Practical Tips for Supplier-Distributor Success
As the industry enters Annual Business Planning (ABP) season, the often tedious task of aligning supplier expectations with distributor realities is upon us. On the latest episode of Tapped In Sales, Bud and Mikey dive into how to approach these meetings with a fresh perspective—focusing on aligning goals that lead to mutual success rather than inevitable frustration.
1. The Disconnect Between Suppliers and Distributors
Bud and Mikey kick off the discussion by addressing one of the key challenges in ABP meetings—supplier expectations versus distributor realities. Suppliers often come with sky-high sales targets and distribution goals that are not always grounded in local market realities. As Bud put it, “Suppliers don’t know each individual market as well as we do.” This leads to frustration when unrealistic goals are imposed on distributors.
Tip: Establish Local Market Realities Early
- Before sitting down for ABP meetings, take the time to gather your own sales data and market insights. Use this data to show what’s possible, and push back if the supplier’s goals are unrealistic for your market.
2. Sales Targets vs. Distribution Targets: Where to Focus
The podcast explores how suppliers often focus on broad, national goals that don’t necessarily align with the specific needs of a distributor’s local market. Bud emphasizes that rather than pushing for widespread distribution, it’s more effective to focus on high-velocity, high-productivity points of distribution (PODs).
Tip: Focus on High-Productivity PODs
- When suppliers present aggressive distribution goals, it’s critical to focus on the quality of placements. Concentrate efforts on the accounts that are already performing well, and challenge suppliers to support these accounts with the right products and resources.
3. Incentive Planning: Be Smart About Supplier Dollars
Bud’s advice to suppliers? Come to the table with a clear incentive budget and be open to collaborating with the distributor on the best way to allocate these funds. Simply throwing money at a massive incentive program without understanding the realities of the market is inefficient.
Tip: Collaborate on Targeted Incentives
- Instead of blanket incentives, focus on a few high-impact goals that align with both supplier and distributor priorities. Bud’s suggestion to use a portion of incentive dollars to offset potential FPL (finished product loss) costs is an example of practical planning that benefits both sides.
4. The Risk of Overcomplicating Incentives
Both Bud and Mikey discuss how easy it is to overwhelm a sales team with too many incentives and objectives. A complicated incentive plan with multiple goals can leave sales reps disengaged and confused.
Tip: Keep Incentive Plans Simple and Manageable
- Limit the number of incentives to three to five key objectives. This ensures that sales reps can focus on what’s important and that the incentives actually drive behavior that moves the needle.
5. A Focus on Gross Profit, Not Just Volume
Bud stresses the importance of focusing on profitability, not just volume, when setting goals. He shares his experience of shifting from a volume-centric strategy to a gross-profit-per-case (GP/CE) approach, which led to more sustainable growth.
Tip: Use GP/CE as a Benchmark for Success
- Rather than just focusing on volume, make gross profit per case a central metric in your ABP planning. This ensures that you’re not just moving more cases but doing so in a way that boosts profitability.
Conclusion: Align for Success, Not Conflict
ABP meetings should be an opportunity to align supplier and distributor strategies, but too often, they become confrontational. Bud and Mikey remind us that 95% of the time, both parties are aligned, but it’s the 5% of disagreements that often cause tension. By focusing on realistic goals, high-productivity placements, and targeted incentives, both suppliers and distributors can work together to drive meaningful growth.
Ready to Dive Deeper?
For a more in-depth discussion on how to rethink your ABP meetings and set your team up for success, check out the full episode of Tapped In Sales with Bud and Mikey. You’ll hear real-world examples, expert tips, and practical strategies for aligning supplier and distributor goals.