The old adage that distribution is all about location, location, location may work for retail operations, but does the sentiment hold true for firms in the talent development industry? Perhaps. No doubt, local access to a client base makes dealing with those customers more convenient. What’s more, the more visible you are, the greater the potential for your distribution to pay off in revenue generation.
Let’s look at the “feet on the ground” sales and distribution models and evaluate their pros and cons. In general, the primary types of in-person sales distribution include:
- direct sales force
- consultants
- on-staff telemarketers
- contracted telemarketers
- licensed resellers
- authorized brokers.
The table below attempts to offer a perspective around their relative pros and cons for several variables.
|
|
Direct Sales Force |
Consultants |
On-Staff Telemarketers |
Contracted Telemarketers |
Licensed Resellers |
Authorized Brokers |
| Expense |
High |
High |
Medium |
Medium |
Low |
Low |
| Margin |
Low |
Low |
Medium |
High |
High |
High
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|
| Profitability |
Low |
Low |
High |
High |
Medium |
Medium |
| Company Control |
High |
Medium |
High |
Medium |
Medium |
Low |
| Ramp-Up Time |
Long |
Short |
Medium |
Long |
Medium |
Long
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|
| Offer Knowledge |
Medium/ |
High |
Medium/High |
Low/Medium |
Medium |
Medium |
Linking Sales to Distribution
I am not suggesting that you should interpret this table too literally; there are a host of intervening factors that easily alter the boxes. But it can serve as a nice guideline to evaluate how your firm approaches the market. Keep in mind, though, that the complexity of the offer, the experience of the seller, the reputation of the firm, or the past experience with the client can influence the sale.
Case in point: From this table, you might conclude that the overall least-effective model is a direct sales approach because the expenses, both in the form of compensation and travel, will typically be much higher—resulting in less profitability. On the other hand, this extra cost may be worth it because it offers more consistent brand image and messaging to the market place. In addition, this may be the best overall approach for complex sales because the seller can learn directly from colleagues on a daily basis.
This latter point is important when introducing new products and offerings. It is often more difficult to learn and stay up-to-date in an indirect sales structure where the salesforce is not fully employed by the company. Conversely, some of the other approaches are more profitable—even though there is potential risk for employees to present an inconsistent message and brand to the market place.
Eating What You Kill
Speaking of complex sales, one of the interesting dilemmas facing distribution in the talent industry is the effect of the so-called “eat what you kill” approach. This is where expert consultants seek out, close, and then deliver the product or service. Arguably, these experts may be better able to gauge the customer’s needs and, therefore, accumulate additional sales more readily than a pure salesperson. Of course, finding these types of people can be difficult—given the different skill sets required to do both.
However, for very complex sales opportunities, this may be the most effective approach. From my own personal experience, I have had significant trouble hiring successful salespeople who can sell—and adapt—relatively generic products or programs. The major downside to the “eat what you kill” approach is that you can’t be closing new accounts if you’re always delivering the product or service. There needs to be a balanced approach, supported by an appropriate reward system.
Generating Leads Is Key
Outside of repeat business acquired by on-the-ground sales people, lead generation is becoming increasingly critical. With regards to lead generation, we often talk about a “hunter” versus “farmer” approach, and many organizations feel that these must be two different people. Although it is true that some people are better at one approach, many argue that to be a good farmer, you must be a good hunter. They think that selling deeper and wider into an existing account requires a hunter’s mentality.
It is also very expensive to have both on staff. Enter telemarketing. One reason lead generation via telemarketing has become such a necessity is that it is generally a much lower cost solution to having a group of on-the-ground salespeople “farming” the fields. But lead generation is not as simple as calling numbers from paid for lists; there is a science to the process that involves digital marketing expertise.
Moving Forward
What’s the point of all this? We have all experienced relatively poorly developed programs that do well simply because they have the right distribution, while expertly developed programs sit on a shelf collecting dust. I’ve seen it over and over again in my career: the bigger guy with excellent distribution (but not necessarily the most up-to-date products and services) outsells the smaller guy who doesn’t have the resources for mass distribution (but who does have better products and services).
Ultimately, selecting the right sales distribution model depends on a number of variables—not the least of which is its financial condition and cash flow. The most tempting, and perhaps least financially risky, option is to turn over sales to third-party partners. These may cost less to manage, but they also may be the most difficult to control.
To be sure, most companies include a number of these approaches, even simultaneously. However, the potential for territory and customer overlap increases unless very clear guidelines are in place. For example, some firms assign their own direct sales force to major accounts while providing smaller clients to licensed resellers.
Bottom line: Distribution is just one component of the entire sales engine equation. Much of the sales structure of an organization—indirect or direct sales—will depend on its business life cycle and go-to-market strategy. Perhaps the game changer is a digital network that can reach a more widespread customer base at relatively little cost.
In the meantime, what sales distribution methods have worked or not worked for you? More importantly, how would you change your approach based on this analysis?
