The Hip, New Sales Channel Plan That Will Get a CSO Fired

December 31, 2011 at 7:00 AM

The head of IT comes to your CEO with a brilliant new product:  Client Webinars.   “We can now contact our customers and prospects using just our desktop computers,” he explains. “With this new virtual interface, we can conduct meetings with anybody in the world right here from the home office. We no longer need to have as many expensive Field Sales personnel”.

sales channel

The CEO loves it.  He’ll get on the quarterly conference call with shareholders and say, “This new initiative utilizes the latest customer interface technology and will control costs while increasing accessibility”.  Shareholders will praise him for his vision.

The CFO loves it.  Field reps cost three times as much as an inside sales rep.  For the cost of a simple up-front software package, he can reduce some of the biggest SG&A expenditures—field rep compensation and travel expenses. Reduced SG&A Costs by 15% in FY2012 will look great on his resume.

The Sales Ops guy loves it.  The data is easy to track. He knows how many webinars are conducted by each CSR per month and the duration of every one. An inside rep could host 8 of these in the time it would take a field rep to sit down with two customers or prospects.  Increased client touches by 200% and decreased cost per interaction by 80% will be added to his resume.

That leaves you, the Chief Sales Officer.  You are responsible for increasing revenue by 10% for the next fiscal year.  You’ve heard about this shift to webinars, video conferencing, and the internet as the new Sales Channel, but are hesitant about realigning your sales resources.

Why?

  • Your products are complex.  You don’t think that a simple 1-hour webinar will address all the issues, questions, and details that your customer demands.
  • Trust is a key component of your industry.  Sitting down face to face still shows your commitment to the client’s success.
  • Your customers don’t always identify their needs correctly.  By conducting a webinar, you are addressing the client's explicit needs, without the on-site visit to uncover the root problems that your product can help address.
  • Your competition still relies on a field sales force.  All things being equal, if a Sales Rep from your largest competitor walks in the door of a client shortly after your webinar, who do you think they will gravitate towards?

These are all questions that need to be addressed before you launch a new sales channel management plan.  In my last blog post, we talked about the three questions to ask before you pursue a new sales channel.   This addresses the most important—will the customer buy from this sales channel? 

While a webinars and video conferencing are talked about in terms of cost savings, many times revenue is ignored.  In the quest for efficiency, this plan has lost sight of effectiveness.  These methods work when the sale is simple and transactional in nature.  However, if the customer is making a major commitment when they purchase your product, make sure your sales channel speaks to that commitment.

Key Takeaway:  Before you pursue a more efficient channel strategy, make sure you’re accounting for any potential loss of revenue by analyzing the new channel’s effectiveness.  Customers demand a more effective and specialized (higher cost) sales channel as the product gets more complex and requires a greater investment on their end.

Has your firm made a commitment to an ill-fated sales channel? Has it successfully navigated to a more efficient channel without compromising revenue?  I’d be interested to hear your experiences and comments.

This is the last day of the year- make sure you go in with the best gameplan possible for 2012. Read the new VP of Sales ebook, avoid the 2011 hangover, and achieve your sales goals for 2012.

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Topics: Channel Management Strategy, CSO

Posted by Drew Zarges

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