Multiple channels exist for bringing your products and services to market – inside sales, dealers and distributors, and direct sales. Is one channel preferred over another? Can you use multiple channels simultaneously? Can the different channels support one another?
Different channels efficiently address different markets and situations.
Inside sales teams effectively sell commodity-like products to a widely dispersed market. They can contact many customers in a relatively short time period. Inbound telesales reps can often manage 10 -12 or more transactions per hour. Outbound telesales reps can conduct 8 – 12 substantive sales calls per day where they speak with a decision maker and have a meaningful conversation. When you add email and web-based interactions to the mix, inside sales reps can manage multiple transactions simultaneously which increases their productivity substantially.
Inside sales efforts become less effective when your sales opportunities involve a longer sales cycle and a more complex product. These sales often require face-to-face interactions where the customer and sales representative know each other and have built a relationship over time based on friendship and trust.
Dealer or distributor networks provide a more effective approach when your product is moderately complex and your target market is large and geographically dispersed. A dealer network gives you access to independent companies who sell your products and other companies’ products to their customers. Often the dealer will bring their own value to the sale through a variety of services. Dealer services may include integrating your products with complementary products to create custom solutions, delivering training, or adapting your product to meet industry-specific requirements. If there’s a market need that your product can be adapted to meet, then a dealer or reseller will gladly create the solution. Some dealers deliver value simply by having relationships with the customers you want to reach.
A direct sales force becomes essential to penetrating the market when your product is more complex and critical to your customers’ operations. Customers whose operations or reputation depend heavily on the product or service solution will choose what’s safest and most reliable for them. Personal trust is important; but the company must trust your product, your solution and your company. They need assurance that your product will perform and that you will do whatever is necessary to support your product. This establishes a relationship between two businesses, not simply between a sales rep and a buyer.
Using a direct sales force gives you greater control. You do not compete for your sales reps’ time or attention because, unlike dealer reps, direct sale reps sell only your company’s products and services. You control your reps’ activities and compensation. You control the sales message. You control the sales process.
This graphic shows where the various sales channels are most effective:
Using Multiple Sales Channels
Depending on your situation, you may choose a combination of sales channels in your go-to-market mix. To expand your market presence, you can use all three channels. Your direct sales force can manage key account relationships and sell to prospects in your home geography. This allows you to maintain control of your relationships with existing customers. The field sales reps who are already in place can continue to develop prospects in their territories.
To expand into new geographies or industries where your direct sales force does not have a presence, you may elect to develop a network of dealers or manufacturer’s reps. The dealer reps have existing relationships that will speed the introduction of your products and services into new markets. The dealer network cost should be less than that of an expanded direct sales team. However, your marketing costs will not decrease. Marketing efforts become very important because you need to support your dealer network with training, collateral, advertising and other programs.
For the market areas beyond the reach of either your direct sales force or your dealer network, you may elect to employ an inside sales team. Using marketing, internet and inbound/outbound telesales, you can reach customers and prospects that are not otherwise served by your company or your competitors. The relatively low cost (no travel, entertainment or expense accounts) and broad reach of an inside sales team makes this a very attractive option for pursuing otherwise hard-to-reach businesses.
Channel Harmony and Support
Your various sales channels can and should work together. Successful channel harmony exists when you clearly define and agree on responsibilities. If your sales strategy involves direct sales, dealers and inside sales, you need to define territories. Be specific “up front” about where each channel can and cannot call and when a deal or transaction must be handed off to another channel. You also need to put a fair process in place to resolve channel disputes. If you have two parties claiming rights to a deal in a “gray zone” territory (a territory not previously assigned), they should know the process for resolving this dispute. Plus, they should feel confident that their long-term interests will be protected regardless of how a particular dispute is decided.
By defining territories and responsibilities, you encourage the different channels to work together and support each other. For example, inside sales reps might be used to generate and qualify leads. Their sales compensation will focus on the early stages of the sales cycle. Direct sales reps, on the other hand, may be closers. Once an opportunity has been qualified, the direct sales team may develop it further, close the deal, and earn a commission for their contribution to the sale.
Supportive sales channels also allow you to leverage your dealer network. While your dealers identify and develop opportunities, your direct sales force can be used to provide product support or technical support to further the sales effort. In this way, you gain broader market reach through your dealers and leverage your highly trained direct sales reps to close key opportunities. This approach is also effective in using your direct sales force to train your dealer network.
By leveraging multiple sales channels, you can effectively reach a broader segment of your target market. Since the different channels have different cost structures, you need to choose the channel or channel mix that extends your reach as cost-effectively as possible.
For more information, contact Wallace Management Group at (203) 834-0143 or email David Wallace.
© 2009, David P. Wallace