Computer Market Research

Web-based channel management holds promise for industry

BY GABRIELA VASALLO Special to The Wholesaler

PHCP manufacturers and wholesalers could benefit significantly from examining other industries for best practices related to automating channel management programs such as dealer registration, channel sales, co-op and market development fund programs, inventory tracking, special pricing and lead management.

According to Del Heles, a veteran of industrial wholesaling and now a developer of channel management automation software, the technologies used in the PHCP business often lag behind solutions routinely used in other industries.

“Having grown up in the plumbing and heating wholesale business and now working with many manufacturers in other sectors, I am surprised at how much closer partnerships are in other industries when compared to the plumbing and heating industry,” said Heles, president of Computer Market Research (CMR) in San Diego.

“Especially in the technology sector, manufacturers and wholesalers must be extremely efficient in sharing, processing and analyzing key data from their channel partners,” Heles explained. “This is a matter of pure survival in fast-moving industries. If manufacturers are not up to speed on what products are selling through at the distribution and retail level, who the buyers are and what inventory remains in the channel, they could suffer millions of dollars in losses from obsolete inventory in warehouses and on store shelves.”

The PHCP wholesaling business could become significantly more efficient and more profitable if companies were more willing to adopt the latest automation technologies to help them better manage their markets and channel programs. Too many traditional manufacturers and wholesalers are trying to manage these programs manually through phone calls, paper forms and faxes to communicate and keep track of channel activities. According to Heles, this is unnecessarily inefficient and overly expensive.

Reducing customer retention costs

Retaining existing customers can be time-consuming and expensive. It has become cost-prohibitive for many companies to make field sales calls on every customer, since a personal sales visit today can cost as much as $525 and more, according to sales management analysts. Automation tools can help companies manage and optimize results from alternative sales efforts such as e-mail campaigns, telephone campaigns and direct mail letters. Effective field sales require monthly budgets of $25,000 and more, while, with the right tools, successful e-mail campaigns can be executed for as little as $1,000 per month.

“It has been proven in other industries that channel relationships and channel efficiency improve with automation because of the easy adoption of tools such as Web-based applications that require little training and no software to install or maintain,” Heles said. “There is nothing worse than spending tens of thousands of dollars to develop a co-op program that nobody signs up for because it’s too hard to maintain and too time-consuming to fulfill requests in a timely manner. As soon as a company switches to an automated solution, many of these problems are resolved and the channel programs become much more effective.”

Endless possibilities exist for improved automation in the PHCP wholesaling business. For example, when a trade show is being organized, instead of making numerous phone calls or preparing, printing and sending out invitations by postal mail, a simple tool such as a mass e-mail program linked to a database of contacts enables a company to send electronic invitations to all of its customers and prospects in five minutes or less.

History of channel management automation

Before automated channel management tools existed, manufacturers communicated with their partner distributors and resellers through in-person sales meetings, phone calls and faxing request forms back and forth. This was a costly and time-consuming process.

The first robust automated channel management tools appeared in the mid-1990s along with the popularization of the internet. The earliest online applications were used by manufacturers to manage dealer registration and to better understand who their reseller partners were and what special needs they had. These tools became more sophisticated as companies proved that they increased efficiency and reduced costs.

Today, Web-enabled tools can be accessed from anywhere in the world, any day of the week and at any hour by anyone with the appropriate security permissions. Manufacturers can more easily manage co-op or mdf programs, and partners can request or review their funds available for marketing programs by pulling up a screen on their Web browser or by filling out an online form and pressing a key. Special pricing requests are streamlined by allowing partners to submit a Web-based request and often receiving an answer back in less than 15 minutes.

Significant cost savings, improved efficiencies

Automated, Web-based channel management tools allow for a faster and lower cost of delivery of information throughout the channel. For example, sending out an advisory announcing a special price at 5:00 p.m. is delivered at 5:01 p.m. instead of the following week. This allows partners to react more quickly with the most current information available. Partners can move inventory faster, orders can be placed more efficiently, shipments are received more quickly and wholesaling channels benefit from improved accuracy.

“Conservatively, the potential cost savings and improved efficiencies that could be made possible by widely implementing the latest channel management applications could add hundreds of millions of dollars to the overall bottom line of the plumbing and heating industry,” Heles estimated.

“We’re talking about saving countless hours of manual administrative work and improving process accuracy by eliminating error-prone manual steps. Managers will have instant and secure access to the latest inventory and point of sale information from anywhere in the world at any time. Executives will know exactly where and how much inventory they have in their warehouses and in-transit and marketing will be better able to identify potential problems in the pricing of products or in the tactics being used by sales teams.”

Gabriela Vasallo is a free-lance writer based in Southern California.

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