The tortuous logic of “managing” distributors in the age of overwhelm

This isn’t the first time I’ve addressed this issue; most assuredly, it won’t be my last. But keep reading because I’m providing the remedy this time.

A very recent article in Wine-Searcher caught my attention this week. It was called “US Distributor Awash with Wine.”

I have no issue with the article; it was well done.

But I want to rant about why this needs to be explained to people. Why isn’t it more obvious? Why are so many people still in the dark?

It is shocking to think that there are wine and spirits suppliers out there who “missed the memo” that distributors are overwhelmed with the size of their portfolios (a relatively recent phenomenon) and can no longer do what they used to be able to do for their suppliers.

Wine in the center of an elaborate maze

When the horse stops breathing, dismount.

As unfortunate and inconvenient as the new reality is (too many brands and too few distributors), it is still as true as gravity.

All the denial and wishful thinking will not change the fact that the days of “managing” distributors are over. When the horse stops breathing, it’s time to dismount.

• Will more education of the distributor sales reps help? NO!
• Will more “sales tools” help? NO!
• Will more “accountability” help? Please…
• Will more access to the top brass help? Not anymore…
• Will incentive money help? Temporarily yes, but any new distribution gained this way is fleeting.
• Will throwing a temper tantrum help? No, but many still foolishly choose this route and it’s fun to watch.
• Will moving to a NEW distributor help? NO! You’ll have the same problems with the new one.

There’s only ONE thing that will help, and it is this:
If it’s important to you, you’ll have to do it yourself.

There’s a “cure” available, but you won’t like it.

Here are four key things suppliers of all sizes can do to escape this unending nightmare. But fair warning: most will shun them.

1. You need fewer people “managing” distributors and more people doing actual selling. The good news is that the latter people are far less expensive.
2. You must abandon any hope of a wide-and-thin distribution strategy and settle for a narrow-and-deep one instead.
3. You must learn how to generate your own demand.
4. Reduce activities that cannot be scaled and ramp up activities that can.

Let me expand on each of these things because these are NEW for most suppliers.

Don’t pay people to “manage” distributors.

Once you understand and accept that you cannot improve the performance of your distributors, you will see how pointless it is to pay people lots of money to attempt to do so.

Are there still things left to be “managed?” Absolutely! Things like:

1. Managing shipments, inventory, and depletion data
2. Organizing pricing and programming
3. Reconciling monthly billbacks
4. Bird-dogging sample usage

You don’t need as many people for these tasks and surely don’t need to pay them high six figures.

There was a time when a sales leader's relationships with key distributor management folks were a huge and valuable asset. Not so much anymore (another point of denial for most).

The good news here is that for the same amount you’re spending on payroll now, you can “re-distribute” those funds to affect sales positively.

Target fewer accounts but well-chosen ones.

Because so many brands are chasing an ever-shrinking pool of shelf, by-the-glass, and cocktail menu placements, the old wide-and-thin distribution strategy has become a pipe dream.

But that is OK because focusing on the correct accounts can help you consistently and profitably achieve your sales and revenue targets.

This requires research, data, and planning, but fortunately, all of these are available in abundance (if you know where to look).

There are two things you should be pursuing (and I mean YOU, not the distributors), and they are:

1. ) Accounts capable of delivering high-volume
2. ) Personal relationships that ensure the “stickiness” of your best placements.

PRO TIP: Most of your competitors will continue to rely on distributors to do the selling for them, so while they are beating a dead horse, you can giddy up and ride on to glory.

I suggest you grab a free copy of our Revenue Rangers: Guide to Leveraging Large Volume Sales Opportunities.

Learn how to generate your own demand.

If one thing keeps my team and me super busy these days, it’s teaching our clients how to generate their own demand and do it without adding sales headcount. Once you learn, you will need fewer salespeople. (Don’t shoot the messenger).

Rather than take up space here explaining it,  I want to point you to two powerful resources:

• All about lead generation for the trade (webinar recording)
• The life-changing magic of lead magnets

People always ask me if this really works, and I always point out how I used this strategy to build my own business. This lead magnet has brought me 330 fresh new leads in just three weeks).

We live in a marvelous time! Imagine being able to bring trade buyers TO YOU!

It all comes down to messaging and targeting. There are trade buyers in the tens of thousands who never see most new products because the distributors only push things on their quote sheets (driven by the most influential brands in their house).

But this can’t stop you from attracting those same buyers to your offerings! Although there is a steep learning curve, it is so worth it.

Examples of actual lead magnets

Scale, baby, scale!

This last point might be the hardest one to accept. Here it is. Are you ready?

Anything that requires the physical presence of a human being cannot be scaled.

• Face-to-face selling will always be the most effective way to sell.
• Dinners and special events are a powerful, intimate way to showcase your wares.
• “Liquid to lips” does precisely what it promises.

But here’s the problem. In addition to being time-consuming and expensive, none of these things can be scaled.

By contrast, the following items CAN be scaled - infinitely!

• Digital lead generation
• Growing (and leveraging) a trade-only email list
• Providing trade-oriented content on your website
• Social selling

Now, I am not suggesting you eliminate your “non-scalable” sales activities. However, I invite you to recognize their limitations and augment them with scalable sales strategies.

If you want to immerse yourself in this idea, I highly recommend this article, which paints a detailed picture of what this looks like in practice.

The choice is clear: modernize or fossilize.

Stop swimming against the current.

Cease clinging to a bygone era.

Pivot or perish.

Transform or get left behind.

Evolve or become extinct.

A great separation is about to occur in our industry. On one side will be those who stubbornly adhere to what they’ve always done. Like the proverbial frog in the pan, they will slowly meet their demise.

But, a new breed of brands will emerge. Like any other inflection point in history, those who adapt and evolve will thrive despite difficult circumstances. History is replete with examples!

The future belongs to the innovators, the rule-breakers, and the “early” adopters. I put the word early in parenthesis because, quite frankly, this evolution has been going on for six or seven years now.

When climbing a mountain, you’ll need a Sherpa.

Everyone needs a little help sometimes, especially if they’re going through difficult times. After 40 years in the industry, I cannot recall a more difficult season.

My team and I are here for you if you want to chat. Here’s my email address: ben@winesalesstimulator.com. I’m an excellent listener 👂.