sometimes you’ve actually got to meet your customer

Sometimes you’ve actually got to meet your

customer

David Jenkins; i2i-management.com

St John’s Innovation Centre; 8 Mar 11

March 2011 managing sales channels 1

An outline of today’s workshop

• How do you motivate buying decisions?

• You don’t have a business if there’s no

mechanism for enabling potential customers to

make buying decisions and motivating them to

do so in your favour.do so in your favour.

• This interactive workshop reviews the options,

including the web, direct sales, distributors and

franchises, provides a framework for choosing

the right ones and explains how they should

then be managed.


Please note that it’s not about selling

It’s about managing sales channels


This is how the workshop will

proceed

• Building the model

– Where do we meet the customer?

– Choosing the right channel

• Direct sales, distributors, agents and franchises

• Using the web• Using the web

– You can use the web for anything ...

• Where does marketing fit in?

– What should marketing be doing?

• Channel conflict

• Getting help


And what right have I to be here

today?

• Been there ... done

that ... got the gold

cards

• Lived in a few places

• Worked for some

companies

• Managed different

sales channels

• Used the web


And forgive me ...

• My background is B2B with a focus on products

• This workshop should not be so limited and

should embrace BtoC (and in fact CtoC) and

services as well.

• My language is going to be tilted towards BtoB

and products but that will not be to exclude the

rest.

• Please challenge me if you think that I’m not

getting the balance right.

February 2011 doing business internationally 6

meeting the customer: what

exactly does that mean?

• This is the value chain which I’ve just

rediscovered

discover or design

develop deliver market sell supply service

• Just about every business can be represented

this way. Just change the sizes of the boxes

• So if this is what a business does where does it

meet the customer, where does the buyer meet

the seller ... discuss!


Where does marketing fit into

this scheme?

discover develop deliver market sell supply service

inbound marketing

strategic marketing

Internal marketing

tactical marketing

operational marketing

relationship marketing

• Marketing people will hate me for this but

marketing is a resource function like HR and

finance.

• It takes place where ever the marketing

resources need to be managed


In the beginning we were all

sole traders

• Business people

would interact

themselves directly

with customers

• That’s little different to • That’s little different to

having a direct sales

force today


And then came the middle man

• Manufacturers

especially would sell

their products through

‘shops’

• Shops are in effect • Shops are in effect

distributors.

• Shops exist in the

same way today


And some of these engaged in

eCommerce

• Selling products

without direct person

to person contact is

little different to what

we call eCommercewe call eCommerce

• The point is there is

no meeting and the

customer makes his

or her buying decision

on his/her own


There was even a little

marketing

• I guess marketing

used to focus on

promotion

• People must have

thought about thought about

products, prices and

place (channel)

• They just didn’t call it

marketing


This suggests a model for today

• Where do we meet the customer (if at all)?

• Whose resources do we use?

location


ow

n3

rd p

arty

reso

urce

s

meeting place

branded outlet

grocer's shop

own eCommerce site direct sales

portal distribution

remote customer's site

Today I’m going to focus on web

and direct vs distribution

• Meeting places clearly continue to be important

• They exist for both B2B and B2C

location


ow

n3

rd p

arty

reso

urce

s

meeting place

branded outlet

grocer's shop

own eCommerce site direct sales

portal distribution

remote customer's site

Choosing the right channel

Which channel fits which business?

...discuss


The choices today are really no

different to what they were then

• Obvious for software, low value items, BtoC and CtoC

• Challenges you to ‘drive’ customers to you

• There is no physical meeting between buyer and seller

• High fixed cost, low variable cost

Web: route of choice for many

today

• Best for high value and/or technical itemsDirect sales: • Best for high value and/or technical items

• You need to find the potential customer

• Lots of control but issues of fixed cost and roll out

Direct sales: challenge of

managing people

• Low fixed costs and rapid roll out possible

• Same challenge of finding the potential customer

• But mega management challenge

Distribution: best of both worlds?

February 2011 Routes to market

Direct sales, distributors and

franchises

• Hands on management

• Develop best practiceDirect sales

• Management by influence• Management by influence

• 3 golden rulesDistributors

• Management by contract

• Who’s the customer?Franchises


Direct sales: managing what we

do; develop best practice

salesAre we calling on enough people?

supplyAre we shipping

promptly?

serviceAre we responding

when we are needed?

Are we calling on the right people?

Are we effective in our calls?

Are we winning business

Are we shipping reliably?

Are our customers satisfied?

Are we keeping our costs low

Is our response effective?

