Few manufacturers – either domestic or foreign – can hope to keep pace with the hunger of the facility management sector for cleaning products by establishing their own presence in every territory. Fortunately, there are many entrepreneurs who are eager to become their distributors and grow along with them.
What qualities should such entrepreneurs develop to become distributors of choice? How do manufacturers help them sustain, financially and otherwise? How do they iron out kinks in the relationship? We have the answers.
Distribution vs manufacturing
For many new entrants to the cleaning sector, entry barriers for setting up a production facility may be high, which makes it challenging for them to achieve economies of scale. For them, distribution is an appealing gateway into the cleaning business.
Tony Chazhoor, MD, IP Cleaning India explained: “For more players to be convinced to invest in production facilities, disposable incomes that can be spent on acquiring cleaning machinery need to rise. Until then, the dealer/channel partner network model will be the most appropriate choice.”
Many global players already have an Indian presence in the form of 100% subsidiaries, which has helped them understand the Indian market and purchasing behaviour. While some are tentatively expanding the number of products they manufacture in India, their output is not yet sufficient to meet market demand. Besides, some bigger machines, which are unlikely to sell in large volumes initially, will have to be imported rather than manufactured domestically.
Satish Mahajan, National Sales Head, Comac India weighed in: “We are still importing most of our machines to ensure consistent quality and value for our customers. We are working on a project to manufacture a few of our fast-moving machines in India and studying its feasibility from the standpoint of captive consumption and meeting other demands. But this is in a very early stage”.
In terms of volume, the major cleaning machines being manufactured in India are single-disc scrubbers/polishers and walk-behind scrubber dryers, as well as some ride-on scrubber dryers. For at least some time more, most suppliers will depend on imports for high-end ride-on scrubber dryers, sweepers and pressure washers, ensuring the preponderance of the distribution model.
The ideal distributor
What do companies look for in a channel partner? “Years of experience in the industry, market presence and investment capability in terms of finance and team size”, replied Indu Vijaykumar, Director, i-team India.
Rajiv Bhatia, Country Manager & Director, Nilfisk India Pvt Ltd expanded on his criteria for assessing a potential partner as follows:
- Financial capability to invest in manpower, machines and infrastructure, such that the distributor can take seasonal business cycles in his stride and not be cash-starved if sales happen to fall in one quarter. The ups and downs of the market should not cause the business to suffer due to a lack of working capital.
- Motivation to promote the cleaning equipment business in terms of synergy with his existing lines of business and how he wishes to maximise his wallet share with his existing customer base.
- Concept selling capability, since the cleaning industry is mushrooming in India and a lot of concepts need to be explained to different industrial and institutional customers.
- After-sales service capabilities in terms of process-oriented service call logging & assignment, service metrics measurement, spares management and most importantly, his existing customer base’s views about the firm.
- Finally, a passion to grow his business.
Chazhoor is particular about nomenclature: “Actually, we do not look for distributors in capital equipment sales. Rather, we look for specialised dealers or channel partners for our ecosystem.” For him, such a partner should be from the capital equipment business, with in-house sales and service infrastructure, an excellent history and reputation, and extensive knowledge of the local market, evolving industry trends and the demographics of the catchment area.
With this necessary level of scrutiny, it should come as no surprise that it takes an average of 8-9 months to develop a channel partner in a given area.
Every respondent agreed that the most basic quality for eligibility is that the partner understands the importance of keeping a ready stock of machinery, spares and consumables. Adequate sales and service staff must be available to take care of machines throughout their life cycle.
Mahajan makes a seemingly simple but crucial stipulation: “They should have experience in and domain knowledge of the cleaning industry. This industry is very unique and cannot work like other businesses. Partners who have worked within the cleaning industry have a brighter chance of becoming successful compared to those who haven’t. Of course, it’s not difficult for the latter, but their gestation periods may be prolonged”.
A relatively recent criterion is a distributor’s willingness to digitise all aspects of business management. Underlying all the above criteria is the readiness of the partner to adhere to the supplier’s code of conduct and ethics; any violation will negatively impact the supplier’s brand image.
