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Distribution Loyalty Programs: Next Big Thing In Channel Engagement Solution

As manufacturers use complex multi-tier distribution mechanisms to reach their consumers

Photo Credit : shutterstock


India, a country with over 1.2 billion consumers has 69 per cent of its population living in rural areas while 31 per cent reside in urban areas. This split makes distribution a challenge for manufacturers of Fast Moving Consumer Goods (FMCG) and other Discrete and Process Industries as lack of connectivity, among various other factors come between them and their end consumers. The Industry also has evolved over years - it was the era of iconic brands pulling sales till the 70's , retail and distribution strength driving sales till this millennium and  wit the consumers driving the sales and growth since 2000. All this means in a country like India, managing the distribution channel becomes important to compete and win in the marketplace.

Just to put the complexity of this challenge into perspective, we have an estimated total of over 12 million retail distribution outlets in India, as manufacturers use complex multi-tier distribution mechanisms to reach their consumers.

Multi-tier distribution
Multi-tier distribution is a form of distribution, common in certain industries such as retail, where vendors (i.e., producers of the original products) sell to an intermediary distributor, who may also carry products from multiple vendors, who in turn sells these products to retailers or sales entities that actually sell to the end user.

The Indian Manufacturing industry, in all its complexities, largely banks on such multi- tier distribution networks. This frequently involves entities such as Carrying and Forwarding Agents (CFA), a dealer or distributor, a wholesaler and finally the retailers who sell the products to the end consumers. The reach of distribution in the CPG & manufacturing industry is highly dependent on the brand reputation. Hence, influencing these entities is critical for growth.

But what about the service provider?
There is another dependency for a large part of manufacturing businesses such as:  
1)    Chemicals - paints & coatings
2)    Industrial machinery and components
3)    Household furnishing & equipment
4)    Automobile parts
5)    Lighting and electrical equipment
6)    Consumer electronics.

Though, all of these and several allied industries operate through the same multi-tier distribution channels where they need to influence the dealer/distributor, wholesalers and/or retailers, there is an additional critical influencer- the service provider.

This influencer can be a painter, a plumber, an electrician, a mechanic, a security expert, a building architect, and/or a designer depending upon the end product that these companies sell.

For instance, in India, when a consumer pays for paint in order to paint their house, they are not the one who actually does the painting. Since the painter plays a disproportionately important role in the decision making process, these manufacturers are increasingly realizing the need to
1)    Identify these influencers
2)    Enroll  and activate them into an engagement and rewards program
3)    Run and track targeted campaigns to make them influence their product
4)    Reward and recognize them and track sales influenced by them

Unifying Channel Engagement
While the dealer/distributor incentive programs are well established, schemes to unlock the potential of influence that can be generated through the service provider is largely unorganized. This is because it's difficult for manufacturers to get visibility in this channel. Such schemes are usually run locally, and companies aren't able to track the sales generated through such incentives.

This calls for a unified solution which manages to converge both the ends of the spectrum, to track and optimize both the distribution and consumption channels. The Capillary Channel Engagement Program gives manufacturers just that. It is a comprehensive framework that seamlessly integrates both these two critical elements and provides both the field sales representatives and the channel sales executives across all these industries, critical sales and channel related insights. This in turns can help them track growth of the sales network in real time, allowing them to influence and impact revenues and margin positively.

1)    Identifying influencers
Manufacturers and brands can now not just identify their distributors, but even the service providers and end users of their products on a single platform. They can also look into the purchasing patterns of these entities, allowing them to accurately predict their needs and preferences.

2)    Acquiring influencers
With the Channel Engagement Solution, manufacturers can include all such influencers into comprehensive, sophisticated, engagement and loyalty programs that enables them to appropriately reward these entities.

3)    Run and track campaigns

Through the platform, manufacturers can run highly targeted campaigns for each influencer to help grow their distribution and sales. They can also track these campaigns and the sales it has generated in real time, allowing them to modify and optimize these initiatives.

Since the Channel Engagement Solution is on the cloud, it's easy to access and use for any field or channel sales executives. The unified view of multiple channels gives better visibility into these sales for these manufacturers. Hence, such technologies pose to transform business in the entire manufacturing ecosystem.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Tags assigned to this article:
Distribution Loyalty Programs fmcg consumer

Jayaraman Krishnamurthy

The author is General Manager (Strategic Initiatives) and would be responsible for driving Capillary's foray into CPG & related industries. He has over 20 years of total experience in CPG, manufacturing and retail Industries having consulted and worked for leading organizations in both India and abroad. He has led multiple initiatives across Consumer Products, Retail and Manufacturing Industries for Software Product /Consulting / Services Organizations working in the areas of Supply Chain, IT Strategy, Analytics, Customer Engagement & Commerce, Trade Marketing & Distribution and overall Digital Transformation.

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