Business Coaching Articles

Getting Outside Sales

Guns for Hire

Getting Outside Sales
Part one of two on selling through outside channels
By Craig Montgomery

Many successful companies at some point rely on independent sales channels.

For mature businesses wanting to penetrate foreign territories or start ups looking at overall sales strategies, the use of sales channels should be seriously considered.

This is a cathartic moment for many businesses…you need to get in touch with the "dark side" - outsourcing sales! Setting up a sales team can be challenging and costly and whether you are supplementing your team or looking at a temporary alternative, an independent sales channel deserves careful investigation.

Fundamental Issues

Most large and small companies stumble when trying to establish realistic expectations when dealing with sales channels. Aggressive, yet attainable, quotas will make it much easier to achieve success.

Many business owners think of channels with little enthusiasm, however treating distributors as an "extension of your sales team" will prove to be a very successful strategy in gaining their loyalty. Then watch them penetrate your market!

By creating a blend of direct and indirect sales within the organization, your business will fire on all cylinders. If you are targeting a specific customer base, you need to focus your own people on closing those "house account" opportunities, leaving the rest-of-theworld accounts to the channels.

Deciding which channels are right for your business can be a complicated choice. There are several types of independent sales channels. Prepare the right questions to make this a win-win, or you may find yourself giving away too much to these professional sales organizations.

Which model(s) is right for you depends on what you are looking for. Here are some of the pros and cons of different sales channel models and what you should be aware of when you approach the people who run them.

Distributors

• Demand larger gross profit margins relative to the value of your product
• Typically stock product and have larger, regional or national sales forces along with some degree of technical support
• Boost your product sales immediately through inventory orders alone, however, you share the spotlight with many other product lines
• Staff turnover is often a problem in maintaining consistency
• Have staff experts to negotiate resale contracts and demand a lot
• Provide immediate access to existing accounts. You benefit by becoming a complimentary sale to their product line

What you need to do:

• Provide training, support, motivation and promotions
• You must have a high demand product
• Set reasonable expectations for their sales staff – for example don’t expect their entire staff to fall in love with your product
• Find a few champions in the organization to nurture and build success – others will quickly follow the commission dollars

VARS (Value-add Resellers)

• Sometimes stock product and usually add value through bundling complimentary products
• Often have smaller regional/ national sales forces to penetrate markets than distributors
• Somewhat less staff turnover, higher quality of staff than distributors
• The very term of “value-added” implies they take your product and package it together with other items to make it unique
• The strength of their negotiations will depend on how well you convince them your product will meet their needs

What you need to do:

• You provide training, motivation and promotions
• To interest their top sales people you must have a high demand product

OEMs (Original Equipment Manufacturers)

• Will take your product and “private label” it with their brand, often adding some value along the way
• Usually want more independence and require technical support of the highest level
• Tend to have their own sales and marketing staff and simply place orders for more product as needed
• This is sale that requires a specialized approach and patience
• Tend to be more long-lasting, secure relationships if you can find the opportunities

What you need to do:

• Building strong relationships usually takes time
• Return on investment is over a much longer cycle typically
• Less maintenance once the initial work is done

Reps

• Rarely stock product or handle billings and collections
• Provide a more professional sales approach
• Often act as an extension to your sales team in territories or countries you can’t support
• Have fewer lines, more dedication, usually more experienced
• Tend to look for lines generating existing sales, good profit
• Provide exclusive territory rights
• A great way for companies to build new territories and establish a presence on a global scale with minimal investment.

What you need to do:

• Treat these firms more like professional guns for hire
• Finding good reps is more difficult as they are smaller organizations

Telemarketing firms

• Mostly responsible for generating leads, qualifying prospects with little involvement past that function
• Can be an effective way to generate immediate sales leads
• Tend to have lower benefit and credibility
• You can quickly penetrate a market, generate leads and prospects

What you need to do:

• Don’t use them to tackle a single telemarketing effort - you likely are throwing money away
• Like most marketing, this requires sustained, long-term strategy.

Channels can get new accounts you aren’t aware of and those clients may become lifetime customers. Some channels will be more effective with your product/service than others. Channels can work in harmony with your own sales team as long as you set out clear rules. Your own sales people can manage the channel and be compensated (at a lower rate typically) for territory sales, off-loading you from being directly involved. Whether you choose a rep, VAR or distributor, the important thing is to set proper expectations and realize that not every sales strategy works the first time. Enjoy the successes when they happen, sign solid legal contracts and learn from your mistakes.

In part two I’ll look at how you can determine which are the best channels to meet your needs.

