Not all sales channels are created equal and not all salesforce is created equally. There are channels that have the capacity to bring you hundreds of thousands of sales (even millions), while there are also those that may only bring you a handful. Of course, any business owner would prefer the former over the latter. And so the question becomes, which sales channels are you the most effective in gathering the most sales when considering quality and volume? Should you go for catalogs, VARs (Value-Add Resellers), or foreign distributors (among other channels)?
Sadly, there isn’t a one-size-fits-all solution to this question since businesses are unique and have their own dynamics. However, even having said that, allow us to share with you this framework from The Disciplined Entrepreneurship book by Bill Aulet. A lot of what he explains is based on ballpark figures and estimations, so not cast in stone as it also depends on the maturity of your product. Our clients find it a useful guide as they figure out their Channel Strategy.
Who is who in sales?
To understand the model better, we will look deeper into the categories of salespeople, and weigh the pros and cons of each.
This will guide you on the best choice to choose from.
Options | Pros | Cons |
Field Sales: These are direct salespeople who are employees of the company. They call on prospects in person at some point in the process. They provide high-touch connection and line of communication to the potential customer. They are also known as “outside sales.” | - Excellent for demand generation when creating new markets; may well be the only option for demand generation - High-touch approach creates an excellent feedback loop - High-touch approach also generally creates deep customer loyalty | - Very expensive (salary, bonus, expenses) Requires a Life Time Value of Ksh. 3,000,000 or likely higher - Hard to scale up as hiring them is hard and expensive and the success rate is unpredictable - Takes a long time to become productive - Need skill to manage |
Inside Sales: Also known as “telesales” in the past, but today, they are no longer just telephone sales reps. They use e-mail and other electronic communication to create and continue a dialogue with the customer, but do not visit the customer in person. | - Much cheaper than field sales - Maintain direct connection with prospects, potential customers, and customers - Able to get nuanced feedback from prospects because a human is in the loop - High productivity because of lack of travel - Good systems exist to further increase productivity and track progress of sales funnel and sales reps | - Lower touch, resulting in less customer engagement and less demonstration of the company’s commitment to the customer - Still expensive because the salesperson is interacting one-on-one with customers - Some products just can’t be sold without an in-person demo or meeting with the customer |
Internet Sales: This is a general catch-all category for sales done by computers through automatically generated emails, big data analysis, social media, preference engines, etc. The key differentiator is that there is no human in the loop. | - Direct interaction with the customer - Ability above all others to systematically capture even more data on the customer and track their progress—as well as spot patterns and make intelligent recommendations - Lowest cost by far Actually preferred by some prospects | - Low touch - Can’t read some nuances that only humans can - Some prospects do not react well to it - Privacy considerations - Can be hard to build customer loyalty - Risk for high LTV prospects/customers that others who use the higher touch channels above will steal these valuable customers |
Third-Party Resellers: These people sell your product but are not employees of your company. They include Value-Added Resellers (VARs), distributors, stores, catalogs, independent sales agents, etc | - Instant geographic coverage - Easy to manage - Understand the cultural context and have pre-existing contacts in their databases - Lower cost than field sales - Don’t have to hire, fire, and manage salespeople - Good for quick demand fulfillment - Potential temporary solution - Potential good solution for a mature product | - They own the customer, not you (very bad!) - Unlikely to have direct interaction with prospects, hence miss important learning about customer needs - Poor at demand generation - Expensive compared to inside sales and Internet sales - Most likely low loyalty to you and your product (just another product in their portfolio) |
When to determine who to hire
Estimated LTV (Life Time Value) | What you can afford for sales channels in the long term | Yusudi service match |
Ksh 3,000 | Only Internet sales; no human should be in the loop. E,g E-commerce, online ads | We can provide you with Yusudi Sales graduates to oversee delivery teams. |
Ksh 30,000 | Predominantly if not all Internet sales, with maybe a very small amount of inside sales for the most important prospects. | Yusudi sales graduates are suited for inside sales and delivery teams. |
Ksh 300,000 | Mix of Internet sales and inside sales and maybe some third-party resellers, especially if the product is mature or requires low support. | 100% match if you need inside sales teams from our graduating classes. |
Ksh 3,000,000 | A mix of all channels, with heavy reliance on inside sales and judicious use of field sales on big accounts. Third-party resellers can play a role in this scenario for geographic coverage and quick scale-up. | Our trainees can support with insides sales and lead generation to allow the field sales to focus on relationship building. We can also support with finding you great field salesforce. |
Ksh 30,000,000 | Likely led by field sales, with support from inside sales and some third-party resellers in selected areas for geographic coverage. | Our trainees can support with insides sales and lead generation to allow the field sales to focus on relationship building. We can also support with hiring field sales. |
Ksh 300,000,000 | Dominated by field sales, with other channels in a supporting role. | We can link you up with our sales recruiters to help you find this talent in the market. |
Ksh 3,000,000,000 | The field sales representatives are the all-powerful dictators; other sales channels don’t even look at highly qualified prospects or customers without their approval. Customer intimacy and professionalism is crucial in this scenario. | We can link you up with our sales recruiters to help you find this talent in the market. |
How to use the above framework
Bill Aulet recommends that you start by determining the short, medium, and long-term projections of what proportion of sales will come from different channels. There is a worksheet he provides in his book for the Short, Medium, and Long Term to define the periods of time and proportions, as well as sales goals to achieve during that period, and assumptions and risks involved. You will also define what milestones you need to reach during each period so that your company is prepared to shift to the sales strategy for the next period.
Short-term, medium-term, and long-term are defined in large part by the progress you make on your product.
In the short term, you are figuring out what your product is and creating demand;
In the medium term you are refining your product and starting to produce it in a repeatable fashion, fulfilling demand, and building the manufacturing and sales infrastructure you need to be successful; and
In the long term, you are scaling your business.
Conclusion
The key to the success of the model is that you define and understand what milestones allow you to shift your approach from the short-term sales channels to the medium-term to the long-term.
The short term is where you will focus on demand generation and creating market awareness, and you will also still be iterating on your product and marketing, so field sales will be important despite its higher costs. As you progress through the medium term and then the long term, your sales channels should shift away from focusing on field sales, particularly for an LTV of less than Ksh 100M in the medium term and less than Ksh 1M in the long term.
Should you require any further clarification, please contact us at info@yusudi.co or visit our website for more content.
Comments