Principal Development
Running a chemical distribution business was once described by a senior industry figure as like ‘managing a leaking bucket’. He explained that ‘You have to ensure that the flow of business from new Principals, going in the top of the bucket, is greater than the business lost from Principals that are leaking out of the bottom.’
No matter how good you are, or how strong your Principal relationships, continuing consolidation and changes in the chemical sector will result in the loss of existing Principals at some point.
Therefore it's not a question of ‘if’ you'll lose Principals, but ‘how often’?
So what steps can you take to improve your chances of keeping existing Principals and how do you go about getting new ones?
Improving Principal retention
There are no sure fire ways of achieving a 100% Principal retention year on year - there are always going to be situations beyond your control, but there are some simple steps you can take to help minimise your losses.
One of the first steps in a retention strategy is to find out what your current Principals' think about your performance as a distributor. How good are your established Principal relationships?
Once you understand where you're at you can then develop a program to improve service levels and address unfavourable perceptions.
Identifying & gaining new distributorships
In today's competitive market place Chemical Distributors can no longer afford to sit back and wait to be approached by chemical manufacturers offering them distributorships.
Chemical distributors need to make building relationships with potential Principals a strategic business activity. This is critical if your growth plans are dependant on developing and extending your current product portfolio.
Outsourcing trends in the chemical industry are still in the distributors favour but in a growth market are you picking up more new Principals than your competitors?
How Chemagility can help distributors develop their business with existing and new Principals
- Principal survey. Chemagility can carry out an independent research study to find out what your Principals think of your performance. In our experience Principals view this as initiative by the distributor in terms of what can be improved still further, rather than viewing that there is something currently failing with existing processes.
- Product portfolio review. We can give you an objective view of your current portfolio in relation to your key markets and help pinpoint 'new' products that would have a good strategic fit with your customer base. This is a good way of highlighting additional revenue that it might be possible to leverage from your existing markets.
- Identifying and targeting new Principals. Commissioning Principal research in addition to a product portfolio review, will help identify potential Principals and help form the basis for a more successful long-term, product development strategy for your business.
- Competitive benchmarking & positioning. It is imperative to have a compelling competitive position that will give you the edge over other distributors in gaining a new Principals business. Chemagility can will benchmark your competitive position and advise you how to develop your service offering to both customers and Principals to give you that all important edge for generating additional revenue.