Craig Montgomery is the President of iMotion Marketing Inc, a company that provides marketing solutions to successful businesses. Craig also delivers executive coaching, professional sales training and consulting services. His clients include: TD Waterhouse, AE Lepage, Premier Canadian, the EDC and Columbia Health Centre.

Contact him with comments or questions at (250) 869-4000 or craig@imotionmarketing.com

Guns for Hire
This is the second of two parts on selling through outside channels
By Craig Montgomery

First, you must be clear on what your business will require from “hired guns”. Define your
long-term goals and intentions, to make this process easier. Knowing what people in these outside sales channels are expecting will make it simpler to speak their language and negotiate more effectively.

You are working with “guns for hire” and the good ones are only serious if the potential in a
partnership with you is above average. By outlining the definitions of a typical working relationship, you will find some mutual goals.

What Sales Channels Want:

• Territory exclusivity
• Testimonials/references
• High gross profit margins
• Technical support
• Run-rate projections
• Demos/samples
• Professional marketing materials
• Run-rate of business to assume
• Lead generation strategies
• Product reliability
• Desirable product or service
• Healthy working relationship
• Short sales cycle
• Sales contract with acceptable terms

Different sales channels want different things out of a relationship. Thousands of companies everyday make these relationships work by knowing what the channels want. If you think of the channel as an extension of your company, you will be more successful with them. You likely need them more than they need you to expand your sales, but it must be a win-win scenario. A word of caution…you better have your strategy planned since you often get one chance only to make an impression.

Once you know what you need, and have an idea of what they are looking for, the next question is where can you find these hired guns?

Trade Shows provide an excellent chance to learn what your competition is doing and to find potential sales organizations for your product. The smaller venues (i.e. tabletop shows) tend to attract the businesses that might be interested in reselling your product line. The many annual industry shows can become a great incubator for these relationships.

Timing is everything and changes happen more often at trade shows than most everywhere else. Go prepared with this in mind. Don’t be afraid to ask tough questions! They aren’t shy if they’re in sales and once you start to talk about a reseller, the networking process begins.

Check out your competitors’ websites to find out how extensive their channel sales strategy is. Often this will provide an opportunity to dialogue with resellers even if they are not currently looking to change. Once you have initiated the relationship, you may find a year later they are contacting you about a possible reseller agreement. This is also great prep work before attending trade shows.

Association meetings, chamber lunches, business breakfasts and other networking events are other ways to find these players. If you spread the word about your needs, eventually someone will know someone who is looking to add to their portfolio. This is something you should be always thinking of. Sales channels/people are often changing and you always need to stay one step ahead.

The more you know about the reps selling your competitor’s products the more knowledgeable you will be against them in a sales cycle. If the representatives have their own websites, check them out.

You will also discover the related products they sell, which leads to more potential for
prospective resellers. For example if a rep sells process control boards as well as related software, the software manufacturer can become a potential lead for resellers and so on. This is a great way to expand your reseller network. Simply contact that sales organization’s president and open the door. They may even know of another sales firm looking for new product lines...it’s a small world.

You should be aware of the way your competitor sells, especially if that company is a leader in
the business. Know your competition.

Advertising is also effective. Good old-fashioned newspaper or trade journal advertising does
work. Finding the best venue takes time and can be a little costlier than other methods. You do
however reach a much larger audience and could uncover someone who is a perfect match for your product. Beyond what they want, there are also many things the sales people need to do their jobs well.

If you prepare for that, you’ll have a much easier job of attracting them to work for you.

1. You need to make sure the product works well or you lose credibility.
2. You require pre and post technical support to handle the demonstrations, installs and any future technical issues that arise.
3. You must have marketing material (collateral) to leave with clients, hand out at trade shows or send electronically.
4. You likely need a website to assist your sales cycle.
5. You should have testimonials and references to prove that the product works.
6. You need a process behind you to insure shipping, accounting, technical support are in place to follow up once the sale is made.
7. Advertising bring in leads and helps reduce cold calling, which is rarely fun.
   Treat this process of attracting hired guns as a job itself, and you will have a good funnel of sales prospects to count on to grow your business.

Craig Montgomery has twenty-five years of expertise in high-tech and is the President of iMotion Marketing Inc, a company that provides marketing solutions to successful businesses. His clients include: TD Waterhouse, AE Lepage, Premier Canadian, the EDC and Columbia Health Centres.

Craig also delivers executive coaching, professional sales training and consulting services. Contact him with comments or questions at (250) 869-4000 or craig@imotionmarketing.com