Like newly glazed ice to a skater or fresh powder to a skier, January brings the opportunity to start anew. Twelve months to “get it right.” A new budget to spend on all the projects you contemplated, but postponed in 2012. I know I said in my previous post that 2013 results are almost pre-determined at this point. However, I was going to an extreme to make a point; there really are some actions you can/should take now. While the vision of a new start is still fresh in your mind, what channel resolutions should you make (and keep!) early this year? Here are a few suggestions:
1. Survey end-customers
Sure, your company conducts customer surveys all the time. Questions about products. Pricing. Brand messages. But when was the last time you asked customers about their channel preferences or buying process?
End-customers are the starting point for all channel strategy, yet most companies are operating on assumptions and years-old (even decades-old) data. In 2013, you should conduct a definitive, end-customer segmentation and buying behavior research project.
2. Plan early for 2014
While 2012 just ended, 2014 is really not that far away. This is especially true if you’re contemplating changing your channel structure and/or the associated compensation levels. Changing channel requirements or benefits (discounts, rebates, programs, etc.) is a very detailed undertaking. It will directly affect your company’s financial results. To get it right, you should start looking at the data and contemplating options no later than March or April.
3. Find incremental business/channels
Virtually all business plans contemplate growth. But, do you actually know from where that growth will come in 2013? Will your boat rise with an industry tide? Will your channels partners take share from competitors? Will you simply raise prices?
In many cases the sources cited above will leave you short of your growth target. While the year is fresh, you need to consider new/incremental sources of growth. You need to look for “white space.” This white space can include new or under-served end-customers such as small companies, international markets, new decision-makers, emerging vertical markets, etc. Similarly you may have opportunities (to reach the new customers) via new channels. These channels might include direct-selling options (online, telesales, etc.), adjacent channels, Web-based resellers, technical or vertical specialists, etc.
To get a handle on incremental growth options you should undertake one of several opportunity assessments – brainstorming, market coverage analysis, adjacent channel research, etc.
4. Launch new products . . . the right way, in the right channels
Some statistics indicate that as many as 80% of new products fail to hit their sales targets. While multiple factors contribute to this alarming statistic one of the biggest is selling the product through the wrong channel. Too often companies just “round up the usual suspects,” e.g., their existing partners. If the new product is merely a revision of an existing product than the traditional channel probably makes sense. However, if the new product targets a new customer segment, presents a different value proposition, relies on a unique technology or requires any other significant deviation from past products you may need to find a new channel. Identifying, recruiting, and on-boarding a new channel takes considerable effort. The time to start is now, not a month or two before launch.
5. Identify wasted spending
Lurking inside every channel program is inefficiency and misspending. You might grant a deviated price to a distributor who isn’t meeting a competitive price, but rather a lower price from one of your other distributors. You might have distributors that stock little inventory because you’re willing to drop ship for free or a minimal charge. You might pay a bigger discount to a price-cutting large distributor even though a smaller one creates a much higher market share in its territory. You might even be giving an early pay discount to someone that doesn’t pay early! The failure to police contracts and watch program details means that most companies are paying more to their distributors than required. You need to review your contracts, programs, metrics, and procedures to squeeze out every drop of margin you deserve.
2013 will be half over before you know it, and as the months tick by the opportunity to impact results diminishes. Consider undertaking one or more of the above opportunities this month. Put a team together. Define objectives. Develop a plan. Bring in experts. Get it done.