Developing A Multi-Channel Sales Strategy That actually Works
Whenever I’m developing a Go-To-Market strategy for an IT product or service, my top goal is to find the most effective way to reach the target customers and achieve the business growth objectives. While considering the various single or multi-channel distribution options, I have to consider multiple factors, such as what will drive the fastest revenue growth, maximize customer success, and build a sustainable business. The key in this complex equation is simplified by focusing on the customer.
The digital transformation is having a massive impact on how and where customers acquire IT technology. This transformation in customers’ purchasing behavior is the driving force behind my last post, Why it may be time for a 100% Channel Strategy. However, depending on your product and target market, a multi-channel strategy that includes direct sales may be the right approach. Like skydivers flying in formation, the key is to understand the role and expectation of every member of your multi-channel team.
Many IT vendors still follow these typical multi-channel sales strategies
- Product/Service segmentation: for example, 100% direct sales for most products while using partners for a subset of products and professional implementation services
- Market or Account segmentation: for example, 100% direct for the enterprise accounts , while carving out a market segment, such as SMB or Mid-Market, for partners
- No segmentation: partners can sell into any account, though often in “coopetition” or flat out competition with the direct sales engine
Any of these strategies can work if executive leadership is driving a channel-led culture and implementing appropriate organizational structure and compensation plans to drive the right behavior. We’ve all seen vendors who execute their multi-channel strategy extremely poorly, where everything they do breeds channel conflict and leaves a slew of burned channel partners in their wake. This is what I called the “Channel-Dead” strategy. Other companies do a much better job treating their channel partners as true business partners and have successfully developed a channel-led culture throughout their organization. However, even in these companies, channel partner’s success may be hampered by a variety of factors and unintentional consequences.
5 things companies do that sabotage indirect channel sales
- Run marketing programs and campaigns that favor and tend to drive direct sales behavior
- Build sales compensation plans that penalize direct reps if the deal goes through a partner
- Having a sales leadership team that doesn’t really support or believe in the channel
- Running sales operations in ways that favor direct sales over indirect
- Decide where to sell direct based on where you want to sell, rather than where customers want to buy
Best practices in multi-channel sales – the customer-driven approach
There’s a tipping point when successful channel vendors go from “channel by exception” to “channel by model”. When you see companies like Brocade, where Channel Chief, Pete Peterson, says well over 85% of their business come from the channel, it’s a pretty good clue that they have found a partner-driven strategy that is working. Another great example is Actifio, where the channel strategy is based on where customers want to buy, not where Actifio reps want to sell. Actifio’s channel chief, Mike McClurg, drives a customer-driven team approach where inside sales, field sales, and the partner all work together to identify new opportunities, engage prospects, and drive deals to closure.
Rich Blakeman presents this winning approach to the multi-channel strategy in his new book The Hybrid Sales Channel. To adapt to the new paradigm of buyer behavior, Rich says that vendors need to think of a hybrid sales model like a hybrid car that alternates between gas and electric power depending on the situation. The gas engine and brakes charge the batteries. All systems work together. In a hybrid sales channel model, direct sales and indirect sales work together, not duplicating efforts but energizing each other and meeting the needs of the customer.
Rich lays out a number of best practices for the hybrid channel to succeed
- Assess territory coverage by determining how and from whom your customers are buying, and which of your partners are selling to your customers and what they are selling
- Apply a systematic channel management model and keep channel management in the hands of channel managers
- Keep channel sales rep engagement in the hands of direct sales , with a focus on working with the partner sales reps who have the right skills and relationships
When doing territory mapping, Actifio’s direct reps look at each account in their territory and map out which partners have trusted relationships and are on approved vendor lists with those accounts. Selling direct is the exception, typically only in the largest global accounts where purchasing wants a direct vendor relationship. With over 85% of business coming from the channel, Actifio has crossed the tipping point and has found a winning channel model.
Wherever your company is in the channel journey, stepping back and taking a customer-focused approach can have a monumental impact on your channel success. If you’re wondering how to accelerate growth through a hybrid or multi-channel strategy, following are
3 key ingredients for success:
- Develop a customer-driven channel strategy and sales culture, leveraging the strengths and relationships of your direct and indirect reps, and avoiding duplication of efforts
- Implement a methodical and comprehensive channel management model to support and enable your partners
- Create a channel-driven culture across your company through education, collaboration, and leadership
I’d love to hear your thoughts. What lessons have you learned in making a hybrid channel sales strategy work for your company?