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Strategic Distribution Decisions

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Choosing the right set of distribution channels is one of the most critical decisions you will make as a publisher.I learned this the hard way. Now, through mistakes I made with my first title and from my many years of experience as a high-tech marketing consultant, I have on hand a simple and straightforward process I developed for making strategic distribution decisions. You can use it whether you are publishing for the first time or are an established publisher with multiple titles.

It’s a matter of taking the time to think and to plan.

 

Forget Ego; Stress Customers & Cash Flow

Finding the right distribution channels is a business decision. Don’t be lured into signing with a distributor just because the distributor likes your book. It’s always good for the ego when that happens, but remember that you are running a company! This is true even if you only have one title. In order for you to stay in business, you need customers and you need cash flow. Those are the foremost facts to keep in mind as you evaluate distribution options available to you.

First, some definitions. A distribution channel is a means by which you get your product (a book) to customers (readers). A direct channel is one through which you can sell your book directly to your customer with no other business entity involved; you hand the customer (or ship them) the book and they give you cash. An indirect channel is another distinct business entity that is in between you and your customer. They sell your books directly to your customer, expect a hefty discount off list price, and ery,
ually return some money to you. Indirect channels may be book distributors or any type of book reseller such as Amazon.

This article focuses only on indirect channels. So, for the purposes of this article, I will use the term “distributor” to mean any type of “indirect channel.” When you use indirect channels, they are the primary interface with your customer. You need to feel comfortable that they will represent your product accurately and that they will pass customer feedback along to you. As you consider candidates for indirect channels, ask yourself whether you trust them to do that.

 

Truths Born of Error

My first title was High Tech Product Launch. Before I published it, I had spent two years reading all I could about how the publishing industry works. I made three mistakes that led me to discover three truths.

Mistake #1:

Line up all the distributors you can find who will take your titles. More is better.

Truth #1:

Someone else’s list of distribution channels may not work for your company. You can waste time, lose money, and miss your market window.

Mistake #2:

Each new title should have its own set of distribution channels.

Truth #2:

You need to find the set of distribution channels that work for your business–not just for one title. Managing multiple distribution channels is too complicated and time-consuming, especially if you’re a one-person company like me!

Mistake #3:

Set up several distribution channels for your books to find out by trial and error where customers buy them.

Truth #3:

You must know your target customer down to the last detail before you choose your distribution channels. Otherwise, you’ll miss your market window. (I started out in the right channels but added more that didn’t yield sales. Eventually I had to eliminate the newer ones.)

 

The Thinking & Planning Step

Two things should drive distribution decisions: your company’s business objectives and your target customer’s buying behavior.

Business objectives can be financial or market-related. The first step is to sit down and think about your financial objectives and market objectives. Ask yourself some questions. With this title, do you want to:

1. Turn a profit?

2. Break even?

3. Maintain a certain cash flow?

4. Meet payroll?

5. Generate enough cash to do the next title?

6. Build awareness of your company?

7. Enter a new market?

8. Compete more effectively?

9. Leverage other titles?

10. Leverage other non-book business?

You also need to assess customer’s buying behavior–the other crucial factor. I highly recommend finding one or more real persons who represent your target customer and asking them these questions:

1. Where do you buy books like this?

2. Why do you buy books like this? (possible reasons: information, inspiration, reference, education, entertainment)

3. What are you willing to pay for a book like this?

4. What packaging do you expect? (hardcover, paperback, illustrations, etc.)

 

Screening Candidates & Making the Decision

After you have answered both sets of questions and before you start contacting distributors, make a list of requirements. Then identify potential distributors who can meet your criteria; this will require homework. Talk to other publishers and ask about their distributors’ track records with regard to speed of payment and returns. Find out which distributors offer marketing opportunities to leverage your title and whether they are profitable companies that are likely to stay in business for a while.

When you start discussing contracts with distributors, keep the following points in mind. Remember, this is a strategic business decision and you are seeking a reliable partner with whom to establish a business relationship. You need to be proactive, not reactive:

1. Again, don’t be overly influenced by the fact that a distributor “wants” your book. This is business.

2. Realize that any distributor’s terms can be negotiated. Any of them.

3. Discuss all the distributor’s business processes and procedures until you fully understand what’s expected of you and what they will deliver.

4. Don’t sign anything until you understand all the terms of the contract. Have your attorney review the contract and discuss it with you beforehand.

5. Make sure there’s a release clause in the contract, which should specify notice no longer than 30 days to either party.

 

Rating Distributor Performance

Once you begin working with a distributor, evaluate performance at least quarterly. Are sales and payments meeting your requirements? Is the distributor meeting all terms of the contract in good faith? If not, exercise your release clause and move on.

Make detailed notes about every distributor’s performance and use them when you plan your distribution strategy for the next title. This will help you set priorities and get your new books to the highest-performing channels first. Setting priorities will, in turn, help you allocate your marketing budget and your precious time more effectively.

If a distributor is performing very well for you, send a complimentary letter to your contact person. That will help build and strengthen your business relationships for the future.

 

Catherine Kitcho is the President of Pele Publicationswww.pelepubs.com) in Mountain View, California, and the author of “High Tech Product Launch” and “From Idea to Launch at Internet Speed.” Known as the “Launch Doctor,” she works with companies to help them manage and launch new products. Her consulting Web site, www.launchdoctor.com, contains many free articles on marketing topics.

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