Students to Start-Ups Entrepreneurial Skills Workshop Series

1. Students to Start-UpsEntrepreneurial Skills Workshop Series Presents: Driving Growth Though Distribution Strategy and Sales Management

2. Agenda • Distribution Channels • Examples • Channel selection • Channels management • Sales Management • Sales priorities • Sales management model • Building sales capabilities • Sales productivity • Case Studies

3. Strategic Innovators What do these firms have in common?

4. Strategic Innovators It was not just what they sold but, how they sold it! (reconfiguring the value chain to achieve lower costs and/or better service)

5. Distribution Channels - Examples • Field sales reps • Corporate resellers • Master or local distributors • Integrators • Value-added resellers • Manufacturer’s agents • Brokers • Franchises • Telemarketers • Inbound telesales agents • Internet sites • Extranets • e-Marketplaces • Direct Mail • OEM’s • Retail • Kiosk’s • Strategic alliances • Agents (consultants, affiliates, etc.)

6. Channel Continuum (illustrative) High “High Touch Channels” Field Sales VAR’s Value Add Of Sale Direct Sales Channel Dis- tributors “Low Touch Channels” Retail Stores Indirect Channels Tele- marketing Internet Low Direct Channels Low High Cost per Transaction

7. Channel Selection… • Channel strategy must start with the customer • Who are our target customers, what do they need and how do they want to do business with us ? • What drives them to make a purchase? • What kinds of experiences are they seeking from their vendors? • What has real value to them in the sales process – value their willing to pay for? • What channels do they use today, and what channels are they planning to migrate to over the next year? • What specific actions would cause them to increase significantly their volume with your firm?

8. Channel Selection… • Channel strategy must be aligned with the maturity of the market • Do you need to develop a new market or fulfill needs within an established market? • Are there dominate vendors or distribution channels already established? • Are you targeting a narrow or broad market? • Do you have the funds necessary to build all the required services (pre and post sales) to compete? Can you spread the costs over enough volume to be competitive? • Do you have a narrow or broad product offering? • Who are the key purchase influencers?

9. Channel Selection… • How you sell has to fit with what you are selling • Are the channels selected the ones that customers actually use to buy the things that you are selling? • Channels chosen must make economic sense, given what you are selling • The channel selected must be well suited to the complexity of your offering • You can not be everywhere at all times for every customer • There is a trade off between market coverage and control

10. Sales Control vs. Coverage… Control Coverage “We want to reach and serve new markets and customers, and to grow as fast as possible” Goal “We want to dominate and lead in our core customer base, to protect the brand, and control the relationship with the customer” Channel Approach • Field sales force • High-end partners, thoroughly • trained, with binding contracts • covering all aspects of the sales • process • Retail, mass merchants • Telesales • Distributors • Value-added resellers • Internet • Strategic alliances • 3rd party service agreements • Etc. Source: “Go to Market Strategy” by Lawrence Friedman

11. Corporate Resellers Direct, Field Sales Reps Large, enterprise customers VAR’s, Solution Partners Mid-sized accounts Mail order catalog Small office / home office (unserved market) Markets Simple, “off the rack products Mass-customized products Complex, unique solutions Products Market Coverage Example 1 Source: “Go to Market Strategy” by Lawrence Friedman

12. Large, enterprise customers Direct, Field Sales Reps Business partners + Telechannels + Web sites Mid-sized accounts Small office / home office Markets Simple, “off the rack products Mass-customized products Complex, unique solutions Products Market Coverage Example 2 Source: “Go to Market Strategy” by Lawrence Friedman

13. Sales Task Lead Generation Qualification Bid & Proposal Negotiation/ Close Sales Fulfillment Customer Support Channel Direct Field Sales Business Partners Tele- channels Direct Mail Internet Integrated Multi-Channel Model - Single Channel Cost Sales Cycle Source: “Go to Market Strategy” by Lawrence Friedman

14. Sales Task Lead Generation Qualification Bid & Proposal Negotiation/ Close Sales Fulfillment Customer Support Channel Direct Field Sales Business Partners Tele- channels Direct Mail Internet Integrated Multi-Channel Model - Reduce Cost & Increase Sales Cost Sales Cycle Source: “Go to Market Strategy” by Lawrence Friedman

15. Sales Task Lead Generation Qualification Bid & Proposal Negotiation/ Close Sales Fulfillment Customer Support Channel Direct Field Sales Business Partners (Over $25,000) Tele- channels (Under $25,000) Direct Mail Internet Integrated Multi-Channel Model – Example 1 Cost Sales Cycle Source: “Go to Market Strategy” by Lawrence Friedman

