Design Starts With The Customer,
High Performance Sales Channels
Dave Brock, Partners In EXCELLENCE
(Download PDF Version)
Channel selection and deployment is one of the most critical issues
facing companies today. Customers
are in the drivers’ seats, as they should be, when it comes to the
buying relationship. Powerful
products and, to some degree, great brands no longer provide sustainable
differentiation to customers. Customers
are looking for superior value in all the solutions they consider.
Increasingly, the sales channel creates the most powerful and
sustainable differentiation in delivering superior value to customers.
However, much of what
companies do today in deploying sales channels keeps them from
establishing the highest performance, most effective channels.
Many companies are not getting the sales growth, market penetration
and customer share they should because of ineffective channel design and
deployment. In assessing the
channel effectiveness of dozens of organizations worldwide, we find
companies doing things backwards. They are designing their sales channels from inside-out, that
is, based on a company focused strategy.
Our work has shown the easiest and most effective means of
designing and deploying high performance sales channels start with the
Unfortunately, many great
companies are prisoners of their heritage. Their
sales channel design and deployment is driven by their heritage.
They continue to do the same thing, only more and faster, not
necessarily better. Those
organizations that had a strong focus on company owned field sales
channels continue to expand that organization, often losing productivity,
effectiveness, and profitability.
Other companies try to do
everything, exploiting multiple channels to reach the same customers,
confusing the customer, creating channel conflict, eroding margins, losing
share and opportunity. These
companies have all the traditional channels in place and are adding all
the new and fashionable channels (internet, direct marketing, and others)
without rationalizing the strategy and approach.
Others drive their channel
strategies based solely on financial criteria, namely cost of selling, not
treating their sales channels as investments which are expected to produce
a reasonable return. We see
companies downsizing, shifting from a high fixed cost for their own
organization to the lower or variable costs of an indirect channel
structure (distributors, resellers, representatives, outsourced
telesales). Their decisions
are driven by expense criteria, not the ability of the channel to
effectively reach the right customers at the right time with the right
Then there are those that
can’t decide, every year changing their sales strategy to something
different than before. Shifting
from indirect sales to company owned sales forces.
Moving to inside sales. Moving
to direct marketing. Moving
to the internet. Then
starting the whole process again when each move fails to achieve the
All of these activities are
driven by dozens of task forces, studies, organizational assessments and
other research efforts to look at the right channel design.
These efforts all miss the
point! Moreover, they make
channel design and deployment more complicated than it really is.
The easiest way to design high performance sales channels is to
start with the customer! Once
you know who your customers are and how they want to buy, then you can
design the channel that most effectively reaches those customers in the
way that is most effective.
Channel Design Is Not
Customer focused channel
design and deployment is not rocket science.
Effective design, however, requires a disciplined approach to
understanding who your customers are and how they buy.
Designing a customer-focused channel involves several simple steps:
with the customer. Who are the customers we want to serve? Do we want to expand our relationships with our current
customers? Do we want to
acquire new customers? What
share of customer objectives do we have?
do we segment these customers and characterize each segment?
What markets do we serve, which products and services are
directed to which customers or markets?
Remember that customers in similar segments but different
geographies may behave very differently (i.e. are your French
customers the same as your Chinese and Chilean customers?).
What goals or objectives do we have with each segment?
do these customers/segments buy solutions like those that we offer?
What is involved in their buying process?
What steps does the customer go through in defining
requirements and specifications, evaluating, selecting, and
implementing a solution? Does it require close and frequent interaction?
Is it complex, with many people involved in the buying
decisions? Does the
buying process require close involvement and contact with the
“factory?” Is there a
lot of customization and integration required?
Are there complementary services or products required to
provide a complete solution?
do they buy those solutions from?
How do they buy the solutions?
Direct field sales organization (hunters, farmers?), inside
sales, distribution, resellers, reps, Internet, catalog, OEM,
integrator, retail, supplier chain relationship?
are their expectations of those solution providers?
What level of service and support is important in the buying
and implementation process?
do these solution providers complement and add value to the offerings
of the suppliers? They
are part of the value delivery chain and need to add value not cost.
is the profile of these solution providers, what are their
characteristics? How are
they organized to support the customers?
What programs and capabilities do they need to have?
What relationship do they have with the manufacturer?
do those solution providers expect of their suppliers?
What is the value proposition for channel partner (internal or
external)? How do we
motivate them to wake up every morning excited about selling our
products and services over those of any one else (including other
divisions within our organization)?
do we map our products and services into the channels that most
effectively reach these customers? Which products and services are we going to sell to which
customers through which channel?
channel programs do we need to put in place to support the channels?
What marketing programs are we going to direct to the
customer/segment and channel to drive sales growth in the desired
area? What programs,
policies, processes are needed by segment/channel?
Exploring these issues in
the sequence outlined will help establish the design and the deployment of
the correct sales resources to achieve your objectives.
