The Ultimate Guide To
Dealer Network Management

A dealer network is a group of dealers that sell the goods of a production company. One of the easiest examples is the automotive industry.
For instance, Audi produces cars but does not sell them on their own, they use their dealers for that! This means that the production company can become the best at 1 thing: producing cars.

Of course there’s not just 1 single type of dealer. In fact, there are 3 different types of dealers that we will be talking about in this Ultimate Guide:

1. Flagship dealers
2. Multi brand dealers
3. Mom & pop dealers

With each type we’ll discuss exactly who they are while using a clear example. Besides that we’ll also take a look at the biggest challenges that these dealers face.

Flagship dealers are dealers that only distribute your products. This means that they are an official reseller of your brand and your brand only. These dealers are amazing to have because 100% of their sales benefit you.

Example:

Lab9 is an official Apple reseller and the perfect example of a Flagship Dealer. They will provide you with the latest Apple products while also giving a tremendous service to get the most out of your products.

If the Flagship dealer doesn’t have a high sales volume, your revenue will also be limited even though they are 100% selling your products. The main goal with your flagship dealers is to help them increase their sales revenue and thus your revenue.

This is a perfect example of a win-win scenario because you both generate more revenue.

Multi brand dealers are dealers that sell multiple brands instead of 1. These distributors are more common because they need to be less specialized in one specific brand. Most distributors usually start out as Multi Brand Dealers before eventually moving on to becoming a Flagship Dealer.

Example:

One of the easiest examples that we can give for a multi brand dealer is a supermarket, let’s use “Aldi” for now. Supermarkets are always multi brand dealers because they sell products that are coming from a lot of different manufacturers.

The main challenge with Multi Brand dealers is that they sell multiple brands, obviously. This means that if they love another brand more than your brand, they will promote the other brand! This can cost you a lot of revenue.

The main goal with Multi Brand dealers is collecting feedback on why your share of wallet is low. If you do this, you will discover how to increase your share and by doing so you’ll also increase your revenue.

Mom & Pop dealers are the smallest distributors you can have as a manufacturer. This doesn’t mean they are useless. These types of dealers are amazing to encourage brand love and they will help you build a loyal following due to their personal approach with their customers.

This way, Mom & Pop dealers can benefit your overall growth because of the increasing popularity of your brand.

Example:

A perfect example of a Mom & Pop dealer is a local wine house called “Wine House Mario”. Mario doesn’t sell a lot of wine but almost all of his revenue is coming from your brand. Everytime a client comes in, he chats for a minute to maintain that personal connection and after that he always suggests your brand over others.

The biggest drawback with Mom & Pop dealers is the fact that they will never provide you with a lot of revenue. The real challenge with these dealers is to make them fall in love with your brand and by doing so, they will encourage people to buy your products.

Not necessarily. Below we will discuss the difference between these 2 types of dealers while using some real-life examples.

First of all, let’s start with dealers that don’t add any value. These dealers just provide the product you are buying without adding any services to it.

On the other hand, there are also dealers that do add (a lot of) value. This can be by adding additional services or creating/customizing products. Adding services is very popular in the car industry as manufacturers just manufacture the car and the car dealers add additional services like maintenance.

When you’re buying wood from a timber merchant, you just buy the timber and that’s where the sales ends. You get what you bought and do what you want with it. So there’s basically no added value as you’re just getting the product. On the other hand you have a Furniture manufacturer, he/she buys timber at the timber merchant and creates something out of it, let’s say a table. The added value here is that you don’t need to create that table yourself but the manufacturer does that for you!

A “used car dealership” just buys and sells cars, there’s no added value like free maintenance etc. You just pay for the car, you receive the car and that’s it.

When you go to an Official dealer, you get a lot of added value (services).

Example:

When you buy a brand new Audi and after a couple of years you’re doing a roadtrip through Europe and your car breaks down, you simply call Audi Service and they’ll immediately arrange a hotel for you, a replacement car and will take your Audi to the nearest dealership for free.

