An article that discuss how to reconsider sales channels strategies and operations during economic downturn.

1. Are your sales channels crisis-ready ?
Revisiting Sales Channels
| 2009
April

2. Are you sales channels crisis-ready ? | Revisiting Sales Channel Strategies
The latest economic crisis necessitates the need for companies to revisit their
sales channels. Why? The drastically effected marketplace has altered factors like
sales potential, competitive landscape, customer preferences, partnerships, etc.
As these factors are the foundation for the initial strategies used in designing sales
channels, the changing environment dictates companies revisit their plans around
acquiring and cross / upselling to customers.
The chaotic situation that the economic crisis has dragged companies into
recently brings with it not only threats, but opportunities. While some global
companies are on the verge of collapse (or already have), others are prospering
and expanding. Example – In January 2009, the United States’ second largest
electronics chain – Circuit City – declared bankruptcy, liquidating all its assets,
closing down its 567 stores and letting go 34,000 employees. Within one week of
this devastating collapse, AT&T announced that it was entering into a multi-billion
dollar acquisition deal.
A majority of companies, unfortunately, feel they are closer to facing Circuit City’s
situation than AT&Ts. The natural reaction in such times is to examine cutting
costs, with every department and their respective activities taken under a
microscope.
In the case of sales channels, cuts are often made around commissions and
support systems, overlapping branches / dealers shut down, long-term projects
discontinued, budgets slashed, trainings stopped, etc., all in order to make the
numbers look good in the short-term.
While numbers may in fact look better in the short-term, the long-term impact
may be devastating. Such initiatives need to be conducted in a much more
coordinated and systematic manner. We propose a 5-step approach to revisiting
your sales channel strategies – an approach that takes into consideration both the
short and the long term, and thus, the overall health of your sales channels, both
during and after the crisis.

3. 1
Review
Revisit
Channel
Strategies
Support
5 Methods
2
Review
Optimize Channel
Staffing Usage
Statistics
Optimize
4 Coverage
3
1. Revisit Strategies
Based on the changing factors in the marketplace, companies need to revisit their
sales strategies, particularly in relation to other core objectives such as retention
and satisfaction, and fine-tune them. The focus here is on the importance of
acquisition during the downturn, and whether your company stands to grow or
maintain its customer base. For example, in an environment where your
competitors are struggling due to the downturn, aggressiveness is key to winning
their customers, with targeted campaigns focusing on their relevant weaknesses.
Companies need to assess their situation (their customer base, their competitors,
market conditions, pricing, etc.) in a systematic manner and determine what are
the strategies to focus on during and after the downturn. With this first step
complete the company can then take the next steps around redesigning their
sales channels.
2. Review Channel Usage Statistics
Once the strategies that need to be pursued are identified, companies should
then examine their existing sales channels to ensure alignment with the
strategies. If, for example, one sales channel is particularly effective at upselling a
specific product / service and your sales strategy dictates the pursuit of this
objective, then the channel should be invested in rather than downgraded.
Customer behavior around the usage of the channels should also be examined
here, taking into account their preferences –it is quite possible that their behavior
and thus the usage of the channels has changed significantly since last examined.
Whereas dealers were the preferred method of contact for customers at a certain
point, the internet may have proliferated in usage.

4. Finally, the costs associated with the channels should be examined. There may be
new alternative sales channels that could be used in place of certain existing
channels, ensuring a more significant return on investment. The decisions here
need to be carefully weighed, considering the already significant investments
made into existing channels vs. the shift to more cost effective ones that may
require infrastructural investments around training, process & system design, etc.
3. Optimize Coverage
Based on the channel usage statistics, sales via each channel on a geographic basis
should be examined, particularly around the brick-and-mortar sales outlets. These
channels are traditionally the most costly ones, requiring operational support in
the form of resources and investments. The downturn will have had a more
significant impact on sales in certain regions, providing an opportunity to resize
the company’s physical presence in those specific locations.
It is important not to “cut off an arm” here. Rather, if the sales presence in the
region is bloated, some cutbacks can be made. Ultimately once the downturn is
over, there will be a need to still have a proper presence in the region. Shutting
down too much of the sales operations will cause your company to lose on
potential sales in the future, post-downturn.
Alternative sales channels such as shop-in-shop dealers and outbound call centers
should be strongly considered when conducting the optimization effort, as these
channels are less costly in relation to traditional brick-and-mortar ones.
4. Optimize Staffing
Once the sales channel presence is optimized, it is then time to examine within.
HQ support and management functions need to be assessed in light of the shift in
the sales channel. Based on the overall optimization effort, similar resizing efforts
need to take place within the sales organization.
Once again critical here is to avoid going overboard. Too strong of a pursuit in
reducing headcount and costs could leave the channel headless, with a
demoralized shell of a staff left behind to boost up sales during and after the
downturn. Those in HQ viewed by the regional sales teams as critical to ongoing
efforts need to be identified, and, kept on board.
5. Review Channel Support Methods
With a revised management and regional sales effort in place, the support given
to sales operations should be considered at this point. Again as tempting as it may
be to reduce sales target premiums or operational support items, the channel
needs to be kept propped up during the downturn. Sales representatives need to
be kept motivated around their efforts, and any reduction in support here will
lead to significant demoralization. As it stands, their sales are likely to be under
the prior quarter / year’s results, and thus their overall earnings decreased.

5. The downturn ultimately provides a great opportunity for companies to reassess
their overall sales strategies, channels, presence, budgets, etc. This opportunity, if
tackled in a systematic manner, can go a long way towards preparing the channels
for the downturn and afterwards. Moderation is the key here – scale down too far
and risk losing after the downturn – scale back too little and you might not make
it through it.

6. About Forte Consultancy Group
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impact as well as benefits for stakeholders. Forte Consultancy Group provides a variety
of service offerings for numerous sectors, approached in three general phases -
intelligence, design, and implementation.
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