During my 26 years at Frank Lynn & Associates, Inc., I have seen and helped to create very innovative go-to-market channel strategies across many industries. However, I have witnessed many manufacturers and service providers make the same errors in judgment over and over again when designing their channel strategies. It almost seems as if they have all read from the same book “How to Ensure a Failed Channel Program,” which I have never come across, but am convinced is in its “nth” printing. Based on the firm’s 33 years of experience, here are the most common misconceptions we have seen in business-to-business markets that sell through distributors, wholesalers, dealers, etc. Mistake #1 Expecting Distributors to Generate Demand for Your Product Distributors service markets and rarely develop them. Demand generation is the role of the manufacturer. Some channels classified as “technical specialists,” will help to educate end users relative to new product and technologies. Therefore, they can contribute to demand generation, but ultimately demand creation is the manufacturer’s responsibility. Sales and marketing managers that are frustrated with a distributor’s lack of demand generation activity often will refer to them as “order takers” and in a sense, they are. In fact, broad-line and logistical distributors are very, very efficient at taking orders. If you look at their activities closely, you will see they do a lot more to service their accounts–but they service demand, not create it. Mistake #2 Expecting Great Performance by Providing Distributors with Exclusive Territories The only good reason to grant a channel an exclusive territory or market for your products is if it is new, requires the distributor to invest and you want the distributors to feel they will have an opportunity to recoup their investment. Even with this situation, the timeframe for the exclusive should be limited. Every other exclusive arrangement restricts you, the supplier, from accessing your end customers through other means. In addition, most markets have multiple customer segments that wish to be served by different channels. In almost every situation where I had a client with some exclusive territories and some with multiple channels, their market share is highest where channels compete. Mistake #3 Expecting Your Partners to Sell to New Customers Dealers and distributors focus on servicing their customer base. They evaluate new products and services to determine the best ways to grow revenues in that set of customers. While they may add new customers, typically you can expect 90% to 95% of the distributors’ revenues in 2006 to come from the same customers they sold to in 2005. Unless your product is sold by a systems integrator or a VAR specializing in unique or custom sales that are sold once to an end customer, dealers/ distributors will rarely call on new accounts just for you. That is why most high-share manufacturers and service providers utilize multiple channels to reach a variety of market segments. Mistake #4 Expecting Broad Business Objectives to Work Equally Well [...]