Increasing Profitability In Sales and Distribution Management

Interview with Arun & Aditya @ enParadigm Knowledge SolutionsArun Subramanian and Aditya Krishnakumar head the products team at enParadigm. They have just finished work on the latest upgrade of our principal product for sales managers – SalesPro. I got an opportunity to catch-up with them on a range of concerns – from insights for distribution sales in general, to specific challenges for today’s sales managers. Here are the excerpts of that conversation.Distribution/channel sales - how are businesses in India doing?Aditya: Selling your products by appointing multiple channel-partners or distributors to reach more people, has been a way of life for Indian businesses since time immemorial. If you look at the current penetration level, FMCG companies are doing great. There is huge scope here, particularly in rural India – not only are these markets developing, they are also connecting better with urban populations due to better supply chain and infrastructure. I am particularly impressed with the way HUL's Project Shakti and ITC's e-Choupal are doing it. You must read about them, if you haven't already.Yes, interesting examples indeed and great success stories. But at the same time, building a distribution-based business in India is also considered notoriously difficult, isn't it? Is there a success mantra or a strategy?Aditya: More than strategy it is about relentless execution Divya. FMCG products just need to be made available and accessible.Hmm... so what are the concerns? Why do some businesses riding on distribution sales fail to execute it like the others?Aditya: Our biggest challenge is our diverse geography and the need to appoint multiple intermediaries to reach out to small segments of end-buyers. It is very difficult not to rely on them and have a more centralised association with a few distributors because of the complexity in Indian markets where it requires a local connect to win credibility in that market. But this affects the pricing on the whole, because discounts/incentives keep eating up your profits.Oh! Thats a big challenge indeed. How are Indian business planning for future? Are there correlations with global trends?Aditya: India is known to leap-frog trends. For example, internet users have bypassed desktops and have gotten hooked on their smartphones. Even when it comes to distribution business, there is a high possibility that we will see businesses crossing the retail/supermarket stage and directly getting to selling online or adapt to on-demand delivery services. But initially, it will work only with premium products since their customer segment are internet savvy. For others, the same old distribution chain will continue.Arun: It is also important to strategize and be innovative. Take Paper Boat for example. They started off with selling at premium prices on IndiGo flights, as air travellers fit their target profile – they are willing to pay a good price for a good product. But then, it got so popular that today, every almost every bakery and condiment store has Paper Boat on its shelves and people are ready to pay! What else can we do differently?Aditya: This is obviously a big list. But I want to talk about how we deal with distributors. We tend to sell to distributors based on relationships and not data. Data should be used for insight to appoint distributors for specific areas. You also get to understand competition, buying trends of your customer segment, past patterns of demand/supply, to take smarter decisions. For example, ITC collects data from lacs of retailers every week, and analyses them to understand its markets.And what is the cost of collecting and analysing all that data?Arun: It is significant, but ultimately worth it, as so many companies have proved. But what is interesting is that while companies invest purely in technology and data, usually, the bigger challenge is bringing people on-board, and changing their mind-sets and make data analytics a smart way- to help them sell better.People! Since you have shifted to the people side of things, lets talk about sales managers: what are the top challenges that the modern sales managers face?Arun: No shortage of challenges here: Distributors are always looking for schemes, discounts, and extended credit period. Your trade partners (distributors/franchises) are savvy businessmen, and sales managers are not able to think like they do (basically, they aren’t able to out-think them). Sales managers tend to focus on revenue and what is easiest to sell - product mix and margins etc. take a back seat. Forecasting is considered a last-minute, reporting activity. Planning also tends to take a back seat. Since data is becoming more complex with market dynamics, they need to learn to deal with data, and take data-driven decisions.How can they deal with these challenges?Arun: They need to have a broader perspective and know the outcome of their decisions from a profitability point of view. They should know how to strike a balance between maintaining distributor relations and profitability. Understanding data is important to arrive at strategic decisions - while choosing a strong distributor, or knowing demand and supply or while computing the margins and discounts. Sales-Pro- our business intervention focuses a lot on these challenges.Tell me more! What is SalesPro?Aditya: SalesPro is a 2-day workshop built around a simulated market – where teams compete as regional sales heads, to profitably capture market-share across multiple product lines and geographies. To do this, they will need to analyse data, plan, control distribution, promote sales through schemes, and build/maintain/leverage relationships with the trade.Great! I can’t wait to play this… Now, back to those three things you pointed out as gaps in distribution sales. How does SalesPro help to bridge them?Arun: SalesPro drives sales insight through experiential sessions. It offers a platform for participants to, quite literally, step into the shoes of a sales head, and take decisions in a simulated market environment – with profitability as a key parameter. They get to plan out and build their supply chain and product mix, calculate ROI for distributors, and simultaneously experience the downstream impact of all these decisions.Aditya: Also, what they derive as key takeaway after having applied it and experienced the long-term effects – are easier to retain and implement back at work.How have companies responded to SalesPro?Arun: We have seen tremendous response. Amongst our 340+ clients, SalesPro has always been very popular – I guess the possibility of visible business impact in the next quarter’s results itself, is a big attraction. We have been able to bring about sales transformations at multiple levels, for companies like Hafele and Abbott. Senior business leaders like Mr. Shyamakant Giri, Country Head at Abbott, have taken a particular interest in SalesPro, and its impact on their companies. Or, in his words,“There has been thought-level and behaviour-level changes in our managers, who are now able to take significantly better decisions around profitability and cash-flow.”Great to know! Now, before we close this conversation, is there anything else you would like to say to our readers?Aditya: Yes, I’d like to leave them with two thoughts: 1. Earlier, sales heads and sales managers were measured on revenue. Today, they are measured on margins. Front-line, and even senior/regional sales managers, are not very savvy with this idea. Sales-pro drives this insight. 2. Sales managers need to look at things the same way their sales head does – get a sales head’s perspective of business, so to speak. Apart from other insight, this helps frontline managers understand why the sales head refuses some of their requests for discounts, or for extension of credit period; or why they want to push for sales of certain slow-moving products etc.Thanks guys! Congratulations once again and keep those simulations coming!

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