Most brands use partners to grow their brand internationally. We provide 10 best practice tips to grow your international partner distribution successfully.
You think the biggest risk in partner distribution is to lose a partner and all local sales? Puma’s CEO Jochen Zeitz thought so too, until Puma’s Greek distributor filed for bankruptcy in 2012. Puma paid a high price when it had to inform the stock market that it might lose €115m; quite a figure, considering the entire Greek sporting goods market is less than €500m in annual sales.
Brands Need to Groom Brand Partner Distribution
If you are familiar with financial reports of global brands, you know this is just one of many cases where poor partner management was costly. Many brands operate far more than 250 partner stores, but they spend 95% of their time on recruiting new partners, rather than grooming existing partnerships. A brand’s global partner manager often fights a lonely battle for quality in partner retail. Commonly, brands’ country managers protect their local partners with no chance for central guidance.
As a result, many partner contracts do not give a brand the access to the actual performance of the partner and his stores. In brand distribution, partner managers are often toothless tigers and qualitative brand growth happens only when brand distributors are strong at developing the brand their own way (for a list of global distributors see Growing with Brand Distributors in Partnership).
General observations are that the stronger the brand and its products are, the less it invests in partner distribution management. Distribution management is reduced to an annual executive meeting, maybe a mystery shopping study and an invitation to a collection launch. But all that has little impact on the qualitative development of the partner distribution.
In April 2011, I led a multinational team for a US brand consortium in transforming their successful, but hands-on 150+ partner store business in Europe, into a holistic partner distribution program. We enhanced the partner distribution readiness and developed processes, tools and structures, while doubling the original partner growth plans. Three years later, standard processes and tools were implemented, partner contracts followed one standard and expansion and profits were well ahead of our original plan. Yet the partner distribution program – the joint work of partners and brands – is still awaiting implementation. Partners are either good and know how to develop, or they aren’t. This is the way many brands in Europe approach their partner distribution.
Partnership Management is a Must
Why do brands prefer to go easy on their brand distribution partner? Why do brands invest so little in growing partnership management? Why do many partnerships fail? For the very same reason so many marriages fail:
- We are blinded by good looks when we say ‘I do’
- We are lousy at investing in and maintaining relationships
As it is, we have developed over the year, 10 key recommendations to select and manage distribution partnerships:
10 Tips for Excellence in Brand Partner Management
1 Avoid Speed Dating Put quality into a proper selection process, refrain from commitments when under sales pressure 2 Opt for performance, rather than friendship Performance doesn't grow among friends. Quality partnerships need a climate of joint growth aspiration and arguments at times 3 Four eyes & experience only Pass partner selection to cross function executive teams, with competence to judge entrepreneurs 4 Management competence over brand love Distributors may be the biggest fan of your brand, but make 'growing brands successfully' your no. 1 selection criteria 5 Don't trust fancy Powerpoint visions Question dynamic Powerpoint growth promises. Insist on joint business plans to understand realistic growth perspectives 6 Plan for twice the need Establish the principle of 200% expansion plans. Only this allows you to turn down poor locations and stay calm if the new location pipeline dries out. 7 Align agendas Your partners top strategic priority is growing sales or filling shopping centres. Your goal is growing a brand, so balance strategic conflicts 8 Trust comes with transparency Share store P&Ls, retail KPIs & benchmarks. Agree on open books from the beginning 9 Senior expertise only Recruit executives for partner management, it is a big strategic task to manage distributors 10 Invest in the marriage It is easy to look for new partners, but better to invest 50% of resources in growing existing partnerships, in quality and L4L
If the majority of time goes into finding new partners instead of growing existing partnerships, how can we expect to cultivate a mutually rewarding partnership? Annual arguments about on time delivery, late payments or larger discounts often are the only communication between a brand & its key distributors. When your marriage is reduced to money issues and late-for-dinner discussions, you won’t grow your partnership. Managing partnerships is no different from maintaining a marriage: without investments in wellbeing, quality of life suffers for both you and your partner.
What Next? Energise Partner Distribution!
Are you creating greatly improved results for you and your partners this year? Whether you look at your partner distribution in Russia or your partner store in Milan, if it doesn’t work for you or your partner, you need to influence the development by working on your partner management.
If You Are a CEO or CSO, Don’t Blame Your Partner or Partner Managers!
Partner growth is a top-level strategic task. ‘Managing’ partners that operate outside your direct reporting lines calls for executive leadership. Don’t leave partner management to small teams and small budgets.
If You Are a Partner Manager, Don’t Blame Your CEO, or a Country Manager!
Raise your brand’s awareness on their development potential and benchmark partnership program. A current and low-key approach holds huge potential for you and your brand – sell the opportunities to the board, leave the state of ‘partner administration’ alone for ‘excellence in partnership management’.
This is a variation of an earlier post published in retail-intrapreneur
About the Author:
Whether assisting a US brand group in developing its European partner distribution strategy, or designing and building a partner organisation for a global toy brand, Guido is a fan of managing qualitative growth. As a retail and finance professional originally, he strongly believes partner distribution is the most challenging, but also the most rewarding brand growth strategy. If you want to benefit from Guido’s experience, get personal advice or just exchange some thoughts, feel free to reach him by email or see more from him here.