Students to Start-Ups
Entrepreneurial Skills Workshop Series
Presents:
Driving Growth Though
Distribution Strategy
and Sales Management
Agenda
• Distribution Channels
– Examples
– Channel selection
– Channels management
• Sales Management
–
–
–
–
Sales priorities
Sales management model
Building sales capabilities
Sales productivity
• Case Studies
Strategic Innovators
What do these firms have in common?
Strategic 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
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Field sales reps
Corporate resellers
Master or local distributors
Integrators
Value-added resellers
Manufacturer’s agents
Brokers
Franchises
Telemarketers
Inbound telesales agents
•
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Internet sites
Extranets
e-Marketplaces
Direct Mail
OEM’s
Retail
Kiosk’s
Strategic alliances
Agents (consultants,
affiliates, etc.)
Channel Continuum (illustrative)
High
“High Touch
Channels”
Field
Sales
VAR’s
Value
Add
Of Sale
“Low Touch
Channels”
Distributors
Retail
Stores
Telemarketing
Low
Internet
Low
Cost per Transaction
High
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 Selection…
• 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?
Channel Selection…
• 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…
Control
Goal
“We want to dominate and lead in
our core customer base, to
protect the brand, and control the
relationship with the customer”
Channel
Approach
• Field sales force
• High-end partners, thoroughly
trained, with binding contracts
covering all aspects of the sales
process
Source: “Go to Market Strategy” by Lawrence Friedman
Coverage
“We want to reach and serve new
markets and customers, and to
grow as fast as possible”
• Retail, mass merchants
• Telesales
• Distributors
• Value-added resellers
• Internet
• Strategic alliances
• 3rd party service agreements
• Etc.
Market Coverage Example 1
Large, enterprise
customers
Direct, Field Sales Reps
Corporate
Resellers
Mid-sized
accounts
VAR’s, Solution Partners
Small office /
home office
Markets
Mail order catalog
Simple, “off the
rack products
Products
Source: “Go to Market Strategy” by Lawrence Friedman
Mass-customized
products
(unserved market)
Complex, unique
solutions
Market Coverage Example 2
Large, enterprise
customers
Direct, Field Sales Reps
Business partners
+
Telechannels
+
Web sites
Mid-sized
accounts
Small office /
home office
Markets
Simple, “off the
rack products
Products
Source: “Go to Market Strategy” by Lawrence Friedman
Mass-customized
products
Complex, unique
solutions
Integrated Multi-Channel Model Single Channel
Sales
Task
Lead
Generation
Qualification
Bid &
Proposal
Negotiation/
Close Sales
Channel
Direct
Field Sales
Cost
Business
Partners
Telechannels
Direct
Mail
Internet
Source: “Go to Market Strategy” by Lawrence Friedman
Sales Cycle
Fulfillment
Customer
Support
Integrated Multi-Channel Model Reduce Cost & Increase Sales
Sales
Task
Lead
Generation
Qualification
Bid &
Proposal
Negotiation/
Close Sales
Channel
Direct
Field Sales
Cost
Business
Partners
Telechannels
Direct
Mail
Internet
Source: “Go to Market Strategy” by Lawrence Friedman
Sales Cycle
Fulfillment
Customer
Support
Integrated Multi-Channel Model –
Example 1
Sales
Task
Lead
Generation
Qualification
Bid &
Proposal
Negotiation/
Close Sales
Channel
Direct
Field Sales
(Over $25,000)
Business
Partners
Cost
(Under $25,000)
Telechannels
Direct
Mail
Internet
Source: “Go to Market Strategy” by Lawrence Friedman
Sales Cycle
Fulfillment
Customer
Support
Integrated Multi-Channel Model –
Example 2
Sales
Task
Lead
Generation
Qualification
Bid &
Proposal
Negotiation/
Close Sales
Channel
Direct
Field Sales
Cost
Business
Partners
Telechannels
Sales support for
key accounts
Direct
Mail
Internet
Source: “Go to Market Strategy” by Lawrence Friedman
Sales Cycle
Fulfillment
Customer
Support
Partner Channel Development…
1.
2.
3.
4.
