7 Key Advantages Of Selling Through Distributors

Indirect sales force is used by most medical device companies for the reasons already discussed in my previous post.

Unfortunately, third parties and partners are often considered the ugly version of a direct sales force; however, a good partnership is a key factor of success for a company that is in search of geographical expansion.

What Is A Good Distributor?

A good distributor is not a commodity; on the contrary, it is an asset on which the profitability of the company is built.

What Are The Advantages Of An Indirect Sales Force When Entering A Market?

The indirect sales force has its own share of advantages, especially to medical device companies and it is the most used model. Highlighted below are some of its benefits:

• Selling cost under control: In indirect sales force, the cost of sales activities is a variable percentage of the revenues generated; the margin will be lower but fixed costs are negligible.

• Customer relationship: A well-established distributor with a large complementary product portfolio already has a good number of customers that can facilitate market penetration. The customer base of the distributor is a key asset and having solid information about it, is critical to evaluate the strategic fit between distributor and manufacturer.

Other Benefits Of A Good Distributor In An Indirect Sales Force Model:

• Market knowledge: A good distributor is one who understands the market, reimbursement, and regulatory dynamics that aids simplifying access to the market and avoiding missteps. Hence, the knowledge and management of the selling model (e.g the tender business) used in marketing your product is fundamental.

• Complementary products and other not competing products: Complementary products allow the distributor to bundle and provide several solutions to the same customer segment.

On the other hand, non-competing products allow revenue generation, in order to sustain an adequate number of sales reps on the territory.

• Reputation: When choosing the commercial partner, especially if the company is new or not well-known, a good reputation on the market is a key asset.

For instance, a respected sales representative working for a popular distributor can easily sell a new product than a direct sales rep who works for an unknown company.

• One stop shop: The “supermarket” effect is very useful if your product is not generating enough value on its own.

Likewise, the product can benefit from piggybacking, if sold by a distributor. Infact, if you’re an appreciated distributor, loyal customers can choose your product, especially if it is not well differentiated from others, just to reduce their buying effort.  

• Local after sales service: A distributor can simplify and secure the creation of after sales service without a huge investment, by providing value to the customer- thanks to the closeness.

If your product requires service and repairs, implementing both a direct sales force and an after sales service could be an unsustainable effort.

Conclusion

If you’ve been following my posts closely, by now it’ll be very easy to differentiate between the direct, indirect and hybrid sales model.

And you’ll also have found out why the indirect sales model is most preferred for companies in the medical device business.

That said, working with distributors in the medical device business has its advantages, but do you realize that the more you know about the advantages and downside of the indirect sales model, the better your decisions will be? You’ll know what sales force will work for your business.

Hence, in my next post I will address the disadvantages of this common selling model- which is the indirect sales model.