The new business reality is that companies need to sell in many different ways to different buying constituents. While in some small ways there will be differences in /what/ is sold (largely down to geography and channel considerations), they will mainly be selling the same goods and services. There are some key business capabilities, therefore, that will be essential to serve customers the way they want to be served.
First, we need to understand the possible ways in which organizations will sell in the near future (if they’re not already).
- Direct selling – There are two elements to this, which we will discuss later.
- Channel selling – Partner access
- Public selling – Full featured public access
What can be observed in the marketplace is that there is fluidity between these groups. This was not always the case. A decade ago, a sold-to could have been tagged in customer master, and the attribute would not have changed. Recently, though, things have become different.
The customers of the distributor have approached the manufacturer looking for a direct relationship. Direct customers have migrated to buying from distributors and resellers for more localized experiences. Distributors themselves have sought to heighten their differentiation in the value chain by seeking out new lines of business – sometimes leveraging technical know-how with OEMs.
All of this creates a quandary for the manufacturer. The goal is to be easy to do business with. However, every business is looking for margin expansion, which means that the forces of the marketplace – buying and selling – may mean introducing the disruptive risk of self-cannibalization. In essence, if the manufacturer raises the price to the direct customer, it increases the possibility that the end customer will buy from a distributor.
Understanding the Selling Mechanisms
Let’s dig in a little more on these selling mechanisms. Let’s think about their purposes and characteristics.
1. Direct Selling
This is the classic selling motion, still very much in vogue today. These folks have relationships with buyers, they respond to inbound enquiries, they create target accounts and they go out and hunt for business, and farm the business. They spend time organizing information in a CRM system. When the sales cycle requires a quotation activity, they will want to complete that in an environment not just closely linked, but absolutely integrated to the CRM. The sum of the quoted line items, expressed in monetary values, forms a critical part of the sales pipeline information that the company uses as in their forecasting activities.
However, there’s an entire constituent inside the organization who support direct selling activities who may not have CRM access. These may include product managers, category managers, and financial personnel who need visibility on the commercials of a quote. It may include operations leaders who need to see the volume of goods being quoted so they can plan raw material cost acquisition and manufacturing line optimization for the coming business.
These folks need access to the information…but they don’t need to use the rest of the CRM. As CRM is charged on a per-user-per-month basis – this quickly becomes either an expensive overhead, or processes are designed around system access.
2. Channel Selling
More and more often, channel partners want and need access to information. This might be product information – which impellers are compatible with which bowls in a pump. It might be cross-product recommendations – which accessories are commonly purchased with which principal items. It might be inventory or lead-time information. It might be pricing (and, let’s be clear, it should be specific, personalized pricing – for that channel partner buying those items in those quantities). Finally, they’ll want to be able to place an order.
3. Public Selling
Direct-to-consumer (DTC) has taken off in a big way in the pandemic world, and it seems those buying preferences are here to stay. Previously, DTC was the realm of small, disruptive players in a stodgy old space. Now it seems that most companies have a thought to achieving this. These questions come with key questions about the technology underpinnings of how to get it done, and also the commercial questions of how to avoid the channel conflict mentioned above.
In the next edition of this series, we’ll discuss the technology that creates these capabilities. Then, in the final edition, we’ll look at how to construct the commercials to avoid channel conflict.