Understanding how to work with local distributors imperative for vendors

For vendors looking to move into new market or territories, understanding how local distributors work can help them make better plans to their channel program.

According to the Global Technology Distribution Council’s (GTDC) latest research report, vendors need to have a well-designed channel program to accelerate the path to success for their partners. This is imperative as the partner ecosystem, although connected, can vary a lot, depending on which part of the world they are operating in.

For vendors, understanding the local partner ecosystem and catering to their needs is the pathway to success. A one-size-fits-all channel program will not work in some regions, given the capabilities and requirements of the partner ecosystem there.

In Asia, the partner ecosystem is probably one of the most diversified ecosystems in the world. Partners, be it distributors or resellers, in Asia have their unique strengths and capabilities to serve customers in the different markets in Asia. Local tier two partners in particular have unique demands and relationships. While they can bring in the sales desired by vendors, providing them with a platform that suits their capabilities is key.

For Ananth Lazarus, Managing Director of GTDC for APJ, vendors need to understand the diversity of the Asian geography as well as the complexity of the markets whenever they decide to get into the region.

Lazarus mentioned that oftentimes, a lot of vendors come and say they want to get into Asia. But then, when they are asked where in Asia or have they thought about the ideal customer profile at a worldwide level and where would they see the fit, they may not have the answers.

“Now, a lot of questions could be added by distributors. Distributors can give you those insights. But you need to have clarity when you are getting into this market. Oftentimes, I see that lacking, unfortunately. It’s not in all cases, but there is a lot of enthusiasm because someone has told them to come into Asia. But oftentimes, there is a lack of planning,” said Lazarus.

“Would you sell without a sales strategy? Will you do marketing without a marketing plan? Or even when you build your product, would you do it without a product roadmap? If that's the case, why would you rush into partnerships without a clear strategy and plan? It's fundamental. It's essential,” he added.

Understanding the ecosystem

For Lazarus, vendors need to understand the local ecosystem before making any plans. This includes researching the players needed and finding out how some customers are engaging with competitors.

When it comes to the channel, vendors need to have the input on how they can complement the existing solutions as well as how can they add value to their services play, and that’s how they must select partners.

“Oftentimes, it's done with distributor. Distributors need to be told who the customer is, what kind of customers the vendor wants. Thereby, select the right channels and fill those gaps. That's super critical. And when it comes to distributors, they will say they want help. It's a process of education. I often say, if a partnership doesn't work, cut the ties and move on. There's no point in keeping it going. And sometimes, it's a match of strategy. It's a match of synergies. It's a match of thinking and partnering. When a vendor works with a distributor, while distributors will do a lot of the enablement, the vendor services help such as teaching them how to do that. Vendors need to not just sign the document and walk away back to the US or Europe, but they need to partner with them locally to enable them to enable others. They need to be there to answer technical questions and hand-hold a distributor maybe for six to nine months,” explained Lazarus.

He also pointed out that vendors need to think of the ideal customer profile and select the right distributor for that market.

“Sometimes, a specialized distributor may be the option. Sometimes, a broad-based distributor may be the option. Then, how does a vendor work with them before signing up? What's the onboarding plan? How do we on-ramp the distributor in the right way? All this is key,” he added.

A well-planned channel program

Going back to GTDC’s report, vendors need to be fully committed and provide the necessary resources to help promote, sell and support products, services and programs effectively in the channel ecosystem.

As such, Lazarus believes that this includes understanding what is their strength and knowing the opportunity amongst distributors in a new market. If a vendor product or solution needs specialization, how will it be sold and how will they educate their partners.

“If a distributor has a marketplace, should the vendor be leveraging their marketplace, or should they go with a distributor who doesn't have a marketplace, for example? They should also know who are the competitors the distributor is dealing with? Don't get me wrong but going to a distributor with a competitor may be a good thing as they've already operated in the market. From there, the vendor can work on what programs to build with that distributor to further the business,” said Lazarus.

Also, when moving to a new region or territory, vendors need to either build a strategy and work with that strategy or just go away. This includes having the right partner program that can support partners as well in this journey.

“That should be the way. They need to invest. One of the biggest challenges and frustrations for distributors is they try very hard to help. But if there's no alignment, it’s not going to work,” said Lazarus.

Leadership commitment is also important. For example, if they vendor is going to have a one-person distribution army and that's the only channel and they have 26 direct salespeople, fighting with the distributors and resellers for business, it's got to be clear cut.

Not only should they understand what the addressable market for the channel is but also what is the addressable market for direct sales. Vendors also need to know what kind of resources they are putting behind the channel as these are the things that matter.