The manufacturers are facing a huge challenge: they depend on their dealers to generate revenue as they usually don’t have stores themselves.
This means that to increase their revenue they should get their dealers educated and motivated to take care of business.

Of course this is not that easy. Otherwise every manufacturer would have hundreds of highly successful dealers but sadly enough, this is not the case.

Our main goal with this in-depth guide is to solve that challenge and to do so we invented the DEAL Framework.

We invented the DEAL framework to assist manufacturers in educating and coaching their dealers to increase their wallet share and revenue. The DEAL Framework is battle-tested and approved by multiple AAA brands so we’re really confident in the success rate of our framework. The DEAL Framework is fairly new so we’ll discuss every stage of the framework below:

The Develop phase is the first phase of the DEAL Framework. In this phase the main goal is to educate your dealers on your products. If your dealers don’t have the needed expertise on your products, it will be nearly impossible for them to sell a lot of it.

This is what you need to accomplish in the Develop phase:

• Perfect product knowledge
• Create a structured educational program
• Create a team of expert sellers (the dealer and their employees)

Of course this is not something that is done in a matter of days or weeks. As it’s extremely important for your business, you should take as much time as needed to accomplish this goal.

The use of (online) workshops is perfect to develop your dealers. This will make them experts and they’ll become part of the team quickly.

A preferred brand is when the dealer always promotes your brand first instead of another brand - this will generate a tremendous amount of revenue for your business and increase your share of wallet with that dealer.

The second phase of the DEAL Framework is called the Engage Phase. In this phase the main goal is obviously to engage with your dealers but how do we do that? To be able to answer this question, we first need to take a look at the Dealer Network Matrix.

When you’re looking to engage with your dealers, you will discover one thing very quickly: you can’t treat every dealer the same way. If you’re wondering why, it’s pretty simple. Some dealers have a huge potential to become your top selling dealers. Other dealers will probably never become one of your top selling dealers. That’s why it’s really important to invest your time and resources wisely.

There are 4 different types of dealers on the Dealer Network Matrix:

1. High potentials
2. Energy suckers
3. Crown jewels
4. Fans

High potentials are dealers that have very high revenue numbers but your share of wallet is limited. Which means they are selling a lot but not a lot of Gyproc®! The reason they are called “High Potentials” is because they have a lot of revenue and thus a lot of potential to become one of your major dealers if you manage to increase your share of wallet.

The goal is pretty simple: get them on board to sell more Gyproc® instead of other brands.

Since these high potentials already sell a lot. You want them to be convinced about your brand. More specifically, you want them to sell more of your product instead of your competitor's product. If we dig a little deeper into the sales process, we notice that salesmen (or shopkeepers or store assistants) will sell the products that they know best.

They will mainly recommend the products they have the most knowledge about. The products that are more complex and about which they have little knowledge will not be presented so quickly. That’s why you have to provide training for your dealers. Once they have successfully finished the training, you can reward your high potentials with a custom T-shirt, sweater or shirt according to your branding.

Make a collection especially for this purpose. Go for quality pieces that can be worn during working hours. This not only turns your dealer into a true expert in no time, but also exudes trust to their customers. Branded clothing equals more visibility. The more visibility your brand has, the more it will be recognized and asked for. Their customers will also be more likely to ask for your products.

These are the worst dealers you can have. Avoid spending time and money on them at all costs! Energy suckers don’t sell a lot in general (low revenue) and besides that they barely sell Gyproc® so they’re literally a waste of time to your business.

The main goal with “Energy Suckers” is to create a partnership that works as efficiently as possible. There’s nothing wrong with having these types of dealers, unless they are taking a big chunk of your time.

The goal is to maintain a normal relationship with these kinds of dealers. Once you can identify this type of dealer, you can shift your focus to other kinds of dealers like the crown jewels or high potentials. Putting effort in energy suckers will not get you anywhere.

