Who in your company decides what product line to lead with? Does an overcrowded channel (too many competitors with the same brand) ever dictate your product selection? Does knowing that a manufacturer will sell their products to your biggest competitor sway your buying decision?
Channel conflict and channel management seem to be at the forefront of systems integrator minds. On one hand the integrator wants to have top brand names in their product mix. On the other hand if their marketplace is saturated by a specific brand, how can they make money?
Some of our integrator members have noticed a shift away from product loyalty. In fact, many believe the days of exclusivity are pretty much over. Some say that the independent reps in their territory were very good at managing channel conflict, but now the manufactures are avoiding exclusivity. Competitive pressures and lofty sales goals have forced sales reps to open up the line to all.
When I first spotted the trend on how much product is moving through distribution, I too wondered if the days of brand loyalty are over. I’m now more of the mind where the biggest factor that determines brand loyalty is the investment it takes — from both parties — in providing support and specific training requirements. After getting to know more about the way the stocking distributors operate, I see that they have no real desire to go in between you and the manufacturer. Many even want to strengthen that bond.
How do you rationalize loyalty with particular manufacturers? Do you prefer to carry top lines even if non-exclusive? Or, does it even matter as long as the products are a part of a fully-integrated solution? Again, who in your company decides what brand you lead with?
I recently visited a company where the CEO couldn’t answer this question. Upon seeking clarity, he was shocked to find out that spiffs and incentive trips led to many of the decisions (by the way that changed the same day). He was surprised that the relationships he spent years to build were being eroded, not because of poor sales, but because of self-serving substitutions.
In this case, brand loyalty was being created on multiple levels within the same organization. The engineering and sales team building relations with distributors and field sales reps, the owner building relationships based on his longstanding relationships, contacts and knowledge of the local competitive landscape. Sadly the owner didn’t communicate to his team that they had quotas to meet, the payment terms he had from preferred vendors, etc.
Have you ever sat down and wrote a purchasing policy for your company? If so, you will find yourself writing one conflicting statement after the other. “It depends upon the situation” is most often what people tell me. I don’t buy that. It should always depend upon the overall health of the business, reputation management and the satisfaction of your customer. I encourage you to explain your philosophy on brand loyalty to your staff and then monitor the situation on a regular basis. — CW