Relationship Management: Vendors and Suppliers
Once design is finalized and production has been established, it is important to maintain a reliable supply of stoves as well as connect that supply to sales channels. While it can be beneficial and educational for manufacturers to sell directly to end-users, it is often more efficient to leverage existing networks. It is advisable to consider a broad list of people and groups who might be interested in selling the products. Examples include:
- Retail outlets selling similar products, such as hardware stores, grocery stores, health centers or agricultural outlets.
- Individual entrepreneurs.
- Community-Based Organizations.
- Health promoters or community health providers.
- NGOs distributing similar products.
A person or team of people should be appointed to manage identification, recruitment and ongoing support for these partners. It is encouraged to cast a wide net, as it is not always obvious who will be most excited about the products or who will be best-suited to sell. Examples of key tactics to attract customers can be found in the Hystra’s “Marketing Innovative Devices for the Base of the Pyramid.” Additional case studies and advice from the field can be found on Impact Carbon’s website, The Social Marketplace.
Working with the production and sales managers, logistics systems should be established. Successful logistics can help business to run more smoothly and fulfill customer needs more quickly. This not only improves efficiency, but can also provide a competitive advantage over other businesses and provide better customer service. Key areas to address include:
- Assigning a production manager and establishing a system for transferring stoves from final production to inventory.
- Assigning a point person to liaise with the production manager oversee inventory, tracking stoves coming in from production as well as authorizing and tracking stoves to be released for sale.
- Assigning a point person to take all incoming orders and liaise with the inventory manager to oversee delivery schedules.
From there, continued work with the team should be undertaken to develop structures that support optimal production and sales.
- Communication: It is important to create and agree upon goals for production and sales, taking the time to discuss these goals with staff, addressing any questions. Clear expectations should be provided on how these goals will be evaluated with clear incentives for meeting and exceeding goals established, creating a path to growth based on reaching milestones.
- Training and Resourcing: Training is important to ensure all team members have the knowledge and resources they need to do their jobs effectively. It can reduce the risk of mishaps, foster teamwork and provide motivation. It is recommended to identify and appoint qualified and experienced point people to manage key areas, including production, inventory, procurement, sales, finance and administration. These employees should be empowered to create training manuals, provide trainings and identify and address ongoing training needs.
- Preparation: It is advisable to build up an inventory of finished products and spare parts to ensure that orders can be fulfilled even if there are production setbacks, such as a shortage in raw materials or loss of power. The inventory manager and production manager should work together to establish systems to ensure efficient information flow.
- Facilitation: Focusing on commercial viability is critical, with attractive margins set. If the product is attractive for sales agents and vendors to carry, they will continue to place orders and make sales.
- Evaluation: It is helpful to identify top performers and underperformers on teams, and the behaviors that make them successful. It is advisable to cater re-investment of carbon revenues to support top performers and invest in successful business.
- Recognition: Acknowledging and celebrating successes within and across teams lets other employees realize that success is possible, provides motivation and can foster a bit of healthy competition!
For additional information on setting up sales incentives, refer to Impact Carbon’s section on Marketing and Sales.
Managing After-Sales Service
Providing and tracking after-Sales Service is important for a few reasons:
- Adoption: Achieving high product usage and a long lifespan is critical for achieving maximum impact as well as optimal carbon crediting results. Providing an after sales program enables you to repair products that have broken or gone out of use, facilitating a longer lifespan.
- Information Collection: After sales service, especially through a warranty card, facilitates a mechanism through which you can collect detailed information on customers to conduct required follow-up surveys.
- Product Improvement: By creating the ability to interact with customers after the product has been sold, it is possible to identify when stoves go out of use, and why. For example, if it is discovered that the ceramic liner cracks in 50% of stoves after six months, it is probably a good indication that liner quality should be improved. Through after-sales service, a dialogue with customers is established which will help to identify where the product may be failing them and how it can be improved.
- Retaining customers: Customers will be more likely to make a repeat purchase if they have had a positive experience with the business already.
- Attracting new customers: Word of mouth marketing is important, If customers have a bad experience with a service or your product, they will be less likely to encourage friends to purchase your product and in some cases may even discourage people from purchasing it
With this in mind, it is important to design a robust after-sales support program. In many cases, it is common to offer a warranty on the product. In this case, it is important to determine who will service the warranty with the customer (i.e. the manufacturer or the vendor) and under what circumstances is the warranty valid, or void. The most efficient and feasible path for servicing the warranty should be determined, and communicated clearly to the customer using a tool such as a warranty card. For non-warranty repairs and replacement, it is advisable to create a fixed price list to ensure services are standardized. Customers should be informed of the ways through which they can have their product repaired throughout its lifetime.
Reaching remote and vulnerable populations:
Another P in the Ps is “Place”, or distribution channel, which is the path through which goods and services flow from vendor to customer, and payments from customer to vendor. A distribution channel can be as short as being direct from vendor to consumer or may include several inter-connected intermediaries such as wholesalers, distributors, agents, and retailers. When there are multiple parties involved, each intermediary generally receives the item at one price point, adds a small markup, and then sells to the next person in the chain until it finally reaches the end consumer. Minimizing the number of parties in the chain can reduce the final cost to the end consumer.
Building a distribution strategy is one of the greatest challenges for an organization. Providers for social goods have a product or service with substantial social benefits, such as improved maternal health clinics or a household water treatment system. However, establishing how to get the product to the target segment, educating the sales force and ultimately the end consumers, and providing follow-up servicing are tasks that are generally not within the core competencies of non-profit organizations. Organizations who are attempting to sell their product in a new area will need to decide on an appropriate distribution strategy based on the product characteristics, their relationships with distributors and other NGOs in the community, and the speed with which they want to roll out the product.
We can simplify the planning process to the decision tree depicted here:
Most companies use a combination of distribution channels to reach their customer. There are pros and cons to each. Distribution methods should be planned to be as efficient as possible in terms of investment, time and labor. Profitability of different channels should be regularly reviewed, as well as their convenience to customers. It is also worth looking at the lessons which can be learnt from competitors or even possible distribution collaboration opportunities. In particular it is helpful to be aware of internal organizational capabilities and to consider partnerships when it does not make sense to do it in-house.
Please see the following case studies on successful distribution here:
For more information, visit Impact Carbon’s website, The Social Marketplace.