PLAYBOOK

The CRM Playbook for ManufacturingSUGARCRM INDUSTRY SERIES

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EXECUTIVE SUMMARY

The majority of manufacturers market, sell and service their products through a network of dealers that operate in local markets and transact directly with the end customer. For a manufacturer, dealer networks significantly reduce the costs of entering a market at the expense of predictability, consistency and control. As a customer, engaging with a dealer provides them with insight and recommendations around the best solution for a problem. With the rise of e-commerce and direct-to-consumer channels, manufacturers are

naturally asking themselves:

“Is the dealer network obsolete?”“What are best practices for Dealer Management?”

Customer Relationship Management software streamlines dealer management by consolidating dealer, territory, market and fulfillment information into a consumer-grade interface for dealers and territory managers.

Consumer

DealerDistributor

Supplier

DistributorManufacturer

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IS THE DEALER NETWORK OBSOLETE?

No. While the ratio of dealers versus direct transactions are shifting for many

industries, this shift is driven by convenience of a given channel for the

consumer’s immediate activity. Purchasing a new home is an interesting proxy for

this:

51% of buyers researched and found their homes online

88% of buyers used a real-estate agent to complete the transaction(National Association of Realtors 2016 HBAS Report)

Research and education are faster online, but negotiating a price, understanding

escrow options, and getting the inside scoop on a neighborhood is easier with a

real estate agent. Consumers consistently choose the lowest friction channel for

their needs.

Most important is to understand how customers learn about their problem,

research solutions, purchase and utilize the product they have purchased.

Taking that journey into consideration and mapping it against the lowest friction

channels provides a map for understanding where dealers add the most value:

• Local marketing and brand awareness

• Consumer education on market trends, news, etc.

• Product recommendation and configuration

• Purchase and fulfillment from stock or local distributor

• Warranty, service and returns

The biggest challenge in leveraging a dealer network is how the manufacturer

makes these activities simple and straightforward for the dealer and ultimately the

customer.

Manufacturers should stop thinking about dealers as order takers and instead

consider them educated product consultants. This disposition creates the largest

value for all three parties involved, the manufacturer, dealer, and customer.

1. The customer is able to leverage the expertise of the dealer

2. The dealer is able to leverage the market perspective, education and

product-fit provided by the manufacturer. This insight empowers the dealers

to understand their local market better, provide better service to their

customers, and a clearer demand signal to the manufacturer.

3. The manufacturer in turn, provides a brand experience that is low-friction

and differentiated versus its competitors. The cleaner demand signals from

the dealer network improves margins and reduces inventory risk.

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Adopting the right perspective

The dealer-manufacturer relationship is, above all else a partnership between enterprises. The net-value of the partnership is a result of the alignment, commitment, incentives, awareness and performance of both parties. In most cases, the manufacturer is responsible for setting the tone of the relationship and providing the infrastructure and tools to enable dealer success.

JOINT BUSINESS PLANNING

A dealer’s goals may not align with the manufacturer. Joint business planning

between the dealer and territory manager provide an opportunity to uncover

disparate and mutual outcomes, document them and jointly execute towards their

achievement.

It’s important that the creation of the plan not take too long as both the dealer

and the territory manager have heavy demands on their time. Ideally this can be

achieved in a one hour session and reviewed once per quarter.

Inputs:

1. Dealer and Manufacturer desired business growth (these may not align!)

2. Manufacturer product portfolio as a share of that growth

3. Prior period performance (order history, trend line, KPI’s)

4. Market trends and their expected impact against plan

5. Activities that will contribute to growth (either joint or individual)

6. Barriers or risks to the plan (either joint or individual)

7. Incentives for plan attainment

Outcomes:

• Mutual accountability between organizations

• Demand signal for the Territory Manager to use in their Sales Forecast

• Alignment of goals based on historical performance and mutual investment

• Orders captured during the planning period are reconciled against the plan

and added to the dealer’s scorecard.

• If a dealer’s performance deviates from the plan too broadly, an alert can be

sent to the dealer and the territory manager.

• Plans may be reviewed and approved by both parties (including senior

management) and is visible on the dealer’s profile in the dealer portal and

CRM.

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INTEGRATE DEMAND FORECASTING

The supply side of a manufacturing business needs a clean demand signal from sales, marketing and service business lines to ensure they are producing the right amount of product.

Manufacturers with integrated demand planning processes across commercial, finance, production and supply see a 67% increase in profitability over those that do not. (Aberdeen Group, 2017)

The challenge with demand planning is that the people who have the best perspective on demand (dealers and territory managers) are usually the most divorced from the process. Demand plans created by the finance or supply portion of the organization are usually closer to “supply” plans and are biased towards their needs.

