Aligning your channel tactics
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Transcript of Aligning your channel tactics
© Linda Gorchels, BrainSnacksCafe.com
Channel Tactics
In Memorial This presentation represents a condensed version of Managing Your Go-To-Market Strategy. The course,
and its predecessor versions, were offered by the University of Wisconsin for decades. As the Center shifted its mission to management and leadership
training, the marketing and sales courses were discontinued. Since channel strategy is no longer available as a public workshop, I am offering these
materials to you for your personal education. Enjoy!
© Linda Gorchels, BrainSnacksCafe.com
© Linda Gorchels, BrainSnacksCafe.com
Questions? Contact: Linda M. Gorchels Emerita Director, Executive Marketing Education UW-Madison School of Business Center for Professional & Executive Development [email protected]
What you can expect This channel management session will hone your ability to: • Assess channel fitness given
changing strategic and tactical conditions
• Structure ideal candidate profile templates
• Improve support programs • Reduce channel conflict
© Linda Gorchels, BrainSnacksCafe.com
Why you should care
© Linda Gorchels, BrainSnacksCafe.com
Working with dealers and distributors can feel like herding cats – unless you do it right!
What is channel management?
© Linda Gorchels, BrainSnacksCafe.com
Stewardship Differentiation
Efficiency
What is channel management? • Stewardship of a go-to-market strategy
that provides value to end-users… • local selling • financing/credit terms • delivery/installation/customization • service support
• In a way that establishes differentiation • through seamless customer experience
• And increases effectiveness or efficiency • cost containment and channel segmentation
© Linda Gorchels, BrainSnacksCafe.com
Range of channel issues
Is channel structure redesign required due to: • market dynamics? • shifts in strategy? • a new product launch?
How can you: • better manage your
relationship with the channel?
• motivate the channel to attain objectives?
• evaluate channel effectiveness and performance?
• improve support within the channel?
Strategic fit (requiring changes)
Management issues (on an ongoing basis)
© Linda Gorchels, BrainSnacksCafe.com
Channel management process 1. Assess
performance of existing channel
structure 2. Refine
channel and coverage
requirements
3. Rethink channel design
4. Prepare ideal candidate
templates and assess fit
5. Review mutual
performance expectations
6. Support channel efforts
7. Monitor performance and adjust
plans
© Linda Gorchels, BrainSnacksCafe.com
1. Assess performance of existing channel
structure
© Linda Gorchels, BrainSnacksCafe.com
Too many process potholes?
• What can you streamline?
• Automate? • Simplify? • Eliminate? • Combine?
© Linda Gorchels, BrainSnacksCafe.com
Excessive channel conflict?
• Are your contracts, guidelines and policies working?
© Linda Gorchels, BrainSnacksCafe.com
Picture from mediate.com
Lack of partner mindshare?
• Are your channel partners willing to push aggressively for your sales?
• Why or why not?
© Linda Gorchels, BrainSnacksCafe.com
Picture from michaelmccurry.net
Lack of trust & acceptance?
• What do your partners say about you when you are not in the room?
© Linda Gorchels, BrainSnacksCafe.com
Customers jumping to new channels?
• Do end-customers want new services or conveniences?
• Can they get what they want with your existing channels?
© Linda Gorchels, BrainSnacksCafe.com
So …
© Linda Gorchels, BrainSnacksCafe.com
• Are you accomplishing your objectives with your existing channel?
• Do you need minor tweaking?
• Or is more significant structural change necessary?
2. Refine channel and coverage
requirements
© Linda Gorchels, BrainSnacksCafe.com
Requirements of customers
© Linda Gorchels, BrainSnacksCafe.com
Requirements of your products
© Linda Gorchels, BrainSnacksCafe.com
Your importance to the channel
Major vendor
Secondary vendor
Minor vendor
Importance to distributor’s business
high
moderate
low
Distributor willingness to adapt
high
moderate
low
Manufacturer’s marketing approach
push
push/pull
pull
© Linda Gorchels, BrainSnacksCafe.com
Required sales tasks
Pre-sale Transaction Post-sale
© Linda Gorchels, BrainSnacksCafe.com
3. Rethink channel design
© Linda Gorchels, BrainSnacksCafe.com
Consider your options
© Linda Gorchels, BrainSnacksCafe.com
Distributor continuum
Generalist Specialist
•Product generalists
•Fast-moving inventory
•Reactive selling
•Heavy inventory resources
•Many customer orders
•Product specialists
•Full parts inventory
•Proactive selling
•Dedicated resources
•Fewer, larger customer orders
© Linda Gorchels, BrainSnacksCafe.com
© Linda Gorchels, BrainSnacksCafe.com
A common problem
Markets
Questions: How do you obtain coverage of Market #3?
