magazine |
April 8, 2016
Changing Sales Channels As a Product Moves Along Its Life Cycle
By: Dan Bernoske
Your sales channel options range from low-cost, low-touch self-service to high-cost, high-touch field sales. Your product life cycle follows a predictable, four-phase path. It is critical to align your sales channel strategy to your product life cycle.
As your product matures, margins naturally become slimmer. New competitive threats and evolving customer demands put downward pressure on your customer lifetime value (CLTV). Unique value propositions can easily become commoditized. Your margins get squeezed as your product evolves through its four phases of life:
Meanwhile, customer acquisition cost (CAC) is taking a bite out of your bottom line. Your go-to-market choices play a significant role. In fact, much of your CAC:CLTV ratio depends upon how you select your sales channel to match where your product is in its natural life cycle.
How you engage with your buyers can range from free to using a $500,000, fully loaded field sales rep. On the low end, Freemium and self-service models are well suited for low- cost products. While common among new, innovative web products, this approach should also be considered for highly matured, commoditized products. On the high end, field sales with sales support resources are best for high-cost or differentiated products. Regardless of choice, always consider the life cycle of the product you’re bringing to market.
As your product matures and market dynamics change, reevaluate your sales channel strategy. Make sure the costs do not outweigh customer lifetime value. Enable your buyers to buy the way they want to.
The key to sales greatness is a well-aligned strategy that simplifies the buying and selling process. It’s why “A-Players” love their employers and almost never leave. Turn to page 37 to learn more.
Prior to SBI, Dan held business development, sales, and product management leadership positions at several start-up companies, developing Apple iOS platforms and E-Commerce-based social networks. Most notably, Dan was co-founder of Video Lantern, an online video advertising sales and operations firm. He is Six Sigma certified from GE.
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