5.
6.
Define the scope of the channel
Define partners’ role in the sales process
Develop robust and attractive channel policies
Build a strong base of partners
Build a strong channel support infrastructure
Measure and manage channel performance
Source: “The Channel Advantage” by Lawrence Friedman
Sales Management…
What are you selling… to whom?
High
Call
Efficiency
Dominates
Customer
Fragmentation
Call
Effectiveness
Dominates
Low
Low
High
Value Proposition Complexity
Sales efficiency & effectiveness…
Sales Efficiency
Sales Effectiveness
Definition
How to get in front of the right
customers, for the right amount of
time, at a minimum cost
Once there, how to maximize
sales potential
Typical
Performance
Levers
• Territory design / coverage
• Activity reporting systems
• Compensation systems
• Sales support
• Selling skills
• Account strategy
• Application knowledge
• Effectiveness models
• Systems
• Structures
• Recruiting
• Training
• Coaching
• Coverage
• Call rates
• Cost per call
• Sustainable margins
• Repeat business
Driving
Mechanisms
Sample
Measures
Source: Huthwaite, Inc. 1988
Setting objectives / priorities…
Current
Business
New
Customers
What kind of customer?
- Size
- Type of business
- Attitude / usage
Where? What geography?
What products / services?
More From
Current
Customers
More of current product use?
Cross sell other products?
Higher prices / better product mix?
Eliminate unprofitable accounts?
Requires different sales skills…
Current
Business
More From
Current
Customers
“Farmers”
New
Customers
“Hunters”
Sales management model
What is the value proposition
and the role of the sales
force in its delivery?
Efficiency
Is the sales force (and
channels) organized for optimal
coverage of selected markets?
Does the sales force have
adequate coaching &
supervision?
Sales Strategy
Strategy/
Mission
Sales
Individual
Force
Selling
Deploy- Sales
Skills
ment Support
Coaching
& Super- Recruiting
vision
& Training
Does the recruiting and
training match selling skill
requirements?
Effectiveness
InforMotivation
mation
& CompenResources
sation
Capability Building
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…
Develop sound
selling strategy
Organize for efficient
coverage
Develop skills for
effective selling
Clear segmentation
Right structure
Define necessary skills
Explicit objectives,
goals and priorities
Right size
Develop training,
recruiting and
coaching programs for:
Territory / account
Winning selling
proposition
Realistic time
frame/expectations
Assignments for
adequate coverage
• Product knowledge
• Buying process
• Sales methodology
• Planning & execution
Motivate & support
sales force
Align measurement
and reward systems:
• Compensation
• Recognition
Provide necessary
organization support
(systems, etc.)
Example sales productivity model…
Sales Force Productivity
Profit contribution
= $4
per $ direct selling cost
●
—
●
Effectiveness
Profit contribution
= $400
hr. actual selling time
Efficiency
Direct selling cost
= $100
Hr. actual selling time
●
—
●
X
Selling Margin
40% profit contribution
margin
• Compensation plans
• Sales tools
• Value proposition
Selling Rate
Revenue
= $1000
hr. actual selling time
• Skills assessment
• Territory / opportunity
planning
• Partnerships
Direct Selling Cost
$500 / day per rep
Sales Force Utilization
Hrs actual selling time = 5
per day per rep
• Reduced overhead costs • Centralized sales admin
• Sales force automation
Case study #1
(The early years)
Case study #2
(The early years)
Case study #3
5 Year Old S. CA Professional Services Firm
Additional Resources
 Books
The Channel Advantage, Lawrence G. Freedman, Timothy R. Furey
Go To Market Strategy, Lawrence G. Freedman
 People
UCI Center for Entrepreneurship and Innovation CEI@Merage.uci.edu
SCORE Orange County www.score114.org
Students to Start-Ups
Entrepreneurial Skills Workshop Series
UPCOMING WORKSHOPS
April 4th
Nuts & Bolts of Business Structure and Licensing
April 18th
Refine Your Unique Value Proposition
RSVP
CEI@MERAGE.UCI.EDU
Questions
Mike Mata
Michael.Mata@SCORE114.org
Thank You!