Best in class manufacturers implement a simple but effective forecasting methodology for the front line of their business, integrating with finance and supply chain functions.

• Dealers provide estimated product line order volumes based on historic andlocal market trends. This is integrated into the joint business planningexercise.

• Territory Managers report on product line order volumes for their entireterritory, which is the sum of multiple dealers, distributors and direct businesschannels.

• Marketing, Sales and Service leadership review and approve the territoryforecasts. They each provide adjustments based on major contributingfactors under their control. The consolidated forecast is passed to finance,production and supply functions for further analysis and vetting.

• Dealers, Territory managers and executive leadership have access toforecasts and real-time attainment of order volumes and trends so everyoneis on the same page and corrections can be made as conditions change.

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DEALER AND TERRITORY SCORECARDS

Understanding your performance as a dealer or territory manager is key

to informed improvement. Scorecards are used as a one-page

performance summary, consolidating key metrics, trends and progress

towards goals

For dealers:

• Overall program status (Bronze, Silver, Gold)

• Delta for reaching the next level

• Current period product line order volumes against targets

• Prior period (or prior term) product line order volumes

• Certifications / Education objectives per employee

• Customer warranty registrations

• Customer promotion redemptions

• Progress and notes towards plan objectives

• Term / Credit Limits / Net Payments Outstanding

For territory managers:

• Overall product line order volumes against targets

• Dealer specific targets

• Local market demand generation initiatives and investments

These scorecards are generated and distributed weekly but available in

real-time from the CRM or dealer portal. Scorecards are linked with

drill-through capability so that sales leadership can start at the top and

navigate down into problem areas, and territory managers can look at

other territories and dealers to get a benchmark for comparison.

.

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IDENTIFY AND CLOSE GAPS IN COVERAGE

Every territory is different, so giving territory managers a macro view of their business helps drive informed decision making and prioritization. Most manufacturers sell several product lines and the performance of a product line in a territory is a top-concern for the business. Factors that can affect product line performance are multivariate and can range from:

1. Do we have adequate brand awareness / product line awareness in alocal market area?

2. How much inquiry are we getting in my market area for a given productline?

3. Do I have dealers in the right physical locations for the catchmentarea?

4. How informed and educated are my dealers about a certain product /product line?

5. How frequently are they recommending it, and when are theyrecommending it?

6. When are they recommending a competitor and why?7. Are competitor activities over-shadowing my local market activities?8. How frequently are customers having issues with my product and

why?

Answering these questions requires a mix of qualitative and quantitative analysis, and the Territory Manager is expected to act as the “farmer in the field” collecting this information. While it’s difficult to report on these factors specifically, several proxies can be used as general indicators which drive deeper analysis:

1. Product Line Order Volumes2. Warranty Registrations3. Product Defect and Return Rates4. Education and Certification Levels of Dealer Employees5. Leading Demand Indicators (automobile sales volumes for an auto

accessories dealer)6. Dealer Presence Information (number of customers per day, catchment

area served, etc.)7. Dealer Competitor Representation (number of competing product lines

represented)

It must be simple to collect this data, ideally not requiring the Territory Manager to collect it at all, or move some of the burden to the Dealer or even inferring it through indirect means. But once collected and consolidated, the Territory Manager will have a better picture of where they should be spending their to maximize the performance of their territory.

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PROACTIVE NOTIFICATIONS, REQUESTS AND OUTREACH

Territory Managers and Dealers have extensive demands on their time

from customers, vendors, partners and employees. Automating away the

minutiae of their job is important for efficiency and morale. Sending

notifications when performance is slipping, or when a dealer hasn’t been

contacted in a month is foundational to organizational discipline and

consistency. Additionally, collecting information from dealers or their employees

shouldn’t always require a phone call or sending an email. Being able to

automate these functions, including scheduling and outreach pays dividends on

time and imbues a sense of progress. The most common areas of automation

are:

1. Performance related notifications:

a. Order volumes

b. Warranty and service request volumes

c. Forecast and quota attainment

2. Information requests:

a. Dealer certifications and training

b. Dealer foot traffic information

c. Business plan update

3. Process automation

a. Quote or discount approval

b. Order expediting

c. Back-order request

d. Market development fund request

4. Scheduling automation

a. Book a one-off meeting with a territory manager

b. Recurrent account touch points or check-ins

Automation generally requires a work-flow engine which many CRM platforms

provide. It’s important that the CRM and Dealer Portal leverage the same work-

flow rules and definitions to ensure there is consistency across business

stakeholders and reduce maintenance costs. Ability to manage work-flow steps

and approvals from email, or mobile is a bonus.

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