Sales Channel Strategy for Business Success Pt 2
Create Multi-channel Strategies
The channel spectrum that has evolved in most markets is characterized by a wide spectrum of choices, ranging from highly efficient, logistics oriented channels to highly focused, service oriented businesses. Few manufacturers can assure optimum market presence by selling via only a single channel type. Market share leaders will include a variety of channels in their mix and provide a differentiated offering through the channel to reflect the unique characteristics, needs, and market value of each channel type utilized.
Make Smart Choices in Channel Selection
One of the key changes occurring in most channel classes is consolidation. It is rare to find the true independent operator today. Given this consolidation, you run a higher risk than ever before associated with a poor choice of channel partner.
There are fewer alternatives to offer you market presence and share if your existing relationship does not work out. Winning channel managers address this risk through a more considered approach to channel selection. More time is spent up front defining the ideal characteristics of a channel partner. These characteristics usually include financial and management capabilities to support growth, sales and marketing capability to support your programs and goals, and operations considerations to help drive efficiency.
Tackle Channel Conflict Management Strategically
In an environment where multiple channel strategies are normal, conflict management should be considered an integral part of the strategy planning process. A fair and impartial approach to channel management helps control conflict through a variety of ground rules, around access to brand, product authorization, and economics that reflect the role of the channel. Clear policies and consistent enforcement of authorization, channel standing and termination provide the most level playing field for your channel partners, allowing for effective conflict management.
Use Channel Pricing to Manage Market Complexity
You may still base your channel pricing on volume. This approach fails frequently in the environment where you utilize multiple channels with significantly differing business models. The volume based approach invariably favours the logistics oriented channel over the service based models. This leads to channel conflict and puts strain on relationships with the service based channel model.
A more pragmatic approach to channel pricing is a value based compensation model. This approach places a value on each of the functions the channel performs for you, allowing your overall payments to the channel to more directly represent their role in your go to market strategy.
Create Programs for Strategic Advantage
The most successful businesses take the time to assure their programs offered through the channel partners are linked to market dynamics. These programs are carefully designed within the context of the market map. Then you can expect a much higher return on the resource investment.
Sales Channel Strategy for Business Success Pt 1
Capture and Use Detailed Market Information
A broad and deep understanding of the market is critical to the creation of a sustainable market position. Winning marketers have developed a ‘map’ of their market, including the most actionable segment definition, profit potential, buying behaviours and decision processes, size, outlook, needs, expectations, competitive dynamics and sourcing preferences. The market map provides an objective context for internal discussions regarding strategy alternatives and resource allocation decisions.
Accelerate the Planning Process
Markets are changing faster than ever before and so must your planning process. You cannot get caught in the never ending cycle of analysis planning that is characteristic of many organizations today. The planning process of the future is one that is decision centric, rather than analysis centric. The planning process should be designed to use the existing body of knowledge of your organization. Senior managers should be more involved, and involved earlier, in your annual planning process.
Rather than a management meeting to culminate a lengthy analysis conducted by several layers of the organization, the plan should be initiated by senior management. Use the senior management meeting to kick off the planning process and define the strategy, then let the organization validate the assumptions. The result will be a quicker developed plan, much more reflective of current market reality, and one in which senior managers are much more invested.
Streamline Your Organization for Speed and Flexibility
Effective market management will require speed in decision making and flexibility in action. An organizational structure that supports this will consolidate channel management under one group within the organization. In addition, consolidating all products, programs, and channel relationships will serve to enhance your market power.
Regain the Power of Your Brand
One of the most vital tools you have to retain customer relationships and power in the marketplace is your brand. Therefore, you will be well served to reinvest in establishing brand value. This will be done by clearly articulating the value your brand stands for and consistently delivering against this value. Brand value will be a powerful tool to secure your market presence.
Win at the Local Level
A local market management philosophy may be the single biggest factor that separates the winners today. Customers have a wider range of channel choices than ever before. Information is more widely available. Customer segments are using these choices and information to evolve their buying behaviours in different ways and at different rates. The result is that the ‘map’ of local markets is likely to vary widely, and the most appropriate channel strategy is likely to vary significantly from market to market. The successful marketer will recognize these differences. Local market managers will be given the autonomy and flexibility to customize the local channel strategy to local conditions.
Corporate policies serve as a set of guidelines and programs serve as a menu from which the local manager designs the unique channel mix to optimize share and profitability. Winning marketers have recognized that it often requires different skill sets and compensation for the local market manager operating under this model versus a traditional sales capacity.
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