnering together.”
Distributors should also consider how to carry that terminated relationship forward in an industry where you’re bound to run into one another again in the future. Think about what your company stands for as an organization, Beveridge advises, and think beyond just the product lines that it carries.
“If you have a really strong value proposition that defines what your firm stands for, then that defines what you believe in and your commitment to the customer,” Beveridge says. For example, the electrical distributor whose value proposition is based on “improving profitability for our customers,” should be focused on doing what’s right for the customer and constantly seeking out solutions that make that client work smarter, better, and faster in today’s competitive business environment.
“Any transition—whether its employee turnover or the closing of a branch or the termination of a partnership agreement,” says Beveridge, “should tie back to this overall value proposition.”
McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at email@example.com or visit her website at www.expertghostwriter.net.
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