PLAYBOOK

The CRM Playbook for

Manufacturing
SUGARCRM INDUSTRY SERIES
EXECUTIVE SUMMARY

The majority of manufacturers market, sell and service their products through a network of dealers that
operate in local markets and transact directly with the end customer. For a manufacturer, dealer networks
significantly reduce the costs of entering a market at the expense of predictability, consistency and control.
As a customer, engaging with a dealer provides them with insight and recommendations around the best
solution for a problem. With the rise of e-commerce and direct-to-consumer channels, manufacturers are
naturally asking themselves:

“Is the dealer network obsolete?”

“What are best practices for Dealer Management?”

Customer Relationship Management software streamlines dealer management by consolidating dealer,

territory, market and fulfillment information into a consumer-grade interface for dealers and territory
managers.

Consumer

Distributor Dealer

Manufacturer Distributor

Supplier

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IS THE DEALER NETWORK OBSOLETE?

No. While the ratio of dealers versus direct transactions are shifting for many
industries, this shift is driven by convenience of a given channel for the
consumer’s immediate activity. Purchasing a new home is an interesting proxy for
this:
51% of buyers researched and found their homes online
88% of buyers used a real-estate agent to complete the transaction
(National Association of Realtors 2016 HBAS Report)

Research and education are faster online, but negotiating a price, understanding
escrow options, and getting the inside scoop on a neighborhood is easier with a
real estate agent. Consumers consistently choose the lowest friction channel for
their needs.

Most important is to understand how customers learn about their problem,

research solutions, purchase and utilize the product they have purchased.

Taking that journey into consideration and mapping it against the lowest friction
channels provides a map for understanding where dealers add the most value:

• Local marketing and brand awareness

• Consumer education on market trends, news, etc.
• Product recommendation and configuration
• Purchase and fulfillment from stock or local distributor
• Warranty, service and returns

The biggest challenge in leveraging a dealer network is how the manufacturer

makes these activities simple and straightforward for the dealer and ultimately the
customer.

Manufacturers should stop thinking about dealers as order takers and instead
consider them educated product consultants. This disposition creates the largest
value for all three parties involved, the manufacturer, dealer, and customer.

1. The customer is able to leverage the expertise of the dealer

2. The dealer is able to leverage the market perspective, education and
product-fit provided by the manufacturer. This insight empowers the dealers
to understand their local market better, provide better service to their
customers, and a clearer demand signal to the manufacturer.
3. The manufacturer in turn, provides a brand experience that is low-friction
and differentiated versus its competitors. The cleaner demand signals from
the dealer network improves margins and reduces inventory risk.

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JOINT BUSINESS PLANNING
Adopting the right perspective
A dealer’s goals may not align with the manufacturer. Joint business planning
The dealer-manufacturer relationship
between the dealer and territory manager provide an opportunity to uncover
is, above all else a partnership
disparate and mutual outcomes, document them and jointly execute towards their between enterprises. The net-value of
achievement. the partnership is a result of the
alignment, commitment, incentives,
It’s important that the creation of the plan not take too long as both the dealer awareness and performance of both
parties. In most cases, the
and the territory manager have heavy demands on their time. Ideally this can be
manufacturer is responsible for setting
achieved in a one hour session and reviewed once per quarter. the tone of the relationship and
providing the infrastructure and tools
Inputs: to enable dealer success.

1. Dealer and Manufacturer desired business growth (these may not align!)
2. Manufacturer product portfolio as a share of that growth
3. Prior period performance (order history, trend line, KPI’s)
4. Market trends and their expected impact against plan
5. Activities that will contribute to growth (either joint or individual)
6. Barriers or risks to the plan (either joint or individual)
7. Incentives for plan attainment

Outcomes:

• Mutual accountability between organizations

• Demand signal for the Territory Manager to use in their Sales Forecast
• Alignment of goals based on historical performance and mutual investment
• Orders captured during the planning period are reconciled against the plan
and added to the dealer’s scorecard.
• If a dealer’s performance deviates from the plan too broadly, an alert can be
sent to the dealer and the territory manager.
• Plans may be reviewed and approved by both parties (including senior
management) and is visible on the dealer’s profile in the dealer portal and
CRM.

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INTEGRATE DEMAND FORECASTING

The supply side of a manufacturing business needs a clean demand signal from
sales, marketing and service business lines to ensure they are producing the right
amount of product.

Manufacturers with integrated demand planning processes across commercial,

finance, production and supply see a 67% increase in profitability over those that
do not. (Aberdeen Group, 2017)

The challenge with demand planning is that the people who have the best
perspective on demand (dealers and territory managers) are usually the most
divorced from the process. Demand plans created by the finance or supply
portion of the organization are usually closer to “supply” plans and are biased
towards their needs.