Is Market #4 an opportunity or a hindrance?
Calculate effectiveness
• Product Fit: percent of total market your product or service “fits”
• Distribution availability: percent of opportunities where your product is present
• Win rate: how often you win the sale
effectiveness = product fit x distribution availability x win rate
14% = 60% x 80% x 30% © Linda Gorchels, BrainSnacksCafe.com
Leverage your sales force
Key accounts
General business
Small customers
Sales force primary focus
Other channels
(custom solutions)
© Linda Gorchels, BrainSnacksCafe.com
4. Prepare ideal candidate templates
and assess fit
© Linda Gorchels, BrainSnacksCafe.com
Ideal candidate template Description of “ideal” Candidate
evaluation Market served
Product line fit
Territorial coverage
Sales capabilities
Business & managerial stability
Marketing capabilities
Operational capabilities
Local service
Ease of doing business
Reputation
© Linda Gorchels, BrainSnacksCafe.com
5. Review mutual performance expectations
© Linda Gorchels, BrainSnacksCafe.com
Manage, motivate, evaluate
• Effectiveness usually increases when expectations are mutual – What was written into the contract? – What specific measures are addenda
that change annually? – Know what to expect and what NOT to
expect from your distributors or reps.
© Linda Gorchels, BrainSnacksCafe.com
Price & performance expectations
• The target street price is the price you feel is attractive to the end user while providing acceptable compensation to the channel.
• Compensation may include discounts from the target price along with allowances, rebates and other programs
© Linda Gorchels, BrainSnacksCafe.com
Classic Discount Structure
List Price Target Street Price
Dist Buy Price / Mfr Sell Price Distributor Rebate Program
Standard Cost
1.00 .90
.60
.57
33% Channel Margin
5% Rebate
47% Manufacturer
Margin
Multiplier
10%
.40% 43%
70%
Discount
0%
Source: Sam Shapiro, Channel Pricing Associates
.30
© Linda Gorchels, BrainSnacksCafe.com
6. Support channel efforts
© Linda Gorchels, BrainSnacksCafe.com
© Linda Gorchels, BrainSnacksCafe.com
How strong is your support?
Those who sell for you require lots of support …
– Training (product and sales) – Ordering/sales management systems – Marketing “air cover” – Advertising support (“co-op”) – Selling support – Promotional programs – Logistics (delivery/expediting, parts, returns,…)
Channel receptivity to change
• Self-growing • Growable • Not growable
– Sustainable – Not sustainable
(Source: Frank Lynn & Associates, Inc.)
© Linda Gorchels, BrainSnacksCafe.com
Rep Business Life Cycle
Birth
Struggle
Rapid growth
Maturity
Decline
“Death”
The comfortable lifestyle driven rep
The growth driven rep
Longevity Source: Harry Novick, Selling through Independent Reps
© Linda Gorchels, BrainSnacksCafe.com
Planning a dealer/rep meeting
• One way to learn about how your reps and distributors evaluate you is through advisory councils – Survey past attendees – Be sure senior managers attend – Obtain feedback on company effectiveness. – Follow up on meeting ideas
Source: Joseph Conlin, “The Art of the Dealer Meeting,” Sales & Marketing Management
© Linda Gorchels, BrainSnacksCafe.com
Ensure organizational support • Quick response to
questions and RFQs • Follow through on
promises • Technical support • Accurate and prompt
payment (for reps) • Plant visits (as
appropriate)
What incentives might we use?
• Discounts • volume • contractual • functional
© Linda Gorchels, BrainSnacksCafe.com
Picture from ecigarettedirect.co.uk
What incentives might we use? • Discounts • Sales promotion
– Contests – Spiffs
• Promotional funds
© Linda Gorchels, BrainSnacksCafe.com
Picture from thebusinessboosters.blogspot.com
What incentives might we use?
