Planning to open a new distribution channel? That’s a good way to cover a greater portion of your addressable market. Just don’t make the mistake of expecting to see results overnight, especially if you haven’t taken the time to implement the appropriate sales processes for each of your sales channels.
A company typically has three main sales channels: a direct sales channel, an online sales channel and a partner or distribution channel. In order for a new sales channel to be a success, it must accomplish three goals:
1) Drive the expected incremental revenue
2) Provide the necessary incremental margin
3) Deliver an excellent customer experience
The first two requirements are standard in any business venture. But providing an excellent (and consistent) customer experience is critical for long-term success. Here are five tips for delivering that quality experience in a new sales channel:
1) Evaluate your cost to serve: For each of your sales channels, it’s essential that your organization is efficient enough to deliver that customer experience (direct, through partners or through e-commerce) in a way that’s financially sound. The key here is “cost to serve,” an efficiency measure that has a variety of sub-metrics beneath it. It helps you assess whether the cost to serve in each sales channel aligns with your business goals. Make sure your operation is able to deliver your products affordably before you open a new sales channel.
2) Assess your financial commitment to new channels: Opening an online sales channel, for example, is difficult and expensive. If your company doesn’t have the financial appetite to stay in it for the long term, you’re not going to be successful. With a new sales channel, you need to plan ahead and have a financial model in place for how you’ll absorb any losses and finance any investments you need to keep the channel going in the long term.
3) Determine how to measure customer satisfaction in each sales channel: When you’re opening sales channels, you need to know as early as possible whether you’re succeeding in terms of customer satisfaction. That’s why it’s important to create a mechanism for getting customer feedback and using it to determine your sales effectiveness. If you’re delivering that excellent customer experience in an effective way, you’re likely to achieve your goals for revenue and margin.
4) Decide how to align your sales channels: Before you open your doors to partners or distributors, you need a plan for how you’re going to manage these multiple channels and how you’re going to align your products and services with each of those channels. When companies fail to develop and communicate their pricing strategy, it leads to “channel conflict” and other problems, as direct, online and partner channels end up competing with each other to sell your product to customers.
5) Set clear expectations in your new sales channel: To be successful with a new channel, you must be clear about what products you’re going to offer through the new channel, what customers you want them to target and what sales processes and programs you have in place to support their selling engagement. If there’s any ambiguity in those areas, you’re opening the door to churn and partner dissatisfaction, reducing your ability to cover the addressable market.
And finally, you need to make sure you support each of your sales channels with the appropriate training. If you’re thinking about opening an online channel, for example, speed is essential to a good customer experience. So you need to spend time training your internal organization to manage that sales process quickly and efficiently.
When you’re talking about partners, the training challenge is different: You need to make sure they’re representing your company and products in an effective way in each of their engagements. And most partners are going to be representing more than just your organization.
In that case, you need your training to help you rise above the noise of all the other companies that are competing for your partner’s time and attention. Your training program has to help your partner deliver an effective customer experience, but it also needs to be ongoing and consistent, so that the partner’s sales organization always thinks of your products first.
In the end, opening a new distribution channel is a great way to cover more of your addressable market. You probably won’t see results overnight with your new channel, but if you follow these five tips for delivering a quality customer experience, you’ll build a strong foundation for long-term success.