Best in class manufacturers implement a simple but effective forecasting

methodology for the front line of their business, integrating with finance and
supply chain functions.

• Dealers provide estimated product line order volumes based on historic and
local market trends. This is integrated into the joint business planning
exercise.
• Territory Managers report on product line order volumes for their entire
territory, which is the sum of multiple dealers, distributors and direct business
channels.
• Marketing, Sales and Service leadership review and approve the territory
forecasts. They each provide adjustments based on major contributing
factors under their control. The consolidated forecast is passed to finance,
production and supply functions for further analysis and vetting.
• Dealers, Territory managers and executive leadership have access to
forecasts and real-time attainment of order volumes and trends so everyone
is on the same page and corrections can be made as conditions change.

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DEALER AND TERRITORY SCORECARDS

Understanding your performance as a dealer or territory manager is key

to informed improvement. Scorecards are used as a one-page
performance summary, consolidating key metrics, trends and progress
towards goals

For dealers:
• Overall program status (Bronze, Silver, Gold)
• Delta for reaching the next level
• Current period product line order volumes against targets
• Prior period (or prior term) product line order volumes
• Certifications / Education objectives per employee
• Customer warranty registrations
• Customer promotion redemptions
• Progress and notes towards plan objectives
• Term / Credit Limits / Net Payments Outstanding

For territory managers:

• Overall product line order volumes against targets
• Dealer specific targets
• Local market demand generation initiatives and investments

These scorecards are generated and distributed weekly but available in

real-time from the CRM or dealer portal. Scorecards are linked with
drill-through capability so that sales leadership can start at the top and
navigate down into problem areas, and territory managers can look at
other territories and dealers to get a benchmark for comparison.

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IDENTIFY AND CLOSE GAPS IN COVERAGE

Every territory is different, so giving territory managers a macro view of their

business helps drive informed decision making and prioritization. Most
manufacturers sell several product lines and the performance of a product
line in a territory is a top-concern for the business. Factors that can affect
product line performance are multivariate and can range from:

1. Do we have adequate brand awareness / product line awareness in a

local market area?
2. How much inquiry are we getting in my market area for a given product
line?
3. Do I have dealers in the right physical locations for the catchment
area?
4. How informed and educated are my dealers about a certain product /
product line?
5. How frequently are they recommending it, and when are they
recommending it?
6. When are they recommending a competitor and why?
7. Are competitor activities over-shadowing my local market activities?
8. How frequently are customers having issues with my product and
why?

Answering these questions requires a mix of qualitative and quantitative

analysis, and the Territory Manager is expected to act as the “farmer in the
field” collecting this information. While it’s difficult to report on these factors
specifically, several proxies can be used as general indicators which drive
deeper analysis:

1. Product Line Order Volumes

2. Warranty Registrations
3. Product Defect and Return Rates
4. Education and Certification Levels of Dealer Employees
5. Leading Demand Indicators (automobile sales volumes for an auto
accessories dealer)
6. Dealer Presence Information (number of customers per day, catchment
area served, etc.)
7. Dealer Competitor Representation (number of competing product lines
represented)

It must be simple to collect this data, ideally not requiring the Territory
Manager to collect it at all, or move some of the burden to the Dealer or
even inferring it through indirect means. But once collected and
consolidated, the Territory Manager will have a better picture of where they
should be spending their to maximize the performance of their territory.

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PROACTIVE NOTIFICATIONS, REQUESTS AND OUTREACH

Territory Managers and Dealers have extensive demands on their time

from customers, vendors, partners and employees. Automating away the
minutiae of their job is important for efficiency and morale. Sending
notifications when performance is slipping, or when a dealer hasn’t been
contacted in a month is foundational to organizational discipline and
consistency. Additionally, collecting information from dealers or their employees
shouldn’t always require a phone call or sending an email. Being able to
automate these functions, including scheduling and outreach pays dividends on
time and imbues a sense of progress. The most common areas of automation
are:
1. Performance related notifications:
a. Order volumes
b. Warranty and service request volumes
c. Forecast and quota attainment
2. Information requests:
a. Dealer certifications and training
b. Dealer foot traffic information
c. Business plan update
3. Process automation
a. Quote or discount approval
b. Order expediting
c. Back-order request
d. Market development fund request
4. Scheduling automation
a. Book a one-off meeting with a territory manager
b. Recurrent account touch points or check-ins

Automation generally requires a work-flow engine which many CRM platforms

provide. It’s important that the CRM and Dealer Portal leverage the same work-
flow rules and definitions to ensure there is consistency across business
stakeholders and reduce maintenance costs. Ability to manage work-flow steps
and approvals from email, or mobile is a bonus.

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