One definition of a sales channel is that “it is the pipe through which a producer’s product flows to the user.”  Like all pipes it can be straight, crooked or have many branches.  And reflecting today’s new technologies the pipe can have a flow of information in two directions.

Which channel is best for your business?  As with all such broad questions the immediate answer is “It depends.”  It depends on how your customer wants to buy, the price and complexity of your product, the length of the buying cycle and a myriad of other intertwined elements.

The most common channels today are:

·         Direct, where a company’s sales people interact directly with the buyers

·         Indirect, where a company sells to distributers, who in turn sell to either other distributors or buyers

·         On-line, where the buyer contacts the company directly over the Internet

And, once a company decides on its main distribution channel, secondary or alternative channels often spring up.  Managing the relationships that arise due to multiple channels of distribution is a difficult and time consuming process. The failure to pick the right channel can result in business failure, as key buyers are missed and competitors swoop in and win sales.

Sales channels or Distribution is one of the classic “4 P’s” (Product, Place, Promotion, Price) of Marketing.  On May 3rd, Dick Lush and I will be discussing Sales Channels at 2:30 in Platform A at the Rhode Island Business Exchange (RIBX), and look forward to answering any questions you may have.

You can find out more information about RIBX, other speakers, directions, etc. here:  http://http.ribx.wordpress.com/.

RHM 

4/24/2012

When the best doesn’t come, everyone wonders why goals are not being met, why the sales force is confused and why the partners are underperforming?

I call this approach the “ready, fire, aim” method. The answer to the confusion above is that there is no well thought out, formal partner reseller program.

The following are the major activities that best-in-class partner programs have in common:

1-Strategy- If you have read any of my other blogs regarding sales or sales channels, you know the first consideration already. Any good program must have a strategy. What is the company’s strategy and how will the partners contribute to the strategy? Some of the questions you must answer are: are you developing a partner program to get new customers, new territories, or to augment your direct sales force? Whatever the reason, the program must support these strategies, if not the path will be filled with potholes!

2-A Partner Program: This may seem obvious, but you would be amazed how many companies see an opportunity, but do not plan a program and thus cause a false start and, in some cases, bad will in the reseller community.

Fundamentally a program outlines the why, the who’s and how’s of doing partner business. A partner program is like a business case, it contains items such as goals, objectives, forecasts, roles and responsibilities, partner programs, partner manuals, partner collateral, leads program, training, promotional activities, support guidelines, benefits, procedures/processes, measurements/metrics, engagement procedures, customer service an escalation policy, and much more.

3- What type of partners will you be recruiting? Will they augment your sales force, or a technology, or a skill set, or a region, or help you expand into a new market(s)? Will there be synergy with your sales force or will there be a huge overlap (and potential conflict)? Note that this decision ties back to your strategy.

4- Partner selection: Your program must have documented information on the selection criteria for partners. The criteria should cover among other things: business requirements, certification, capabilities, partner’s responsibilities, partner’s benefits from the program, and sales coverage requirements.

5-Financials: How will the partners be compensated, is there a special discount rate for the selected partners? Will the partners be measured on volume, revenues, or just new business?

6-Targeted Markets- Assuming you have targeted markets for your direct sales force, what will be the targeted market(s) for the reseller(s)? Will they be the same as for the direct sales but with different products, or different markets with the same products or different products and pricing?

7-Measurements- How will you measure success of the partnerships? This will depend on the “stage” that your company is in and the overall goals of the company. As an example if you are in a start-up mode, the measurement for the reseller might just be new business (profitability is secondary), but if you are seeking product revenue expansion, the measurement might be net new revenues.

Well these are some of the major activities that one must consider is developing partnerships. Again, like my blogs that discuss channel selection, things are never black and white and unfortunately they tend to be very gray and complex. Don’t let this scare you away; start with a very well thought out and tested strategy. If you do this step well and involve potential partners, you will be amazed how the well the other activities move ahead.

Till then happy partnering!

RHL 11/23/09