Formprint – Channel Conflict SALES & SALESFORCE MANAGEMENT
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SALES & SALESFORCE MANAGEMENT Formprint – Channel Conflict © 2013 MIT Entrepreneurship Center 1 SALES & SALESFORCE MANAGEMENT What’s your decision? Projected breakeven between ISR and Direct Feasibility of success of either approach Is the ISR option viable? © 2013 MIT Entrepreneurship Center 2 SALES & SALESFORCE MANAGEMENT The Facts of the Case 3D modeling industry Additive vs subtractive manufacturing Why does it matter? New Ortho500 Competitive market Distribution options © 2013 MIT Entrepreneurship Center 3 SALES & SALESFORCE MANAGEMENT Ortho500 Why does marketing want ISRs? Why go after the non hospital market? How much different is the sales cycle? © 2013 MIT Entrepreneurship Center 4 SALES & SALESFORCE MANAGEMENT ISRs What are benefits What’s the cost of sale? © 2013 MIT Entrepreneurship Center 5 SALES & SALESFORCE MANAGEMENT Run the numbers © 2013 MIT Entrepreneurship Center 6 “Direct” Sales Force OEM SF Your Company Channel SF Channel SF © 2013 MIT Entrepreneurship Center OEMs Distributors (Distis) Value-Added Resellers (VARs) Target Customers Target Customers Target Customers Target s Customers Target Customers Target Customers SALES & SALESFORCE MANAGEMENT Sales Channels 7 Coverage vs. Cost to Serve SALES & SALESFORCE MANAGEMENT # and $/Acct Global Accounts Large Enterprise Accounts Enterprise © 2013 MIT Entrepreneurship Center 10s, $100M+ 100s, $10M+ 1,000s, $1M+ Small and Medium Business (SMB) Ms, $10k+ Small Office/Home Office (SOHO) 10Ms, $100+ 8 Direct Sales Channel Sales OEM Sales Gross Sales 100 100 100 Discount % 0% 15% 50% Net Sales 100 85 50 COGS 10 10 GM 90 75 90% 75% 40% Sales Expense 30 5 1 Marketing 20 35 0 R&D 20 20 24 G&A 5 5 5 Net Profit 15 10 10 GM% Reduce this © 2013 MIT Entrepreneurship Center To fund SALES & SALESFORCE MANAGEMENT Different Financial Models 10 40 9 SALES & SALESFORCE MANAGEMENT Is channel conflict good? © 2013 MIT Entrepreneurship Center 10 SALES & SALESFORCE MANAGEMENT Strengths of the Channel They often already know the customers They are selling products that complement yours They only get paid when they make a sale They may or may not have inventory They are a form of leverage © 2013 MIT Entrepreneurship Center 11 SALES & SALESFORCE MANAGEMENT What are the downsides of Channel? © 2013 MIT Entrepreneurship Center 12 SALES & SALESFORCE MANAGEMENT Downsides of the Channel They usually ONLY call on existing accounts They are very protective of those accounts They may switch suppliers at any time. They cover certain industries and certain geographies but not necessarily where you need them Their attention is split between multiple suppliers © 2013 MIT Entrepreneurship Center 13 SALES & SALESFORCE MANAGEMENT What else? They sometimes get purchased They have little true loyalty They are a barrier between you and the customer They are less profitable than direct or are they? © 2013 MIT Entrepreneurship Center 14 Sales yield SALES & SALESFORCE MANAGEMENT Sales Learning Curve Standard Quota Revenue Gap Time © 2013 MIT Entrepreneurship Center 15 Initiation Transition Sales yield SALES & SALESFORCE MANAGEMENT Ramping up the learning curve Execution Traction point (2-3x) Break-even point (1x) Time © 2013 MIT Entrepreneurship Center 16 SALES & SALESFORCE MANAGEMENT Characteristics of each phase Initiation renaissance rep Passionate about technology Comfortable with ambiguity Resourceful – creates own sales tools Catalyst for communication between customers and company – product marketing Transition • Begin structure/territories • Quota bearing Execution Hustle, pace Structured, organized Wants clarity of product value prop, target market, sales cycle, etc. Just wants to sell! © 2013 MIT Entrepreneurship Center 17 2008 Existing products Sales yield SALES & SALESFORCE MANAGEMENT Tale of two products Existing Revenue Gap New Product Revenue Gap New Product (new product, new market, new channel) Time © 2013 MIT Entrepreneurship Center 18 SALES & SALESFORCE MANAGEMENT Your channel as your customer How do you Recruit Train Manage Quota Support terminate © 2013 MIT Entrepreneurship Center 19 SALES & SALESFORCE MANAGEMENT Sales cultures Direct - EMC Channel - Citrix Systems Integrator - SAP OEM - Intel © 2013 MIT Entrepreneurship Center 20 SALES & SALESFORCE MANAGEMENT How does a channel partner make money Economics of: Taking on a new product Training your team Quota Competing with other partners © 2013 MIT Entrepreneurship Center 21 SALES & SALESFORCE MANAGEMENT Sales Organization Who does channel report to: VP Sales GEO leader How does the channel get paid © 2013 MIT Entrepreneurship Center 22 SALES & SALESFORCE MANAGEMENT What else They themselves may have channel issues Their indirect channel may be competing with your direct/indirect channel They cannot necessarily police their channel any better than you can yours © 2013 MIT Entrepreneurship Center 23 MIT OpenCourseWare http://ocw.mit.edu 15.387 Entrepreneurial Sales Spring 2015 For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms.
