Now, once you're done measuring and adjusting your sales force and territories, now it's time to really zoom in on one of these territories, for example, and I'm going to use Brazil. Zoom into Brazil and then within Brazil, that territory, we have to define the verticals in that market, verticals meaning market segments. For example, we sold telecommunication's equipment, so we had:
1. cable TV companies
2. fixed telephone line companies
3. wireless companies
4. satellite companies
5. Internet service provider companies.
These were the five verticals in the market. Well, my resources were limited. I didn't have a lot of sales people, so I first had to segment the market. I decided to implement the cross matrix here, for cable TVs, within Brazil, I said, “We're going to do direct sales." In other words, I'm going to use my sales people to sell directly to the cable TV companies.
When I looked at the telephone fixed line vertical, I made a decision that we will also use a direct sales force.
When we got to the wireless side of the business, we thought a better approach would be to sell through value-added resellers. (Value-added reseller is a company basically that takes different products, puts them all together and then sells it as a full package.
The value-add is in the packaging of the actual system.) Sometimes companies wanted to buy the complete system, so selling into the wireless vertical, We qualified value added reseller companies, we certified them, we trained them and they now sold on our behalf.
Next, when we went to the satellite companies, we thought that would be better to go through a distributor. A local distributor is basically someone who stocks components, or systems or boxes in their warehouse and companies can go directly and buy from them. A lot of satellite business we had was, easy simple sales, just buy the box off the shelf. I chose this because I didn't want my sale's people dedicating their time to that. Then, we did the same thing for internet service providers, push them through distributors.
Look at what I've done here. First of all, I made my markets vertical. The next step was to assign them and to decide what channel I was going to use to sell. By first creating verticals, you know what market segments exist. Then, as a manager, you have to decide what channels are more effective.
Now, I chose these channels based off of their associated costs: When you go direct sales, your transaction cost is going to be high because you have to pay for that salesperson, you have to pay for their time, you have to pay for all the overhead associated with an employee.
At the other extreme, when you use a distributor, your transaction cost go down because all they want is a small commission off whatever they sell. Depending on the channel you use, will also determine your profit margin, your transaction cost. Something to keep in mind.
Defining which channels will be pursued by which channel is important because you can only go after so much market. The best way to get the coverage, if you don't have enough sales people, is to begin relationships with:
2. Value-added resellers
3. Contractors (these are people who have hired guns who will sell your products for a commission only)
4. OEMs, other equipment manufacturers
In other words, companies can take your equipment, put their name on it and sell it under their banner. Some people call this, white labeling. Again, the key part here is that depending on the channel of selling that you choose, your transaction cost will be impacted (cost of sales
Back to the original example of cable TV and telephone companies; We want to use our direct sales force in order to have more control over the sale's process.
I focused my direct sale's team on what I call the high-leverage activities (or companies). In other words, the companies that I knew had the biggest return on investment.
The next step is to really get your sales team to sell on value, positioning your product, doing the presentation to the right people. In our third and last article in this series, we’ll discuss just how you can execute these skills with your sales people. Stay tuned or opt into our weekly Sales Influence Newsletter.