16. Sales Task Lead Generation Qualification Bid & Proposal Negotiation/ Close Sales Fulfillment Customer Support Channel Direct Field Sales Business Partners Sales support for key accounts Tele- channels Direct Mail Internet Integrated Multi-Channel Model – Example 2 Cost Sales Cycle Source: “Go to Market Strategy” by Lawrence Friedman

17. Partner Channel Development… • Define the scope of the channel • Define partners’ role in the sales process • Develop robust and attractive channel policies • Build a strong base of partners • Build a strong channel support infrastructure • Measure and manage channel performance Source: “The Channel Advantage” by Lawrence Friedman

18. Sales Management…

19. What are you selling… to whom? High Call Efficiency Dominates Customer Fragmentation Call Effectiveness Dominates Low Low High Value Proposition Complexity

20. Sales efficiency & effectiveness… Sales Effectiveness Sales Efficiency How to get in front of the right customers, for the right amount of time, at a minimum cost Once there, how to maximize sales potential Definition • Selling skills • Account strategy • Application knowledge • Effectiveness models • Territory design / coverage • Activity reporting systems • Compensation systems • Sales support Typical Performance Levers • Systems • Structures • Recruiting • Training • Coaching Driving Mechanisms • Sustainable margins • Repeat business • Coverage • Call rates • Cost per call Sample Measures Source: Huthwaite, Inc. 1988

21. Current Business New Customers More From Current Customers Setting objectives / priorities… What kind of customer? - Size - Type of business - Attitude / usage Where? What geography? What products / services? More of current product use? Cross sell other products? Higher prices / better product mix? Eliminate unprofitable accounts?

22. Current Business New Customers More From Current Customers Requires different sales skills… “Hunters” “Farmers”

23. What is the value proposition and the role of the sales force in its delivery? What critical selling skills are required for the sales role in the value proposition? Strategy/ Mission Sales Force Deploy- ment Individual Selling Skills Is the sales force (and channels) organized for optimal coverage of selected markets? Sales Support Is support adequate to maximize the selling effort? Does the incentive compensation plan meet management’s objectives and pay the sales force fairly? Coaching & Super- vision Infor- mation Resources Motivation & Compen- sation Does the sales force have adequate coaching & supervision? Recruiting & Training Does the recruiting and training match selling skill requirements? Are information systems being fully utilized to support the selling effort? Sales management model Sales Strategy Efficiency Effectiveness Capability Building

24. Building your sales capabilities… Organize for efficient coverage Develop skills for effective selling Motivate & support sales force Develop sound selling strategy Clear segmentation Explicit objectives, goals and priorities Winning selling proposition Realistic time frame/expectations Right structure Right size Territory / account Assignments for adequate coverage • Define necessary skills • Develop training, recruiting and coaching programs for: • Product knowledge • Buying process • Sales methodology • Planning & execution • Align measurement and reward systems: • Compensation • Recognition • Provide necessary organization support (systems, etc.)

25. Sales Force Productivity Sales Force Utilization Profit contribution per $ direct selling cost Hrs actual selling time per day per rep = $4 = 5 Effectiveness Profit contribution hr. actual selling time = $400 Selling Rate Direct Selling Cost Selling Margin Revenue hr. actual selling time 40% profit contribution margin = $1000 $500 / day per rep Example sales productivity model… ● — ● Efficiency Direct selling cost Hr. actual selling time = $100 ● — ● X • Compensation plans • Sales tools • Value proposition • Skills assessment • Territory / opportunity planning • Partnerships • Reduced overhead costs • Centralized sales admin • Sales force automation

26. Case study #1 (The early years)

27. Case study #2 (The early years)

28. Case study #3 5 Year Old S. CA Professional Services Firm

29. Additional Resources • Books The Channel Advantage, Lawrence G. Freedman, Timothy R. Furey Go To Market Strategy, Lawrence G. Freedman • People UCI Center for Entrepreneurship and Innovation CEI@Merage.uci.edu SCORE Orange County www.score114.org

30. UPCOMING WORKSHOPS April 4th Nuts & Bolts of Business Structure and Licensing April 18th Refine Your Unique Value Proposition RSVP CEI@MERAGE.UCI.EDU Students to Start-UpsEntrepreneurial Skills Workshop Series

31. Questions Mike Mata Michael.Mata@SCORE114.org

32. Thank You!