Switching Sales Channels to Direct Marketing

This is the eight in a series regarding Sales Channels

Last time we discussed the scenario of a direct sales channel and switching or adding an indirect channel. The key issues were: a complete strategy, reseller selection and a reseller program(s). This posting is about adding a Direct Marketing function. Again, like the last discussion, make sure you have a sales strategy or that your sales strategy is updated. We will also assume the strategy is valid.

Here are five key considerations for a direct sales channel planning on switching to or adding a direct marketing channel.

1-Product selection for direct marketing

Do the products within your portfolio meet the following criteria?
– Are the products straight forward and well understood by the market place?
– Are the products fairly standalone (no real services required)
– Do you have a timely distribution system (infrastructure) in place (turn around will be critical)?
– Does your infrastructure support multiple SKDs, as well as tracking and ordering online?

If your answers are yes to at least 2 or 3 of the four then continue. If you answer NO to most of the above, going direct marketing is not out of the question but you need to address the action items below.

Action items
-You will need to augment the product with very compelling features and benefits.
-Create or partner for a rapid/ quick turn around product distribution system.
-Develop your web site so that it handles the complete cycle for transaction activities.
-Begins staffing for customer calls, for those who don’t want to order over the web, those that have difficulty and those who have product problems upon receipt or under warranty.

2- Marketing methods and tool selection

Perform an analysis on which media you will use and what mix:
-Analyze how integrated and automated your marketing programs are, procedures and rules are (considering cycle times to be competitive, automation and responsiveness is critical)
-Telemarketing methods need multiple scripts and an installed follow-up system.
-Investigate what tracking tools you will use.
-Do you have compelling value propositions that will catch your potential customer’s attention?
-What is the best mix of traditional marketing (ads, telemarketing, etc.) versus email, blogging, face book, and twittering is appropriate for your targeted audience?
-Is your data base set up for all of the selected activities?
-Is your web site geared for transactions, and interactions?

Action Items
-Start monitoring what is being said about your company and your products.
-Do an ROI on the media mix and potential revenue per media.
-Do you have the budget and appropriate resources for social media methods (blogging, twitter, tracking, etc?) and skill sets?
-Develop or modify your customer database so it is integrated, complete, and flexible so that you have a closed loop marketing (customer- sales- marketing- back to customers) capability.
-Develop a metric/measurement system for the direct marketing (example, all programs must have an ROI target).

3- Marketing programs

You should have a series of marketing campaign well thought out ahead of time (multiple touches and offers will be required in order to develop a reasonable funnel).
-What will be the offers?
-How will the campaigns be linked (themes, or offers or audiences as examples)
-Do you have marketing “packages” oriented for each targeted audience or and campaigns?

Action Items
-Perform market testing for the campaigns and packages
-Develop some give-away within your web site such as white papers, free ipod, webinars, etc.
-Financials- prepare a complete forecast analysis to understand realistic revenue targets, realistic costs and thus true margins and ROI per campaigns.

4- Financials

Direct marketing will have a startup operating costs just like a product introduction, but the difference will be in the media methods, tools and the skills required in performing this closed loop marketing. So, just like the indirect model case build a complete business model with attention on the following areas:
-Data base organization and analysis
-CRM/SAP type applications
-Web information analytics
-Creative offers
-Web 2.0 type dynamics
-Skills sets required

Action Items
-Related to action item in 3- develop a complete business case.
-Have measurements and timelines with key milestones to determine progress.

5- Cultural Environment

Since direct marketing is under going some dynamic changes, new functions/ procedures need to be introduced into your enterprise. Management also needs to understand that some of these tools/methods are new and thus more of an art than pure science, so be flexible, and prepare for changes along the way. What will be your policy regarding twitting and face book both internally and externally (see our blogs regarding social networking (www.firealarmmarketing.com/blog/))? You also need to consider the value of marketing of brands versus your own internal content marketing.

Action Items

-Educate management and key people involved on the nuances of direct marketing.
-Develop policies and procedures for the various tools and methods of direct marketing

Well, as you can see, Direct Marketing, like other forms of distribution must have a strategy, but differ in that you will probably need new tools and skills to be successful. Overall, you probably will end up with a mix of media marketing with the biggest issue what percentage of each will result in the best return on your investment.

We have looked at different channels of distribution, some guidelines for switching or adding other channels. The keys overall are having a strategy, knowing what the selected channel can actually do for you and having the appropriate programs and tools to be successful.

So, what are you waiting for, get busy and start that channel(s) and start selling!!!!

RHL 10/20/09

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