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The Importance Of Channels: Connecting your company's products with customers
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Innovation
Diversification
Market Development
Penetration
2ndQuadrant
Innovation
Diversification
Market Development
Penetration
2ndQuadrant
Channels“Para multiplicar,…,
hay que saber dividir.” (To multiply…one has to know how to divide) -
Anonymous
Innovation
Diversification
Market Development
Penetration
2ndQuadrant
2009 Copyright
Topics
• Definition• Importance of Channels• Examples of Channels• How to select Channels• Channels: Success Factors• Developing Channels• Business Development• ActivityGestalt of Sales
Innovation
Diversification
Market Development
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2ndQuadrant Objectives
Gestalt of Sales 2009 Copyright
• At the end of this session the student should be able to:• Define the term Channels• State why Channels are important• Develop a company Channel strategy
• Identify three potential types of Channels• Develop and apply an evaluation criteria• Develop an Action Plan to engage
a Channel
Innovation
Diversification
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2009 Copyright
Definition: Channels
Any means that connects your Company’s Product / Service with Customers
• Who do Customers buy from?• How do they buy?• Which is best for each type of Customer?
For every problem of the human endeavor, there is always a solution that is neat, simple and…wrong (H. L. Mencken)
In the end…customers Choose their preferred channels
Gestalt of Sales
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2009 Copyright
Definition: Channels (Cont’d)
Gestalt of Sales
• In the context of:– A complex sale
• Several decision makers• Long sales cycle• Complex functionality• Large investment per contract / sale• Product and professional services
– Business to Business
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Terminology
• Partners
• Strategic Alliances
• Third Party Resellers
• Distributor
• Wholesaler
Gestalt of Sales
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Innovation
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2009 Copyright
Importance of Channels
• Once considered only for “simple sales”: – Retail / Consumer – Commodities
• Product maturity from “direct” => “channels”– 70% of Global
organizations– GNP transacted from
50% => 65% by 2010*
Gestalt of Sales
Innovation
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2ndQuadrant
Innovation
Diversification
Market Development
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2ndQuadrant
2009 Copyright
Importance of Channels (Cont’d)
• Increased Reach: • Geographical• Verticals• Customers
• Establish Market Presence
• Co-marketing• Web site cross referencing
• Enhance / Build Credibility
• Sponsorship• Expertise in sector
• Complement the Solution / Offering
• Prime / Subcontractor• Teaming Agreements• Full Turn Key projects:
H/W, etc.
• Lower Cost of Customer Acquisition / Relationship
• Promotions• Research• Sales calls
Gestalt of Sales
Innovation
Diversification
Market Development
Penetration
2ndQuadrant
Innovation
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2009 Copyright
Importance of Channels (Cont’d)
• Reduce time to market
• Complementary Resources, vgr:– Local => Lower Cost– Special skills– Infrastructure
• Local presence: Office
• Legal presence:– Contractual obligation– Fiscal: taxes (retention –
withholdings)
• Post Implementation Support
Gestalt of Sales
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2009 Copyright
Examples of Channels
• Sales Reps. / Agents• Complementary
Solution Partners• System Integrators• Consultants• Hardware Vendors• VARs• Existing Customers• Competitors?
• Web based tools– Marketing collateral– Demos / Presentations– Video-testimonials– Training
• Direct Sales Force– Internal and External
• Account Management• Marketing
DepartmentGestalt of Sales
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How to select Channels
• Which Channels align best with:– Products?– Customers’ needs?– Target market?
• Geography• Vertical
– Sales Strategy / Method?– Your company’s vision
and commitment to customers?
– Revenue objectives
• Which Channels are :– Receptive?– Available?– Strategic?– Long term vs. Short
term?
• Which Channels:– Are more
profitable?
Gestalt of Sales
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2ndQuadrant Channels: Success Factors
• Management
• Structured model
• Effective communications
Gestalt of Sales 2009 Copyright
Innovation
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2009 Copyright
Channels: Success Factors (Cont’d)
• Decision making:– Speed and clarity– Milestones – Contingency plans
• Flexibility:– Negotiating guidelines– Receptiveness to
alternatives
• Team coordination:– Communication– Pre-scheduled events– Methodology: PM– Common goals
• Resources:– Skills– IT Resources– Support team
Gestalt of Sales
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2ndQuadrant Developing Channels
• Training / orientation– Represent your products fairly– Support adequately
• Go To Market initiatives / campaigns– Website cross referencing / Trade Shows
• Pricing strategy– Complementary– Consistent
• Sales process– Parallels customers’ purchasing process?
Gestalt of Sales 2009 Copyright
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2ndQuadrant Business Development
• Alternatively, Channels can be managed by a:– Business Development Manager, or– VP of Strategic Alliances, etc.
• Responsibilities:– Marketing– Revenue– Product Development
• Job description: see sample
Gestalt of Sales 2009 Copyright
Innovation
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2ndQuadrant We’re almost ready!
Gestalt of Sales 2009 Copyright
Innovation
Diversification
Market Development
Penetration
2ndQuadrant
Innovation
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2ndQuadrant
2009 Copyright
Activity
• Profile your company and products
• Select a product• Identify a (new) target
market• Develop a channel
selection criteria < 5 characteristics
• Identify three (3) potential channels
• Rank the candidates according to the criteria
• Recommendation: Students will make a 5 minute presentation with 5 minutes for Q&A
Gestalt of Sales
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Channel Strategy
Gestalt of Sales
Type / Name
Benefit to channel
Benefit to me
Action Plan
Resources
Mortgage banker
Sure sale in one week
50% of his/her business
Using a template similar to this, develop your company’s Channel Strategy
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19 2009 Copyright
References
How to Develop Your Sales Process - Marketing M.O.
Gestalt of Sales