“We sell our products through big distributors who know how to use their size to overpower our distributor specialists who are supposed to manage them. We are having difficulty in leading them to follow our strategies and agree to our terms. Our distributor specialists are subservient to them. Our distributors are generally performing well because of their market clout, but also because of our fast-moving brands. However, we believe they can still grow more if only we could align our actions. How do you manage a more powerful distributor?”- Powerless Mark
 
Power is a potential for influence. It is the ability of someone like you to get your distributors to do something they would not normally do. If you know how to responsibly use it, you can have greater influence over your distributors and achieve more.

Power is based on dependence. The more you show how much you need them, the more power they will have on you. It is a play on utility and scarcity. The higher their utility and scarcity to you the greater their power becomes.  As a potential for influence, you must know which of the five powers you have and how to use them:

1.Rewards – When a distributor perceives a worthwhile reward, he may be more likely to follow. However, your distributor’s fees must be contingent upon achievement of certain agreed performance levels in different key result areas. This must be clearly defined in your distributor contract. If your distributor makes money based only on his purchases from you (i.e. distribution discount) then you will have lesser power to influence him to do other things like preparing a sales plan or increasing distribution. I always recommend that distributors be paid largely on key activities that have direct bearing on desired results rather than purchases alone.

2.Coercion – A distributor might easily follow if they would be penalized: “We won't deliver your orders if you don’t pay on time.”  In your case, you are obviously being coerced by your distributors because of their greater utility to you. To avoid or weaken this power, you can use the next two powers below.  
    
3.Expertise – If the supplier knows more than the distributor, the distributor would be more likely to follow. Are your distributor specialists “experts” in what they do? Do they possess a higher level of understanding about the market, the dynamics of competition, the complexities of the distributor’s business, financial acumen, and the like, that can significantly increase their utility to their distributors, or are they perceived to be mediocre salesmen who only know how to ask for orders and payment? Distributors, regardless of their business size and background, tend to respect salesmen who create and add value to their business.  As the Chinese philosopher Confucius said, ‘If you don’t live your name you don’t have the right to carry it.’ If this is an issue, develop a sales training curriculum or hire training specialists like Mansmith & Fielders to help.

4. Legitimacy – A distributor might do what the supplier wants if he believes that the supplier has the right to give orders. To effectively use legitimacy power, you can rely on laws and contracts, and norms from your industry and culture, or, you can build up ideas of obligation or shared norms inside your relationship (e.g. how you treat each other). Does your distributor contract clearly cover the desired behavior you want your distributor partner to manifest in your relationship? Were your distributor specialists properly trained to explain and interpret the distributor contract? If they don’t understand the implications of the contract, how can they use it to enforce legal agreements? 

5.Reference – Distributor does what supplier wants because distributor wants to look like or “be at one with supplier.” You have this power when you have a good brand image that confers prestige or a good industry reputation. Of course, it’s not what you have, but how you use what you have.

These five sources of power can be used to positively influence your distributors and discourage opportunistic behaviors.  They increase your power to change behavior, increase your utility to them and their dependence on you. Still, the best results are achieved when power is balanced and you both need each other equally.


Emilio Macasaet III is the Chief Distribution Strategist of Mansmith and Fielders, Inc. He will be running the programs, 4th Trade Marketing Seminar on May 15-16, 2014 and 6th Distributor Management Seminar on June 5-6, 2014. For more information, email info@mansmith.net, call (+63-2) 584-5858 / 412-0034 or text (+63) 918-81-168-88.