3 December, 2020

Engaging and Incentivizing Channel Partners in the FMCG Sector

The ‘Indian FMCG sector’ and ‘distribution channels’ are practically synonymous with each other. Traditionally in India, distribution networks were owned by large FMCG firms- these distributors in turn worked closely with retailers or small-scale kirana stores to push products to the end consumer. Hence, the entire business model, including scale, margins and market share has always depended vastly on channel partner networks and secondary sales channels.

In today’s times, the FMCG industry has evolved and expanded, resulting in numerous firms bringing vast, sophisticated product lines to the market. Customers are the ones driving demand and stocking strategies at local distributor stores. As a result, now more than ever, channel partners are exposed to multiple competing firms.

Unlike earlier times, a single conglomerate can no longer dictate all the terms of their relationship with distributors/dealers. The latter own their distribution networks and often collaborate directly with aggregators and ‘modern’ kirana stores in tier 2 and tier 3 cities. The terms of the trade, therefore, are changing with the evolving retail landscape. At the same time, the role of sales representatives has also changed. Be it a classic or a co-investment model- wherein a firm contributes its own salespeople towards a channel partner’s efforts- sales agents are no longer merely responsible for managing inventory and pushing end-retailers to sell. They’re now actively responsible for maintaining channel relations and ensuring brand awareness/relevance in the face of high distributor turnover (in fact, even the churn rate of salespeople has spiked). Considering the above scenario, FMCG firms need to work in close partnership with sales and channel partners to create value and sell to the modern, often fickle customer.

Channel partners need to feel a sense of affiliation with a brand to stay connected. Discounts and cashback schemes are no longer sufficient to drive channel performance. Continuous, 24X7 sales support, along with relevant training and a targeted incentives scheme is the need of the hour for healthy channel relations, particularly in the FMCG sector. A comprehensive sales incentives and channel management software can help streamline processes and eliminate human error, in the following ways:

• Equipping head of sales/sales managers with the data they need for longer-term planning and understanding channel partner ROI for better negotiations. In addition, helping them determine and push the top performing SKUs as well as planning the right product mix, all through real-time data visibility
• Helping ASMs closely track the performance of team members through a territory-wise sales tracking dashboard
• Enabling sales executives to seamlessly share product information, unique benefits as well as monitor distributor performance through a single digital portal
• Assisting a firm’s marketing team to develop the right sales enablement collateral by sharing pulse surveys with channel partners. A platform like Gratifi can help administer surveys digitally and translate collated results into actionable insights
• Helping distributors stay connected to the firm as well as to the firm’s other channel partners through an online community or forum, where questions can be posed and answers can come from various stakeholders, providing rich insights and a useful, accessible knowledge base

With the rise of aggregators and omni-channel platforms, the FMCG industry now relies on a smaller pool of channel partners to drive their business. As we move towards the future of retail, creating a best-in-class shopping experience for the end consumer will be the determining factor for channel partner success. Given that the COVID-19 pandemic has virtualized collaboration, this can seamlessly be made possible through cloud-based platforms. The result will be the empowerment of a firm’s sales and channel network, creating a win-win situation for both stakeholders.