On the contrary, it will have a negative influence on your results. By shifting your attention to the other types, you will be more likely to achieve positive results.

These are the dealers that you should be focusing on. They are your core dealers and will generate most of your revenue as they are doing big numbers and sell a lot of Gyproc®.

Crown jewels should get treated exceptionally well because losing them can be disastrous for your company. Your main goal should be to make them as loyal as possible to your brand to maximize your share of wallet.

Your crown jewels should already be experts in your product, just like the high potentials. Besides that you show them how much you appreciate them, just like you would do with your fans. But these crown jewel dealers still need to get that extra bit of attention. If you want them to be loyal to you, you truly have to understand your dealers and be aware of what problems they are struggling with.

Try to see if you can help them tackle these issues. For example: you know your dealers can sell a lot but only if they invest in marketing towards their own clients. Why don’t you offer them for example some T-shirts or caps in your branding, that dealers can give away to their customers who buy a lot of your products/services. That way your dealers feel supported by you, plus their clients will be happy with the service they receive from your dealer and will go back. Bonus? Extra visibility for you! Another example: your dealer sells a lot but they have difficulties by attracting new employees to work in their stores.

By working out a trainee program with an onboarding box together with your dealer, they can offer something special to new employees. This increases their chances of making their new employees feel welcome and keeping them on board. Plus, they immediately get to know your brand and will be more likely to present it to clients.

Fans are a special kind of dealers - they don’t have a lot of revenue but almost all their revenue comes from your products. The byproduct of this is that their clients are extremely loyal to your brand and because of that they are literally a free marketing source. They may not provide you with a lot of revenue but because of their personal connection with their clients, you’ll likely get a lot of extra clients without actively doing anything.

How do you leverage fans to increase your brand love?
You should be grateful for your dealers that are true fans of your brand. Reward these kinds of dealers for their loyalty and for being a great ambassador of your brand. A merchbomb can be a great way to positively surprise the dealer. This package can contain items you know this dealer wears a lot, or will definitely please them. There are plenty of special occasions on which you can send something: birthdays, shops that have existed for a number of years, Christmas, ... By surprising them with some branded, sustainable clothing you show how much you appreciate them and even though they don’t provide the most revenue, as a producer you value their effort. This way you build an even better relationship, which makes it more difficult for your dealer to change to another production company.

The third pillar of the DEAL Framework is Attracting new high quality dealers for your brand. A lot of brands are struggling with consistently attracting dealers because they don’t have a strategy to do this.

High demand brands are brands that “everyone” wants to work with! They have created a huge name over the years and because of this, they have lines of potential dealers waiting to work with them. One thing that’s key for high demand brands is having a methodical way of accepting or denying potential dealers. This is extremely important to maintain the highest quality possible.

On the other hand, low demand brands have a huge issue. There are no dealers that are reaching out to them to distribute their products. Because of this, they need to actively prospect potential dealers. 1 strategy that they should be using, is creating demand before they provide supply. This means that they create a demand in the market by starting conversations with potential customers and by doing that, these customers will reach out to dealers to buy the product. Of course there won’t be any dealers with these products yet but that’s where you come in! When executed correctly, this should get you a foot in the door with a lot of potential dealers.

The keyword here is brand love. It’s fundamental for your growth to transform dealers into brand ambassadors that always put your brand first. It’s essential to engage with your brand ambassadors to make them feel part of the brand. They shouldn’t just feel like a “salesperson”. Find common ground with your dealers and speak their language. If they truly love your brand they will be a great source of marketing: they’ll produce results for you by communicating about your brand, by example on social media or by word of mouth advertising. The perfect example here is Apple. Being loved as much as Apple is the end goal for every brand out there.

By now we can all agree that having dealers who sell your products is a win-win. We also learned that not every dealer is the right fit for your brand, because of that you should divide them in categories using the dealer network matrix! If you are looking for step-by-step advice on starting/growing your own dealer network, fill in the form below to get in touch with our team of experts.