• Discounts • Sales promotion • Promotional funds
– MDF (market development funds) – Coop advertising
© Linda Gorchels, BrainSnacksCafe.com
Managing promotional programs
• Provide pass-through materials • templates, ad slicks, catalogs, videos, bulletins,
CDs, DVDs, downloads
• Design direct response campaigns • Email newsletters, social media support
• Increase home office promotions • website, press releases, national advertising / PR
• Support distributor promotions • coop/MDF, yellow pages, customer seminars,
trade shows, open houses, website hosting
© Linda Gorchels, BrainSnacksCafe.com
Managing promotional programs
• Think in terms of a CAMPAIGN rather than piecemeal efforts!
Keep it simple.
Coordinate with manufacturer efforts.
Compare with competitive programs
© Linda Gorchels, BrainSnacksCafe.com
Management & contracts
• Distributors – contractual agreements, mutual business
planning & support • Reps
– commission packages & support • Direct
– sales management (with marketing support) © Linda Gorchels, BrainSnacksCafe.com
Build sales support • Lead generation & qualification • Provide sales tools
– “Elevator pitch” – Killer demo
• Conduct joint sales calls • Provide training • Coach performance
• cross selling • suggestive selling
© Linda Gorchels, BrainSnacksCafe.com
7. Monitor performance and
adjust plans
© Linda Gorchels, BrainSnacksCafe.com
7. Monitoring & adjusting
• How will plans be adjusted to accommodate performance and conflict issues?
• Develop a “report card”
© Linda Gorchels, BrainSnacksCafe.com
Evaluate channel performance
• Define metrics appropriate to your sales cycle – Sales revenue, units – Demos, proposals, etc. for
longer cycles • Ability to meet plan objectives • Functions performed
– Showroom, counter displays, events, etc.
© Linda Gorchels, BrainSnacksCafe.com
Manage conflict between …
Manufacturer and channel Clarify national account strategies
Players in the same channel Define APR and related performance measures
Different channels “Build fences” through defined-customer strategies, brand or product differences, etc.
© Linda Gorchels, BrainSnacksCafe.com
Key points • Stay on top of the dynamics that may suggest a need
for channel re-evaluation, and follow the steps in redesign:
1. Assess structure 4. Assess and/or select partners 2. Refine requirements 5. Review expectations 3. Rethink channel design 6. Support channel efforts 7. Monitor & adjust
• Manage channels on an ongoing basis 1. Maintain good two-way dialog 2. Use incentives that motivate the right behaviors 3. Measure and monitor effectiveness 4. Coordinate and improve marketing, sales and operations
support activities 5. Reduce conflict to an acceptable level © Linda Gorchels, BrainSnacksCafe.com
Based on sections of The Manager’s Guide to Distribution Channels
© Linda Gorchels, BrainSnacksCafe.com
Authors: Linda Gorchels
Ed Marien Chuck West
© Linda Gorchels, BrainSnacksCafe.com
There are several people who taught in and/or contributed to this course over the years. I would like to thank the main contributors as listed below.
Jon P. Christiansen Susan Heintz Jack Nevin
Harry Novick Bob Segal
Chuck West
Just as we routinely upgrade computer systems, we must upgrade our own knowledge systems. Linda has helped over 10,000 people over a 25+ year period with these educational upgrades, merging anecdotal client experience with researched “best practices,” and sharing the resulting insights with managers and executives. After working in the office products, publishing and insurance industries, she joined UW-Madison’s Center for Professional and Executive Development, both as a corporate trainer and program director. Now, as a director emerita, she provides workshops for select clients. An award-winning author of The Product Manager’s Handbook, she has also written The Product Manager’s Field Guide, The Manager’s Guide to Distribution Channels, Business Model Renewal, and Aptitudes of an Energized Product Manager. Linda is now a blogger, mystery author and Creativity Curator for her own company, Tomorrow’s Mysteries, LLC.
Linda M. Gorchels
For more information, refer to the following books on Amazon, follow my blogs, and download several
free articles from my website, BrainSnacksCafe.com.