Distribution determines your success!

Bad distribution, not bad goods,
is the main reason for failure
- Peter Thiel 

Distribution is all about being visible enough to your target audience and then how to cleverly distribute your products to them. Because if you want to be successful, you have to be visible! Yet everyone uses the same distribution channels which comes at the expense of your visibility. Just look at insurance companies working with insurance brokers or soup producers working with supermarkets. 

But what happens when soup becomes readily available to employees at four o'clock? Or an insurer provides its product to workers through a temp agency? Suddenly entirely new markets without competition are available. To get off to a flying start, you need this simple equation:

Distribution = Ecosystem + Incentives + Convenience

1. Ecosystem

Ecology studies both the interactions among organisms, within populations and their communities. It shows that organisms participate in different ecosystems. After all, a bird does not only live in the forest; ecosystems such as a meadow or an urban area are also part of its habitat. Ecosystems can also be applied to customers. Keep in mind that like the bird, customers can be in multiple ecosystems.

Now grab a sheet of paper and start mapping all the participants within the different ecosystems. Ask yourself who influences whom? Where do they work or play sports? What do they read? What companies do they do business with? Dwell on who has access to your customer and, for a fee, is willing to introduce your product? 

2. Incentives

Once you have mapped out different ecosystems take the next step. Using incentives, see which distribution partners are willing to introduce your product to their customers. For example, you can pay Google or Facebook and they will display your ad. You can pay distribution partners a commission or a fee and they will close the sale for you. But there are other ways to entice a distribution partner to show your products. Most companies take little advantage of non-financial incentives.

To grow faster with less budget, think about how to incentivize key influencers without the use of financial incentives. What can you offer a partner who is already reaching your customers at no cost? Networking, knowledge sharing, PR are some examples that do not directly assume a financial transaction but do motivate a distribution partner to work for you.

3. Offer convenience

What is important is that you make distribution partners unburdened, make life easier. Offering customized services alongside your products makes your organization more interesting. Think for example of simplified users, administration, ordering and payment processes. The right customization also makes it harder for the distribution partner to end the partnership (lock-in). Like the soup dispenser in the office with a simple ordering system or an insurer that makes the many registrations and cancellations of temporary workers run smoothly so that the employment agency has one less worry. 

Think about distribution first

The earlier you think about distribution, the more room you have to build it into your product design and business model. Once your client's key ecosystem is established, talk to them early on to understand what motivates them.

Money is never the only resource. Creative convenience incentives can be just as powerful and much more scalable. Give people something that is valuable to them . . and is easy to provide. When you go through the above three steps, you will find that there are many more distribution channels available than you thought possible. 

Ruud Olijve

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