Download - Presents: Driving Growth Though Distribution Strategy and Sales Management Students to Start-Ups Entrepreneurial Skills Workshop Series.

Presents:

Driving Growth Though Distribution Strategy and Sales Management

Students to Start-UpsEntrepreneurial Skills Workshop Series


AgendaAgenda

• Distribution Channels– Examples– Channel selection– Channels management

• Sales Management – Sales priorities– Sales management model– Building sales capabilities– Sales productivity

• Case Studies

Strategic InnovatorsStrategic Innovators

What do these firms have in common?

Strategic InnovatorsStrategic Innovators

It was not just what they sold but, how they sold it!

(reconfiguring the value chain to achieve lower costs and/or better service)

Distribution Channels - Examples Distribution Channels - Examples

• Field sales reps• Corporate resellers• Master or local distributors• Integrators• Value-added resellers• Manufacturer’s agents• Brokers• Franchises• Telemarketers• Inbound telesales agents

• Internet sites• Extranets• e-Marketplaces• Direct Mail• OEM’s• Retail• Kiosk’s • Strategic alliances• Agents (consultants,

affiliates, etc.)

Channel Continuum (illustrative) Channel Continuum (illustrative)

ValueAddOf Sale

Cost per Transaction

High

Low

HighLow

InternetInternet

Tele-marketing

Tele-marketing

RetailStoresRetailStores

Dis-tributors

Dis-tributors

VAR’sVAR’s

FieldSalesFieldSales

“Low Touch Channels”

“High Touch Channels”

Direct ChannelsIndirect Channels

Direct

Sales

Channel

Channel Selection…Channel Selection…

• Channel strategy must start with the customer– Who are our target customers, what do they need and how do

they want to do business with us ?– What drives them to make a purchase?– What kinds of experiences are they seeking from their vendors?– What has real value to them in the sales process – value their

willing to pay for?– What channels do they use today, and what channels are they

planning to migrate to over the next year?– What specific actions would cause them to increase significantly

their volume with your firm?


• Channel strategy must be aligned with the maturity of the market– Do you need to develop a new market or fulfill needs within an

established market?– Are there dominate vendors or distribution channels already

established?– Are you targeting a narrow or broad market?– Do you have the funds necessary to build all the required services

(pre and post sales) to compete? Can you spread the costs over enough volume to be competitive?

– Do you have a narrow or broad product offering?– Who are the key purchase influencers?


• How you sell has to fit with what you are selling– Are the channels selected the ones that customers actually use

to buy the things that you are selling?– Channels chosen must make economic sense, given what you

are selling– The channel selected must be well suited to the complexity of

your offering – You can not be everywhere at all times for every customer

• There is a trade off between market coverage and control

Sales Control vs. Coverage…Sales Control vs. Coverage…

Control Coverage

Goal

ChannelApproach

“We want to dominate and lead in our core customer base, to protect the brand, and control the relationship with the customer”

“We want to reach and serve new markets and customers, and to grow as fast as possible”

• Field sales force

• High-end partners, thoroughly trained, with binding contracts covering all aspects of the sales process

• Retail, mass merchants• Telesales• Distributors• Value-added resellers• Internet• Strategic alliances• 3rd party service agreements• Etc.

Source: “Go to Market Strategy” by Lawrence Friedman

Market Coverage Example 1Market Coverage Example 1

Large, enterprisecustomers

Mid-sized accounts

Small office / home office

Simple, “off the rack products

Mass-customized products

Markets

Products

Complex, unique solutions


(unserved market)Mail order catalog

Corporate Resellers

VAR’s, Solution Partners

Direct, Field Sales Reps

Market Coverage Example 2Market Coverage Example 2

Large, enterprisecustomers

Mid-sized accounts

Small office / home office

Simple, “off the rack products

Mass-customized products

Markets

Products

Complex, unique solutions


Direct, Field Sales Reps

Business partners+

Telechannels+

Web sites

Integrated Multi-Channel Model - Single ChannelIntegrated Multi-Channel Model - Single Channel

DirectField Sales

BusinessPartners

Tele-channels

DirectMail

LeadGeneration

Qualification

Internet

SalesTask

Channel

Bid &Proposal

Negotiation/Close Sales

Fulfillment CustomerSupport

Sales Cycle

Co

st


Integrated Multi-Channel Model - Reduce Cost & Increase SalesIntegrated Multi-Channel Model - Reduce Cost & Increase Sales

DirectField Sales

BusinessPartners

Tele-channels

DirectMail

LeadGeneration

Qualification

Internet

SalesTask

Channel

Bid &Proposal



Sales Cycle

Co

st


Integrated Multi-Channel Model – Example 1Integrated Multi-Channel Model – Example 1

DirectField Sales

BusinessPartners

Tele-channels

DirectMail

LeadGeneration

Qualification

Internet

SalesTask

Channel

Bid &Proposal



Sales Cycle

Co

st


(Over $25,000)

