As business grows and evolves, a change of channel sales model is often required. It could be changing the channel strategy from direct to channel *or* from channel to direct *or* establishing a mix. In any change there are seven key considerations that need to be addressed to make a smooth channel sales transition.
1. Pricing:
- Direct and channel pricing to the buying customer needs to be consistent.
- Margins & discounting need to maintain trust between channels.
- Marketing should be involved in addressing this issue.
2. Sales Support:
- Include sales engineering & sales operations in your planning.
- Examine the situations when customer information is required.
- Pre-sales activities such as for sales assistance, demonstrations or technical support.
- Post-sales activities for order processing, user licenses, maintenance updates, etc.
- Establish clear policies as to how this information will be used and will be protected to maintain trust between channels.
3. Sales Talent:
- Examine sales talent requirements. Can you utilize existing sales resources or should you hire new talent?
- First issue to consider (is the obvious one) … are what are the skills needed for your new sales model. Do your current sales people possess these skills? Can they be trained or do you need to acquire them?
- The second bigger issue (not so obvious) is changing the mindset from direct to channel *or* channel to direct. It is a very different mindset.
4. Rules of Engagement:
- channel conflict will happen. Address it early.
- Who owns a deal?
- How will enterprise customers with multiple locations be handled?
- What happens when direct & channel are competing?
- Having separate direct & channel sales teams with a “Chinese wall” will minimize (not eliminate) issues.
- Set up rules of engagement to maintain trust between channels. When issues arise address them quickly, openly (with transparency) and communicate “learning” across all channels.
5. Demand Generation:
- How will lead generation be funded? Are there co-marketing funds for channel partners? Will direct sales have their own marketing funds? Does the company generate leads for both?
- How will leads be distributed? Who does initial qualification? Who will oversee follow-up?
- Once consideration is to use an outside firm, like Initial Call (www.initialcall.com) for lead generation and provide them with equitable lead distribution guidelines.
6. Services:
- Services is a critical and often forgotten area when changing channel sales model. There is great hidden opportunity here that can be capitalized on. Don’t miss it!!
- How are services such as site-inspections, installation & maintenance to be delivered to customers?
- Will the company provide these directly or sub-contract with the channel?
- Price lists will need to include services and pricing needs to be consistent (see pricing above).
There can also be hidden opportunities here for added revenue!! A company providing direct services could allow channel partners to mark up & resell these services. A company with system integrator partners could add partner services to the direct price list. - It goes without saying that customer service should be involved in addressing these issues and keep them tightly coordinated with sales.
7. Compensation:
- The sales strategy needs to be established FIRST then compensation can be defined.
- Building a comp plan is another seven step process. Look for my blog on this next week and, in the meantime, here are the steps:
- Review the sales job description
- Identify plan objectives
- Identify controllable, measurable job elements
- Establish compensation level
- Determine method of compensation
- Test & establish administrative process
- Implement plan & distribute regular dashboard measurements