Sales Channels in ActionRick Struzynski
I’d like to share a story about a company I’m currently working with. They serve as a great real-world example of the challenges created when companies fail to utilize the appropriate sales channels. I thought it would be an interesting follow-up to my last post on sales channel strategies.
As I mentioned in the previous post, while I have some personal preferences in channel strategies, I put them aside when I am working with a client – I want to ensure I truly provide the best channel for their specific business needs. In the case of this company, the VP of sales strongly dislikes the Rep model. He much prefers the Direct model (and I agree that there are some good reasons for this). However in this case, it is the absolutely wrong strategy – here’s why:
Due to available resources, their direct salespeople are covering multi-state territories (remember, a direct salesperson costs more than a rep). However, their business is structured in such a way that many small customers are spread throughout their multi-state regions. For example, in one 8-state region, the #10 customer by sales spends less than $20K per year with the company. With this many small customers (which in itself is fine), there is simply no way for one person to adequately cover a multi-state area.
My advice to the company is to change the role of their direct sales force (this company calls them Regional Sales Managers) and have them build a rep network under them. This would allow them to: 1) manage the rep network, and 2) work directly with some key accounts. Consequently, the company would now be able to reallocate resources (they would not need as many RSM’s), reallocate some fixed costs, and improve overall sales coverage. Additionally, there is an often overlooked benefit of improved job satisfaction among the RSM’s, as their new roles become more manageable.
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