Are our customers satisfied?

Are we getting repeat orders?


Your own sales+supply+service

teams: learning how to do it

build awareness

generate suspect develop prospect build relationship

repeat buys as a % of the installed base

revenue per unit of installed base

cost per suspect generated

suspects per quote; demo and trial stats


secure order service customer

install equipment

service productivity measurements

quotes per order; the win:loss ratio

sales productivity measurements

% sales to new customers

supply productivity measurements

Distributors: the 3 golden rules

Don’t think of your distributor as a customer; its customers are your customers

Don’t expect your distributor to do any Don’t expect your distributor to do any serious marketing; it’s a sales, supply and service organisation

Don’t expect your distributor to do anything for you if it doesn’t make a decent margin


Distributors: the practicalities

• However hard you try

to influence them they

are still independent

• You will always be

competing with other competing with other

principals for

resources

• The distributor owns

the customer


Franchises: nice work if you can

get it; think critical mass

• A franchise is a

hybrid.

• On the one hand you

have people

dedicated to your dedicated to your

products/services

• On the other hand

they’re not your

people


Agents are just a part of the

channel

• They just keep a look

out for you

• There’s little loyalty

and they simply take

a fee for introducing a fee for introducing

business

• Good agents are fine

but poor ones might

drain you of resource


However you do it you’ve got to

manage it

• Manage your own peopleDirect sales

• Manage the relationship


• Manage the relationship

• Manage your champion

• Manage their peopleDistribution

• Manage the relationshipFranchise

Using the web: you can use the web for

everything

... discuss


Using the web: you can use the

web for everything

marketing

• Be clever; make it easy for prospects to find you

• Use every opportunity to highlight your presence

sales

• Your web-site is your catalogue

• Make it easy for people to make the right buying decision


supply

• Classic eCommerce

• Make it easy for people to buy from you

Service

• Your web-site makes it easy for your customers to stay with you

• cement the relationship

Where does marketing fit in?

• Think of the 4Ps

– Place: that’s channel and that’s what this is all about

– Price: think especially about margins earned by distributors

– Promotion: where does this take place?

– Product: what’s the channels’ role in new product development?

• For services people also talk about:

– Process: how is this service delivered?

– Physical evidence: how will the customer know that he or she has experienced the service?

– People: what’s the role of people? How do we train, resource, manage and reward them?

• What should marketing be doing? ... discuss


Where does marketing fit in?

Back to the value chain

• What’s the role of marketing?

• Building awareness

• Generating leads

• Supporting sales activity

• Setting pricesSell

• Setting pricesSell

• Establishing service standards including availability

• Defining the process

• Providing the physical evidenceSupply

• Reinforcing relationships

• Stimulating repeat purchasesServiceMarch 2011 managing sales channels 28

Channel conflict: when to get it,

how you manage it

• In the simplest case

of direct sales only ...

– you’ve got to make

sure that your sales

people stay on people stay on

territory.

– that’s easy. You

manage it.



how you manage it



• If you’ve got 2

distributors ...

– you’ve got the same

issue

– but you’ve got EU law

to worry about



how you manage it




distributors ...

• You may be mixing

direct + distribution ...

– be clear about the

rules relating to house

accounts



how you manage it


of direct sales ....


distributors ...

• You may be mixing

direct + distribution ...

• If you mix physical

and web business ...

– get the pricing right.

– it won’t be easy.


A final thought before we leave

distribution? Why do it?

• It’s a specific example of a more general

question: should we do this in-house?

• Go outside if someone else can do it better and

it’s not an important strategic process.


A final thought before we leave

distribution? Why do it?

• It’s a specific example of a more genera

question: should we do this in-house?

• Go outside if someone else can do it better and

it’s not an important strategic process.

March 2011 managing sales channels 34b

ad

ly we've got a problem! consider out-sourcing

what sort of process is this?

special to usstandard across

industry

ho

w w

ell d

o w

e d

o it?

we

ll keep it in house consider in-sourcing

Where to go for help

• Distribution

– Business Link http://bit.ly/eDeof8 (focus on export)

• Franchises

– Which Franchise? www.whichfranchise.com

– British Franchise Association www.thebfa.org

– Franchise directory www.theukfranchisedirectory.net

– Business Link http://bit.ly/gRXTtF

• eCommerce

– Business Link http://bit.ly/fYltUR


David Jenkins

[email protected]

www.i2i-management.com

+44 1223 236232 or +44 7739 759859

Skype i2i-management

March 2011

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36managing sales channels