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growth process toolkit
Distribution Channel Optimization
Accelerating Growth through Unbiased and Ongoing Partner Evaluation, Selection, and Management

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INTRODUCTION

Growth through Distribution Channel Optimization A recent study determined that high-performance businesses (i.e., the 10 percent that outpace competitors regardless of economic conditions) “excel in the development of meaningful customer insights and practical ways to put those insights into action.” 1 They understand what their customers want, and they know how to deliver solutions that customers will buy. An unwritten, but nonetheless significant, extension of this idea is that they not only know what customers will buy, but where and how they want to buy. In short, no company is successful for its insights alone. Success ultimately depends upon the effectiveness and reach of its go-to-market strategy. Distribution channel optimization is therefore a critical ingredient to sustaining growth through a rigorous customer focus. ∗
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At their most basic level, distribution partners enable suppliers to deliver goods or services to end users, and distributors’ reach significantly influences the extent to which suppliers can engage with customers. On a more meaningful level, distribution partners provide customer service in areas where suppliers cannot or do not (e.g., financing, insurance, training, maintenance, repairs). Taken together, the two deliver an enhanced customer experience. If managed properly, distributors provide access to customers that can determine a supplier’s reach, revenue, and long-term growth potential. Companies with productive channel relationships stand to increase sales, reduce operating costs, and improve customer reach. Importantly, effective distribution channel management delivers benefits to all players in the value chain, often by