The “right” channel design and structure becomes will start to
become obvious with this analysis. Usually,
a couple of alternatives that emerge and a variety of criteria can be used
in selecting the best alternative.
In addition to making the
channel design and deployment process much easier, the tremendous power to
this approach is that since it is customer driven, it will become
immediately obvious and easy for your customer to buy your products and
solutions in a manner that is most closely tailored to how they want to
acquire solutions. This means
you sell more stuff to more people more effectively and efficiently!
Critical Success Factors
Based on our experience,
few companies can achieve their objectives with a single channel strategy
approach. Most organizations
must establish a variety of different channels to reach their customers
most effectively. Leading
companies will have a combination of many different channels.
However, from the customer view, the sales channel should be very
clear and easy to understand!
1: Don’t confuse the
customer about how he acquires your solutions, keep it simple, intuitive
There are too many
alternatives for your customers to choose from. Their job is not to sort through how to buy your product,
which channel to work with, what price to pay, who is good, who is bad.
They just want to procure a solution in the easiest manner
If the customer is in any
way confused about who they should buy from, the channel has been defined
incorrectly. We need to make
it very clear and simple about how to buy our products. If the customer cannot easily understand who they should
purchase the product from, they will go somewhere else.
Part of what we need to do is make our products and services easy
to buy or acquire.
There will be overlap in channels, but this should be minimized
and managed effectively. Focus
your channels on competing against the competition, not against each
The real world is not black
and white, there are many shades of gray.
It is impossible to define the channel structure cleanly.
Design your channel strategy in a way that your channels spend more
time fighting the competition than they do fighting each other.
The latter case will only produce dissatisfaction with customer and
the channels. Ultimately it
leads to pricing/margin erosion and share erosion.
Don’t over-distribute your products.
Over-distribution means that you will compete against yourself
not your competition. You
will lose the loyalty of your channel and lose customers.
We like to recommend
sufficient coverage of the market with your channels, not over-saturation.
Too many outlets, ultimately, is a losing proposition for all.
Make sure there is a reasonable business proposition for your
channel partners. Are the
markets they address with your solutions sufficient to support their
investments and to provide an adequate return?
3: Remember your channel
partners are your customers as well.
What’s your value proposition to them?
Often we are very good at
defining our value proposition to our end customers.
However, we forget that we need to define the value proposition for
our channel partners, as well. How
do we create excitement, awareness, and a high desire to sell our
products, over other products that the sales channel has to sell (This
applies to field sales, as well.)? We need to think of how do we make our products and services
compelling to for them to sell.
Mindshare in the channel is based on how important your products
and services are to their success.
If you aren’t in the top five, you won’t get sufficient
Most sales organizations
have a range of products and services on which they choose to spend their
time. They will tend to focus
on a few areas, in which they can maximize the return on their investment
in time. If your products and
services will not be one of the top one’s in which they focus, you will
not get the attention that you need to achieve your goals.
You will want to re-assess your channel strategy and programs to
assure that you get the right attention on your products. With a field-oriented channel, you may want to put in place
special emphasis programs or even an overlay, specialized sales
organization. With indirect
organizations, you may want to choose different partners.
Web-based channels will require other action.
Consider your customer and product life cycles in your channel
design. Different channels
are required depending on where your customers are in their growth and
maturity. Likewise, your
product life cycles impact channel decisions.
Many companies make the
mistake of determining the channel strategy at product launch, then never
changing it as the product matures in the market.
Likewise, our customers will change their buying process over time.
For example, as products get more commoditized, in the customer’s
mind, they will change how they procure these solutions.
If we have not adopted our channel strategy to support this change,
we may not be reaching the right customers, with the right message. This impacts both the top and bottom line.
Channel strategies cannot be cast in concrete.
They must evolve, or sometimes, go through revolutionary change!
We must continue to
reassess and tune our channel strategies based on how our customers and
markets change. Not doing
this will cause us to be left in the dust, losing share, revenue and
profits. Many industries are
undergoing profound and radical change, which requires new thinking.
Designing The Channel Is Just The Start!
Designing the channel is
just the start, what counts is execution! The best channel design in the world, does not mean anything
until we start implementing it and tuning the strategy for reality.
This includes putting the channel in place, putting the programs in
place to support the channel, and putting the measurements in place to
assure they are accomplishing what we expected.
Continually monitoring performance and tuning the organization in
their execution of the strategy is critical to achieving the business
results we want.
For more information on Partners In EXCELLENCE
channel management and development programs, follow these links:
EXCELLENCE supports its clients in achieving performance and
organizational excellence. We
help our clients develop and implement high performance marketing, sales,
distribution, and customer service strategies, maximizing their impact in
achieving the desired business goals.
Much of this work begins with the Sales or Channel Audit.
For more information about this audit or for other information on
developing and implementing your channel strategies, please contact us at firstname.lastname@example.org,
or by phone at (949)305-7146.
is the founder and president of Partners In EXCELLENCE. He can be reached at email@example.com.
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