Knowing when customers prefer to buy directly or indirectly can make or break your revenue goals. Likewise, matching the appropriate customer acquisition cost (CAC) by channel with customer lifetime value (CLTV) by customer and product type can improve the odds of making your number.
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Channel options range from low-cost, low-touch self-service to high-cost, high-touch field sales. These options represent various levels of CAC that ultimately affect your bottom-line revenue.
Select the Right Channels
The first, crucial step is to match appropriate CAC to the overall revenue potential of each buyer. To select the right channels, you must understand the needs of your buyers.
For example, Chris Bittner, senior director of worldwide sales and channel strategy at Autodesk, explains how his company learns about channel preferences. “The basic answer is to talk to customers,” says Bittner. Aside from ongoing interviews, Autodesk conducts an annual purchase behavior study. The company collects thousands of data points on buyer preferences.
Manage Your Channels
The next step in controlling CAC while maximizing CLTV is to manage your channels effectively. Lay a successful foundation by deciding upon the right coverage model:
- Intensive: Many channel partners in the same space competing for the business
- Selective: Only channel partners that meet certain criteria
- Exclusive: One reseller per market segment
Begin the recruiting and onboarding process with an understanding of market needs, and match those needs to the unique value of each partner.
Enable Your Channels
Channel management includes a defined prospecting and sales process, territory alignment, quota-setting, and partner compensation planning. The final step in determining product and channel fit is enabling your channels to maximize revenue.
Would you like help thinking through the right channel selections to maximize revenue? Consider a visit to The Studio, SBI’s multimillion dollar, one-of-a-kind, state-of-the-art executive briefing center. In advance of the meeting we can help you calculate your CAC and CLTV and leverage the insights from that data in our working session. The Studio is a safe haven for learning and after just a few days clients leave with confidence and clarity on what they need to do to grow revenue and how to do it.