Yesterday, Bob Segal, a principal at research firm Frank Lynn & Associates, made a case for effective communication in successful distributor plans. In part two of the Q&A, Segal addresses the remaining elements critical to the manufacturer-distributor planning process.

Part 1 of this interview was published yesterday on IMT.

In the second half of a two-part Expert’s Corner Q&A, Bob Segal, a principal at Chicago-based consultancy and research firm Frank Lynn & Associates, addresses the remaining elements critical to the manufacturer-distributor planning process.

IMT: As we make our way into the second half of 2010, are any parts of the plan between manufacturers and distributors becoming especially important, whether it’s the sales plan or the customer mix?

BS: I say this only half jokingly, but the forecast part of the plan is going to be very important in 2010, since we are coming out of such a deep recession. Manufacturers are going to want an annual forecast in the plan. However, an important component of any plan is typically a formal quarterly review of progress against the plan, and sometimes even monthly informal reviews, where a manufacturer checks in and asks, “Hey, how are things going?”

So, coming out with the forecast is critical for the manufacturer in planning, as well as for the account itself. But don’t forget the quarterly checkpoints. For instance, ask the distributor, “Are we making progress coming out of this business slump?” The checkpoints can help answer such questions as, “Should we hire more staff?” or “Should we gear up production?” Those forecasts are critical.

IMT: Regarding the plan and its forecast, does it cover sales or the financial plan, or both?

BS: Obviously, it draws on sales/marketing and finance, so it’s usually a separate section of most manufacturers’ plans.

Different companies want the plan in different ways. Some just want an aggregate number for the distributor overall, while some may ask for the sales forecast broken out by major product category. Other manufacturers may request a rolling 90-day forecast. Some may just ask for an annual sales forecast. So, everybody’s looking for something different. However, generally speaking, it’s simply a separate item on the form that asks, “What’s your forecast for the coming sales period?”

IMT: Does the manufacturer-distributor planning process and the plan itself vary depending on the manufacturing industry? Or is it standard across the spectrum of manufacturers?

BS: Of course, everybody likes to customize his or her approach somewhat. Here are a few preface points. One, many companies think they need to put together the plan for their distributor partner. The important point is that the distributor partner put together the plan. That’s the first thing companies must recognize.

Second, just because you are asking partners to put together the plan doesn’t mean that you don’t want to give them a template to follow rather than having the partner create a plan freeform without your company’s input.

Having said that, each company likes to design its own form. There’s always something that the firm is looking for that is unique to the organization. There is no one agreed-upon form.

However, in general, most account plans tackle the same issues. They want a list of goals. They want a forecast. They want to know what the marketing activities will be of the partner. They want to know about key accounts as well as plans for key accounts — whether those are potential or existing accounts. They want to know about personnel and training — who is coming to what training sessions and when. Hiring plans and perhaps new product introduction plans are also usually covered.

Account plans don’t vary tremendously by industry, but every company is probably looking for something a little bit different.

IMT: What about technology companies and their account plans?

BS: The one generic difference from industry to industry is that the technology industry has such an emphasis on new product introductions. And tech companies introduce many new products every year, whereas companies in more mature industries might not introduce a new product but once every three or four years.

So, companies in technology industries are a bit more sensitive to plans for new product introductions during the year, and a bit more sensitive perhaps to technical certifications of sales and support staffers. That said, the categories tend to be fairly similar, I would say.

IMT: It sounds like manufacturer-distributor plans are going to be crucial as we head into the second half of 2010…

BS: From a business standpoint, 2009 was so horrible that people are wondering if we are out of the economic doldrums yet. Manufacturers have laid off workers, and companies and their shareholders are desperately wanting to know when sales are going to head up. Typically, the distributors have a better feeling for that on the ground than the manufacturers, because they are talking with the customers daily.

Because last year was so bad, and because people are wondering whether the economy is turning — or when is it going to turn — the 2010 forecast is particularly critical.

To your point, yes, the sales plan and the marketing effort are very important in 2010, to the extent that they’re going to drive those forecast numbers to reality.

This interview was conducted on behalf of IMT by Michael Keating, senior editor for Government Product News and a contributing editor for American City and County, both published by Penton Media Inc. Keating has written articles on the government market for more than 100 publications, including USA Today, Sanitary Maintenance, IndustryWeek and the Costco Connection. Mike can be reached through his website, MikeKeat.net.