(Under $25,000)

Integrated Multi-Channel Model – Example 2Integrated Multi-Channel Model – Example 2

DirectField Sales

BusinessPartners

Tele-channels

DirectMail

LeadGeneration

Qualification

Internet

SalesTask

Channel

Bid &Proposal



Sales Cycle

Co

st


Sales support for key accounts

Partner Channel Development…Partner Channel Development…

1. Define the scope of the channel

2. Define partners’ role in the sales process

3. Develop robust and attractive channel policies

4. Build a strong base of partners

5. Build a strong channel support infrastructure

6. Measure and manage channel performance

Source: “The Channel Advantage” by Lawrence Friedman

Sales Management…Sales Management…

What are you selling… to whom?What are you selling… to whom?

Customer Fragmentation

Value Proposition Complexity

High

Low

HighLow

CallEfficiencyDominates

CallEffectiveness

Dominates

Sales efficiency & effectiveness…Sales efficiency & effectiveness…

Definition

TypicalPerformanceLevers

DrivingMechanisms

SampleMeasures

Sales Efficiency Sales Effectiveness

How to get in front of the right customers, for the right amount of time, at a minimum cost

• Territory design / coverage• Activity reporting systems• Compensation systems• Sales support

• Systems• Structures

• Coverage• Call rates• Cost per call

Once there, how to maximize sales potential

• Selling skills• Account strategy• Application knowledge• Effectiveness models

• Recruiting• Training• Coaching

• Sustainable margins• Repeat business

Source: Huthwaite, Inc. 1988

Setting objectives / priorities…Setting objectives / priorities…

CurrentBusiness

NewCustomers

More FromCurrent

Customers

More of current product use?Cross sell other products?Higher prices / better product mix?Eliminate unprofitable accounts?

What kind of customer? - Size - Type of business - Attitude / usageWhere? What geography?What products / services?

Requires different sales skills…Requires different sales skills…

“Hunters”CurrentBusiness

NewCustomers

More FromCurrent

Customers

“Farmers”

Sales management modelSales management model

Strategy/Mission

SalesSupport

SalesForce

Deploy-ment

IndividualSellingSkills

Coaching & Super-

visionRecruiting& Training

Infor-mation

Resources

Motivation& Compen-

sation

Sales Strategy

EffectivenessEfficiency

Capability Building

What is the value proposition and the role of the sales force in its delivery?

Is the sales force (and channels) organized for optimal coverage of selected markets?

Does the sales force have adequate coaching & supervision?

Does the recruiting and training match selling skill requirements?

What critical selling skills are required for the sales role in the value proposition?

Is support adequate to maximize the selling effort?

Does the incentive compensation plan meet management’s objectives and pay the sales force fairly?

Are information systems being fully utilized to support the selling effort?

Building your sales capabilities…Building your sales capabilities…

Motivate & support sales force

Develop skills for effective selling

Organize for efficient coverage

Develop sound selling strategy

Clear segmentation

Explicit objectives, goals and priorities

Winning selling proposition

Realistic time frame/expectations

Right structure

Right size

Territory / account

Assignments for adequate coverage

Define necessary skills

Develop training, recruiting and coaching programs for:

• Product knowledge• Buying process• Sales methodology• Planning & execution

Align measurement and reward systems:

• Compensation• Recognition

Provide necessary organization support (systems, etc.)

Example sales productivity model…Example sales productivity model…

Sales Force Productivity

Profit contributionper $ direct selling cost

= $4

Selling Margin

40% profit contribution margin

Selling Rate

Revenue hr. actual selling time

= $1000

Sales Force Utilization

Hrs actual selling timeper day per rep

= 5

Direct Selling Cost

$500 / day per rep

Effectiveness

Profit contributionhr. actual selling time

= $400

Efficiency

Direct selling costHr. actual selling time

= $100

●—●

●—●X

• Compensation plans• Sales tools• Value proposition

• Skills assessment• Territory / opportunity planning• Partnerships

• Reduced overhead costs • Centralized sales admin• Sales force automation

Case study #1 Case study #1

(The early years)

http://www.bmc.com/

Case study #2Case study #2

(The early years)

Case study #3Case study #3

5 Year Old S. CA Professional Services Firm5 Year Old S. CA Professional Services Firm

Additional ResourcesAdditional Resources

BooksThe Channel Advantage, Lawrence G. Freedman, Timothy R. Furey

Go To Market Strategy, Lawrence G. Freedman

PeopleUCI Center for Entrepreneurship and Innovation [email protected]

SCORE Orange County www.score114.org

UPCOMING WORKSHOPS

April 4th Nuts & Bolts of Business Structure and Licensing

April 18th Refine Your Unique Value Proposition

[email protected]



QuestionsQuestions

Mike Mata

[email protected]

Thank You! Thank You!