The following information draws on 30+ years of working with manufacturers on how they can encourage distributors to submit POS data.
When it comes to channel distribution, acquiring accurate and timely POS data information is your bread and butter. As a manufacturer, you depend on POS information [from distributors and channel partners] to facilitate critical business decisions, reward partners and evaluate essential sales analytics such as product performance, market trends, and customer behavior. So, It should be clear by now that encouraging distributors to hand over their POS data is neither quick nor simple.
However, distributors and channel partners may not share the same feeling. The truth is, POS information is a sensitive subject. Your channel partners rely on this “confidential” information to stay ahead of the competition, which includes making sure you don’t sell directly to their end customers.
The fear of disintermediation is alive and well. Distributors recognize the wealth of power they possess in protecting POS data. As is often the case, channel partners and distributors may feel that sharing POS data puts them in a vulnerable position.
Other areas distributors leave themselves vulnerable to when sharing [confidential] POS data
- Risk of manufacturers to take business direct or sell to competing [favored] distributors
- Loss of critical data could compromise trade secrets
- Blackmailed by scammers that hold POS data hostage
- Loss of power/insight into customer demand, market trends, etc.
- Higher potential of POS data to be in the possession competitors
Establishing close relationships with distributors is often the best opportunity to access distributors’ critical POS data. However, the likelihood of creating such synergy is improbable.
Without knowledge of the customer, management can only guess how to sell a product. Point-of-sale records obtained from reporting partners contain this crucial and fundamental information. When reporting partners are content with an optimized channel POS information collection and reporting process, manufacturers gain business intelligence on vital customers that translate into future revenue.
Therefore, it is up to the manufacturer to take necessary initiative and establish the trust that encourages distributors that acquiring their POS information serves their best interests.
Here are 9 strategies you can use to encourage distributors to submit POS data
1. Initiate a written agreement
If you’re serious about the mutual benefit of POS data, you should be willing to have an agreement that will subject you to punitive damages if the information is used against the distributor. In many situations, confidence is the main prerequisite standing between comprehensive distributor POS information and the lack of complete, timely and accurate data in the manufacturers’ possession.
However, if you cannot guarantee, in strict assurance, that the information you obtain is only to be used for the benefit of that specific distributor, how can you create a level of confidence? A legally binding “written” agreement [that safeguards distributors by honoring the sensitivity of the data they provide] is not only essential but also logical.
2. Be flexible in how you collect channel POS data
Simplification is essential. Using flexible channel POS collection processes by allowing distributors to self-report data in their native format ensures a higher probability of partner compliance.
Make sure distributors are aware that you permit multiple options for submissions [e.g., EDI, AS2, Flat-file, secure FTP, CSV, Excel etc.].
Also, take away any and all mystery surrounding how you accept channel POS; the more objective you are regarding the processes you permit, the more likely distributors will be to provide you with the information you request.
Manufacturers that fail to disclose whether they accept specific submission processes will likely give distributors one more reason to “protect” their POS from external sources.
Moreover, a “worst practice” is to provide distributors with a fill-in-the-blank existing template for POS data, as it forces partners to abide by your reporting standards.
3. Only consider the POS data that’s important
Oftentimes, manufacturers are so preoccupied with obtaining data from their distributors, they mandate more information than need be. The more elements you require, the more skeptical and vulnerable distributors become. This can further support their argument to dis-collaborate; more data entails more work and resources to be allocated on the distributor end.
In addition, when you request only the data you need, you make the management and strategy process on your end easier and more efficient.
4. Ease up on your scheduling demands
However long your business can afford is how long you should provide when asking distributors to prepare (and report) their channel POS data.
This “more-casual” approach to scheduling will subconsciously decrease distributors’ apprehension, as it indicates a less urgent, rigid relationship without any of the teeth pulling that comes with requiring data during a specific timeframe.
Relaxing reporting requirements and allowing partners to use their own processes may also mean that reporting can be scheduled in the future, automatically reducing wait time and late reporting.
5. Distributors can acquire a new go-to-market perspective
Distributors will find that ‘opening the lines of communication’ will open the doors regarding how to use that data tactically [i.e., by shadowing you].
By involving distributors in the “war room” as to how you are strategically using their channel POS information, they will have a better opportunity to improve their marketing internally. This tactic also justifies your reasoning for wanting their data. At the same time, such tactics will strengthen a transparent relationship that benefits both you and your distributors.
6. Negotiate a comprise
Who is to say many of the benefits distributors gain from manufacturers’ channel POS data analysis cannot be gained through compromise?
There is no reason your partners cannot confidently provide you with some useful information without turning over their most sensitive data. By discovering a compromise that is mutually beneficial, everyone has the opportunity to walk away satisfied (and without feeling “used”).
It may be unnecessary to give distributors customer names, contact, or price information. However, it may be constructive to provide them unit shipments in certain locations, product groupings purchased by individual resellers, or items sold to customers by certain SIC codes.
7. Incentivize distributors with…incentivizes
When there is a clear [monetary] incentivize for distributors to submit POS information, manufacturers’ proposition becomes immediately more attractive.
For example, submitting POS data before a given timeframe may take the form of higher margins, additional sales leads or marketing development funds, special pricing rebate opportunities, freight allowance pricing, etc.
If you want to take things a step further, implementing tiered programs—that segment or group higher discounts and rewards to distributors based on POS reporting compliance—is an effective tactic for engaging interest and motivating preferred behaviors.
Furthermore, dis-incentives (penalties acquired via non-compliance of POS reporting) are also effective tactics for encouraging desired actions.
8. Eliminate Uncertainty via Partner Portal
Providing distributors with a cloud-based portal is a great way to ease the apprehension associated with submitting critical customer data. This gives distributors more context surrounding why POS reporting serves their best interest, as it can provide insight into:
- How their orders are being processed in real-time
- The way discounts are being applied in real-time
- How incentives are being paid in real-time
9. Improve turnaround [cycle] time on incentive, discount reimbursement
At the end of the day, your channel partners want to be promptly and accurately reimbursed. Clearly communicating that it takes longer to reimburse your distributors due to inadequate, untimely channel POS data will likely incentivize partners to send you more comprehensive information. However, by articulating the connection between channel POS and an accurate, timely payout–your distributors can reconcile your need for this imperative data.
The other challenge of collecting distributor customer data
Ultimately, the challenge of collecting distributor channel POS data boils down to two issues:
1.) Getting distributors to trust you enough that all data you request is received
2.) Inadequate resources make it difficult for manufacturers to unscramble distributor POS data [in diverse formats] and convert them into actionable business intelligence
Gaining the trust and confidence of your distributors can only get you so far.
In order to overcome the second [technological] challenge, implementing an automated POS solution eliminates time-consuming, expensive, and cumbersome data collection processes and transforms them into standardized, easy-to-read reports that enrich data in real time.
An automated channel POS data enrichment includes, but is not limited to:
- Standardizing part number
- Matching reseller names
- Currency conversion
- Zip codes
- Duns numbers; SIC codes
- Product hierarchies