(For part 1 of the this article, see here)
You think the biggest risk in partner distribution is a store takeover or a temporary country exit? Puma’s CEO Jochen Zeitz may have thought so too, until Puma’s Greek distributor filed for bankruptcy in 2012. Puma informed the stock market that it may lose €115m; quite a figure, considering the entire Greek sporting goods market generates less €500m in annual sales. If you are familiar with financial reports of global brands, you know this is just one of many cases where poor partner management was costly.
Brands don’t groom partnerships
Many brands operate far more than 100 partner stores, but they spend 95% of their time and resources on recruiting new partners rather than controlling or nurturing existing partnerships. A brand’s partner manager often fights a lonely battle for quality in partner retail. Commonly in a global brand, country managers protect “their” local partners, and so many partner contracts do not give a brand the access to the actual performance of the partner and his stores. Consequently, partner managers are often toothless tigers, and a qualitative brand growth happens only when partners are strong in developing the brand their own way (see our blog part 1 on partner management).
In general we observe, the stronger the brand and its products, the less it invests in partnership programs. Partnership management is reduced to an annual executive meeting, maybe a mystery shopping study, an invitation to collection launch, but all with little impact on qualitative development of the partnership.
In April 2011 a US brand consortium asked us to transform their successful, but hands-on 150+ partner store business in Europe into a holistic partner program. Our project helped the group to enhance the brands’ franchise readiness and develop processes, tools and structures, while doubling the original partner growth plans.
Today, our standard processes and tools are implemented, partner contracts follow one standard, and expansion and profits are well ahead of the original plan. Yet the partner development program, the joint work of partners and brands, still awaits implementation. Partners are either good and know how to develop themselves or they aren’t, this is the way many brands in Europe approach their partner retail.
Partnership management is a must
Why do brands prefer to go easy on their partner? Why do brands invest little in growing a partnership? Why is it so many partnerships fail? For the very same reason so many marriages fail:
- We are blinded by good looks when we say ‘I do’
- We are no good at reading & guiding people
- We are lousy at investing in and maintaining relationships
If most energy goes into “dating”, how can we expect to cultivate a mutually rewarding partnership? Annual arguments about late delivery, late payments or discounts often make up 100% of a brand’s communication with its partners. If your marriage is reduced to discussions about children school problems and who messed up the bathroom, you can’t expect a relationship to grow much either.
Managing partnerships is no different from maintaining a marriage: Without investments in wellbeing, the quality of (management) life will suffer for you and your partner.
What next? Energize your partnerships!
Do you create greatly improved results for you and your partners in 2014?Whether you look at your distributors in Russia or a partner store in Milan, if it doesn’t work for you or your partner, influence the development by working on your partner management.
- If you are CEO or CSO, don’t blame your partner or partner managers! Partner growth is a top-level strategic task. “Managing” partners that operate outside your direct reporting lines calls for executive leadership. Don’t leave partner management to small teams and small budgets.
- If you are partner manager, don’t blame your CEO, or a country manager! Raise your brand’s awareness on the development potential and benchmark partnership program. A currently low-key approach holds huge potential for you and your brand –sell the opportunities to the board, leave the state of “partner administration” go for “excellence in partnership management”.