If you are a CEO whose company sells exclusively to the end-user of your product or service and you are confident that is the optimal go-to-market motion, this article isn’t for you.
However, if you are a CEO who:
- Is actively considering a new channel strategy
- Isn’t sure you currently utilize the optimal ones; in which case you should download our Channel Partner Attractiveness Tool to find out
- Know you need a new strategy but believe it is the job of your CRO
A channel strategy is the companies plan to reach customers with products and services. It ultimately serves two primary functions:
- Selling to the customer
- Delivering customer experience including the products and services themselves
If you can think of a more critical strategic decision to be involved in as the CEO, we have a different view on the importance of customers to the success of your business.
Determining the Optimal Channels
How to go about determining the optimal channels for your business is a complex process. Depending on your industry, there are numerous options; direct sales, eCommerce, value-added-resellers, wholesalers, distributors, licensing agreements, agents or brokers, just to name a few.
You must consider the competitive environment you play in. Constraints such as costs and capabilities, flexibility and control, potential channel conflicts, and the investment of company resources to ensure success … time, people, and money. A CRO may understand many of the external dynamics but is not best positioned to understand all the internal dynamics.
Let me give you an example of a channel strategy decision made by a CRO trying to meet her revenue growth objectives. She believed to be following sound logic but missed the mark because she wasn’t aligned with the overall corporate strategy or that of other critical functions:
Based on a significant amount of direct customer feedback, she introduced an eCommerce model to eliminate low-value tasks from the direct sales force and elevate them to consultative roles. Customers told her that they would happily migrate significant parts of their business to self-service. She assumed this would free up the direct sales team to focus on larger, more complex clients. To her, it was a win-win. More revenue through a lower-cost channel and more efficiency for her higher-cost channel to focus on the big deals.
Unfortunately, she made a common mistake by viewing eCommerce as just building a slick website for customer orders. She believed that once the site went live customers would start ordering, and that the result would be millions of dollars in new revenue and increased sales efficiency for her team.
The reality is that in the B2B world, there are often extremely complex integrations necessary with business systems, like a CRM, for example. In their business, sales and support contracts were customized for each unique customer. Prices, for the most part, were not transparent. Considerable time and resources needed to be invested in making sure all the processes were in place to make things flow seamlessly, and that did not happen.
She also didn’t properly account for the post-purchase experience. To be fair, orders did come when the site when live, a lot of them. And next came the returns, which in their business were complex. Without defined processes, and trained, dedicated headcount, to handle issues from the new channel, the customers turned to who they were used to- the higher cost direct sales team. Pressure mounted on them, their efficiency went down, and many customer relationships were damaged due to a poor brand experience.
The lesson to be learned is simple. Channel strategy is far more complex than just what happens inside the sales function. That is where the execution belongs, but it is just too important of an over-arching cross-functional decision for a CEO not to be involved in.
To be clear, I am not suggesting a CEO sets channel strategy in a vacuum. Your CRO should unquestionably be heavily involved in the conversations, but ultimately it is their job to execute the strategy once it is defined. That includes everything from selecting the right partners, to establishing a channel governance and enablement process and avoiding channel conflict.
While this article isn’t meant to address those topics, you or your CRO can read more about it by downloading SBI’s 5 Key Components of Channel Management Whitepaper. Or contact us for more targeted information on this subject.