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Changing Your Channels of Distribution

A recession brings an opportunity to prioritize your selling strategies

Sales and Marketing Magazine Article

January 2002 - Tim Furey Co-Author of Channel Advantage



"Channels of Distribution" refer to an entire "go-to-market" system that links a producer of products or services(Suppy) to the end-user (Demand). For example, a hotel (Supply) may want to link to the end-user Meeting Planner (Demand). The channel of distribution to link may be in the following sequence: (a) an "list" service generates a list of potential buyer, Meeting Planners, (b)a hotel telemarketer or telesales telephones these meeting planners to learn of more of their needs and ask if they would like a sales person to call them for an appotintment, and (c) the sales person has an appointment and attempts to "sell." This channel or go-to-market system had three components. As you can see, it would be far more expensive for an experienced sales person to do what the other lesser paid components of the system did. This information will help you to better understand the following article.


Few industries can say that their sales aren't suffering at this point. Blame it on the economy, blame it on September 11—whatever the case, changing your selling strategy is in short order. The first place to start? Deciding which channels of distribution are working for you.


The following steps are recommended by Furey to determine a more profitable selling strategy::

1. Prioritize Customers and Products

Sales executives should be asking themselves which customers and products are going to bring in the most profit during the next year—and then drop the ones that aren't at the top of the list. It sounds easier than it is, because most salespeople want to hang on to any client who's bringing them commission.

Tim Furey, CEO of Marketbridge, a sales consulting firm, in
Bethesda, Maryland, says that many companies evaluating their three tiers of customers—Tier I being large-business clients, to Tier III, which are small-business accounts—are finding that they can't cover their small-business accounts with field salespeople anymore. "I'm working with two Fortune 500 telecommunications and high-tech companies right now that are taking all their field salespeople out of Tier III," he says. "They're covering this group with third-party distributors or using more call-center coverage instead."

Such strategies will help these companies come out relatively unscathed when the economy rebounds. It forces salespeople to put an extra service focus on their biggest, most stable clients, who will still exist when there's a brighter economic outlook.

But for other companies, prioritizing customers has meant abandoning the call center altogether. Tim Lybrook, president and CEO of Teletron, a company in
Bloomington, Indiana, that helps businesses analyze and control their telecommunications information, recently closed his call center in favor of face-to-face selling. "Today it's no longer about just cutting costs for customers," Lybrook says. "You have to solve their problems and we learned that we are more effective in doing so when we're in front of the customer."

2. Integrate Multichannel Coverage

Just because a company decides to make one channel a priority over another doesn't mean certain customers don't still need to be serviced by more than one of your sales entities. During a weak economy it's paramount that salespeople cater to the wishes of their most prized accounts, Furey says. "Major clients want coverage by their salesperson, supported by telesales and Web applications, too," he says. "Customers want to alter their coverage—they don't want to have to pick a channel."

It's dangerous to get caught in single-channel mode. That's why Scott Koerner, executive vice president and chief operating officer of Zones Inc., a computer products reseller, in
Renton, Washington, has established channels based on the size and need of his business clients. He's found that the small-business group responds well to call center service, while the midsize and bigger businesses want more. "The small-business group is more consumerlike, but our core business wants to use the Web for much of its interaction with us, and also wants personal attention from their rep," he says. "That frees up our account executives to call on new customers and work to service everybody better."

3. Abandon What Isn't Working

Partnerships and alliances are the key to increasing your customer base in these trying times, but that doesn't mean every partner is worth keeping. Now is the time to cut some of these partner channels loose, before they drain your business of time and resources. "Everybody needs to do some pretty significant rationalization of partner channels," Furey says. "I recommend cutting the bottom twenty percent of partners out."

What to look for in those you're keeping? Koerner says he can't go wrong with his alliance with Compaq and IBM. "We work together to service our top two levels of customers—the competition from Dell is fierce, so partnering achieves a service level that can surpass what Dell can do," he says. "IBM keeps satisfied customers and we build the relationships with them."




Coaching Recession Rookies

Chances are that most of your sales force has never sold in a down economy. Now's the time to teach them how

Sales and Marketing Magazine Article

January 2002

A few years ago deals were pouring in at Lightbulb Press. Salespeople for the producer of financial education materials juggled as many as a half dozen leads a week, and closed the majority at $40,000 to $50,000 apiece. Now, salespeople for the New York company are down to about one call per week. "Two of the people on my sales team have never sold in a sluggish economy," says Maria Vizzi, Lightbulb's director of sales and marketing. "You can see how a tight market sucks the life out of them."

It's a problem sales managers across the country are facing—salespeople, many of whom have never sold in anything but a booming economy, are struggling in today's recession. In a recent SMM survey, 51 percent of 235 respondents said the average age of salespeople at their company is under 35. Think about it: Most of these reps are recession-time rookies.

The market shifts aren't just throwing salespeople for a loop. How to deal with reps who are lost in a slowdown has many managers flummoxed. Sales managers from GE, Sony, and other major corporations are turning to public relations firms like PepperCom Inc., in
New York, for help with sales positioning strategies that may help "twenty-four-year-olds who don't have a clue," says Steve Cody, PepperCom's managing partner. For the past several years younger reps or those new to the profession "have been nothing but order takers," Cody says. All of a sudden, "it's about uncovering key accounts, market opportunities, and understanding what customers are lying awake at night worrying about."

With some experts speculating that fewer than half of today's salespeople have sold in an economic downturn, many say solving a customer's problems is beyond the skills of reps who have clinched deals by just showing up at clients' offices. The problem of inexperienced salespeople is "endemic among seventy-five percent of my clients," says Jacques Werth, president of consulting firm High Probability Selling, in
Dresher, Pennsylvania.

Robb Johnson, a sales manager for Xerox Corporation, in
Louisville, Kentucky, says he's turned to weekly meetings with sales team members in part to make sure less experienced reps are getting the guidance they need to seal deals that are harder to close. At Information Week, Mike Friedenberg, vice president and publisher, says with ad pages down 40 percent and 32 of his 40 salespeople new to a down economy, he's had to micromanage reps—"talking daily if not hourly"— to make sure sellers are as proactive as possible with buyers. "Last year I told salespeople, 'It's never as good as you're having it right now,'" Friedenberg says. "But I don't know if anyone forecasted this large a drop."