How do suppliers support distributors?
While the above list of parameters may seem intimidating, potential distributors should rest assured that suppliers understand their responsibility to aid and equip their partners in every possible way. They have thought of everything that can ease the entry of the distributor into the cleaning market.
Vivek Mata, MD, Charnock Equipments Pvt Ltd painted a picture: “Businesses flourish when the entire ecosystem works in sync towards the larger goals of customer satisfaction. Distributors are the most crucial part of the supply chain and have to be elevated to the level of channel partners. We empower distributor partners by involving them in everything, right from the client site due diligence to recommendations for the right fit of equipment and machinery. Specialised technical training is imparted to keep them informed about upcoming technology. They are the extended members of the Charnock family”.
Once the partnership is sealed, the induction process for the partner typically begins with sales & service intellectual property transfer in a phased, planned manner. “ A cleaning equipment manufacturer should handhold the dealer/channel partner by sharing in-depth product knowledge and providing frequent training. It is imperative that the dealer be given proper technical knowledge, and be made aware of proper segmentation and further sub-segmentation. This exercise will support the dealer in their understanding of the most productive product mix”, offered Chazhoor.
The supplier may even help the partner hire the right people, and offer field marketing support to improve brand visibility through the partner in the specified territory. A realistic business plan is drawn up that is agreeable to both parties. The supplier’s staff will regularly visit and interact with the partner to identify roadblocks, if any, in the action plan.
It is a mandate for the supplier to ensure the partnership is financially lucrative and appealing to the partner. This can be guaranteed in more than one way.
Said Mahajan: “The company needs to maintain territorial sanctity and integrity of dealers. The terms of territory and other activities need to be designed and specified in the agreement, to have a standard course of action when there are any deviations. Generally, when dealers don’t meet the expected budgets, the supplier company hires its own staff in that particular territory or appoints another dealer. This becomes a big demotivation to dealers; they underperform or don’t perform and leave. Training and retraining is a must for new dealers. Customer service feedback must be reviewed and evaluated at the end of every quarter”.
While suppliers must plan for contingencies, success stories must also be shared with channel partners to keep up their enthusiasm and morale.
Partnership challenges
As in any business relationship, there are bound to be hiccups in the supplier-dealer partnership. As Vijaykumar put it, “Sometimes, our visions are not compatible, or the distributor team is more engaged in their parent business and not available”.
The cleaning market is maturing at an exponential rate; new products do not remain new for longer and there is constant churn of innovative solutions. It can be a daunting task for dealers to stay up-to-date with the latest in the market.
The main challenge that suppliers face is hiring the right talent that can comprehend the technicalities of cleaning products that are vastly different from each other, and then retaining talent with special HR policies and programs combined with attractive incentive plans.
If the channel partner is from a different sector, it becomes essential to provide a comprehensive understanding of the product line, help them suggest what product to suggest for what application, and even accompany the partner for regular customer visits in the area, to ease them into the cleaning market. This takes time, money and resources from both parties without much immediate ROI, but this initial period of intense engagement helps achieve goals in the long run.
Making dealers self-reliant
The ultimate goal of any supplier is to develop their dealer into a well-informed, adequately equipped entity that can function on its own, without repeatedly having to fall back on the supplier for help and guidance.
As Chazhoor put it, “Being an OEM and an expert in the domain, the principals must pass on their sales & service expertise to dealers/channel partners for them to become their extended arms in the marketplace. This is possible only when a level of trust and collaboration is fostered in the relationship.”
Suppliers can support their dealer during the first year for most of their installation and customer complaint activities, and depute engineers and technicians to help them understand technicalities and SOPs. This embrace can extend to assimilating dealers in the supplier’s CRM application so that they become a part of the organisation in every sense.
Bhatia offers two styles of continual development programs: for dealers who are performing well, this includes expansion plans and cross-selling initiatives to boost revenues to the next level; for under-performers, it is all about addressing any roadblocks or clarifying any miscommunication, which is not uncommon with remote partners who meet the company staff just once or twice a month.
