Students to Start-UpsEntrepreneurial Skills Workshop SeriesPresents:

Driving Growth Though Distribution Strategy and Sales Management

AgendaDistribution ChannelsExamplesChannel selectionChannels managementSales Management Sales prioritiesSales management modelBuilding sales capabilitiesSales productivityCase Studies

Strategic InnovatorsWhat do these firms have in common?

Strategic InnovatorsIt 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 Field sales repsCorporate resellersMaster or local distributorsIntegratorsValue-added resellersManufacturers agentsBrokersFranchisesTelemarketersInbound telesales agentsInternet sitesExtranetse-MarketplacesDirect MailOEMsRetailKiosks Strategic alliancesAgents (consultants, affiliates, etc.)

Channel Continuum (illustrative) ValueAddOf SaleCost per TransactionHighLowHighLowInternetTele-marketingRetailStoresDis-tributorsVARsFieldSalesLow Touch ChannelsHigh Touch ChannelsDirect ChannelsIndirect ChannelsDirect SalesChannel

Channel SelectionChannel strategy must start with the customerWho 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 SelectionChannel strategy must be aligned with the maturity of the marketDo 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 SelectionHow you sell has to fit with what you are sellingAre 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 sellingThe 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. CoverageControlCoverageGoalChannelApproachWe want to dominate and lead in our core customer base, to protect the brand, and control the relationship with the customerWe want to reach and serve new markets and customers, and to grow as fast as possible Field sales force

High-end partners, thoroughly trained, with binding contracts covering all aspects of the sales process Retail, mass merchants Telesales Distributors Value-added resellers Internet Strategic alliances 3rd party service agreements Etc.Source: Go to Market Strategy by Lawrence Friedman

Market Coverage Example 1Source: Go to Market Strategy by Lawrence Friedman

Market Coverage Example 2Source: Go to Market Strategy by Lawrence Friedman

Integrated Multi-Channel Model - Single ChannelSales CycleCostSource: Go to Market Strategy by Lawrence Friedman

Integrated Multi-Channel Model - Reduce Cost & Increase SalesSales CycleCostSource: Go to Market Strategy by Lawrence Friedman

Integrated Multi-Channel Model Example 1Sales CycleCostSource: Go to Market Strategy by Lawrence Friedman

Integrated Multi-Channel Model Example 2Sales CycleCostSource: Go to Market Strategy by Lawrence Friedman

Partner Channel DevelopmentDefine the scope of the channelDefine partners role in the sales processDevelop robust and attractive channel policiesBuild a strong base of partnersBuild a strong channel support infrastructureMeasure and manage channel performanceSource: The Channel Advantage by Lawrence Friedman

Sales Management

What are you selling to whom?Customer FragmentationValue Proposition ComplexityHighLowHighLowCallEfficiencyDominatesCallEffectivenessDominates

Sales efficiency & effectivenessDefinitionTypicalPerformanceLeversDrivingMechanismsSampleMeasuresSales EfficiencySales EffectivenessHow to get in front of the right customers, for the right amount of time, at a minimum cost Territory design / coverage Activity reporting systems Compensation systems Sales support Systems Structures Coverage Call rates Cost per call Once there, how to maximize sales potential Selling skills Account strategy Application knowledge Effectiveness models Recruiting Training Coaching Sustainable margins Repeat businessSource: Huthwaite, Inc. 1988

Setting objectives / prioritiesMore of current product use?Cross sell other products?Higher prices / better product mix?Eliminate unprofitable accounts?What kind of customer? - Size - Type of business - Attitude / usageWhere? What geography?What products / services?

Requires different sales skillsHuntersFarmers

Sales management modelSales StrategyEffectivenessEfficiencyCapability Building

Building your sales capabilitiesMotivate & support sales force Develop skills for effective sellingOrganize for efficient coverageDevelop sound selling strategyClear segmentation

Explicit objectives, goals and priorities

Winning selling proposition

Realistic time frame/expectationsRight structure

Right size

Territory / account

Assignments for adequate coverageDefine necessary skills

Develop training, recruiting and coaching programs for:

Product knowledge Buying process Sales methodology Planning & executionAlign measurement and reward systems:

Compensation Recognition

Provide necessary organization support (systems, etc.)

Example sales productivity modelEfficiencyDirect selling costHr. actual selling time= $100

X Compensation plans Sales tools Value proposition Skills assessment Territory / opportunity planning Partnerships Reduced overhead costs Centralized sales admin Sales force automation

Case study #1 (The early years)

Case study #2(The early years)

Case study #35 Year Old S. CA Professional Services Firm

Additional ResourcesBooksThe Channel Advantage, Lawrence G. Freedman, Timothy R. FureyGo To Market Strategy, Lawrence G. FreedmanPeopleUCI Center for Entrepreneurship and Innovation CEI@Merage.uci.edu SCORE Orange County www.score114.org

Students to Start-UpsEntrepreneurial Skills Workshop Series

QuestionsMike MataMichael.Mata@SCORE114.org

Thank You!