Go-to-Market Blog

Is Conflict Part of Your Go-to-Market Strategy?

As they grow, many technology companies evolve their go-to-market strategy from a direct sales model to a model that includes both direct sales and channel partners. In this evolution, management adds channel partners in order to scale their sales resources more cost-effectively than is possible by hiring only direct salespeople.

Unfortunately, the resulting go-to-market model often includes inherent conflicts that impact the company's competitive effectiveness and success in the market. In these companies, direct sales and channel partners don't understand how they are supposed to fit together, don't have an effective way to resolve conflicts when they occur, and sometimes sabotage each other. Symptoms of these conflicts include:

- Complaints by the members of the direct salesforce (from individual sales reps up to and including the head of sales) that channel partners "add no value" in specific deals or across the board.

- Never-ending debates between the CEO and CFO on whether channel partners are really necessary and worth the 30-45% discount.

- Sales management "looking the other way" when a salesperson takes an order direct instead of through a channel partner in situations where channel partners normally get the order.

- Channel partners guarding the identities of their prospects and customers from the vendor, to avoid the possibility that vendor personnel will tip off other channel partners or take the deal direct.

- New product launches that are planned and executed without any partner involvement, even though management expected that partners would start selling the new product as soon as it was announced.

Each of these symptoms is the tip of an iceberg of confusion and mistrust, misdirected or wasted efforts, internal bickering instead of competing with the company's real competitors for the customer's business.

If your company has these problems, what can you do to reduce and eliminate them?

The first step to fixing these problems is to clarify which customers should be pursued by direct sales and which should be pursued by channel partners. The ideal is to have a simple, clear and unarguable line that separates these two market segments -- the "direct" segment from the "indirect" segment.

One example of such a clear line would be a list of named "house accounts" aka "hard deck" that the company sells to directly, with all other customers "off limits" to the direct salesforce and therefore available to channel partners without competition from the direct salesforce. Another example would be to segment the market by company size, transaction size, or some other attribute that's easy for everyone to discover early in the sales process. A third approach is to assign specific products to the direct salesforce, and other products to the channel, which works as long as it's clear to everyone, including potential customers, that the products are so different that no one can easily substitute one product for the other.

The smart way to figure out where the line should be drawn is to model the financials for the different choices. The Route Calculator is a great financial modeling tool that can be used to evaluate alternative boundaries for market segments that can be covered by a direct salesforce or by channel partners, with the output being the "location for the line" that produces the most market share or revenue growth or profit (or any combination of quantifiable goals). The Route Calculator is an integral part of Paramarketing's approach to optimizing the ROI on marketing and sales.

However the line is drawn, it must be enforced. Poachers who cross the line must be disciplined, and the deal redirected to the correct party, so that others won't cross the line in the future.

Unfortunately, the management of many companies believe that they cannot implement the ideal solution outlined above. They see their world in shades of gray, not black and white. They may lack the will to draw a clear line between one market segment and another, or between one set of products and another, because they fear it will limit their growth or their ability to change their mind in the future. Companies that are built through acquisition often find themselves full of overlapping products that are not easy to separate for different channels.

The solution for these companies is to take it a step at a time, starting with documenting the "gray area" where deals can go either way (to direct salespeople or to channel partners). Over time, they need to reduce the size "gray area" in order to widen the sizes of the opportunities that clearly belong to direct and indirect channels.

Every company should have a go-to-market strategy that maximizes profitable growth and minimizes wasted efforts. Conflicts between direct sales organizations and channel partners impact both growth and profitability. The problem is not the conflict; it is a lack of rules and poor enforcement of the rules. That's something that management can and must resolve.

Dave Drives Profitable Turnaround with Routes-to-Market

In this quick and easy to understand video, Dave, a product manager for a footwear company, uses the Routes-to-Market methodology to turnaround sales.

 

Still Cold Calling? There is a Better Way

I thought only office supply companies were still using old and worn cold calling tactics but turns out I was wrong. Recently, a friend who is a Regional VP of Sales of an enterprise software company complained that her boss had mandated a cold calling day for all sales people. Growing the pipeline is their most pressing sales challenge but I'm surprised the action would be cold calling.

This type of reaction and the exponential waste it creates makes me cringe. Sure, there is a small percentage of sales professionals with silver tongues who manage to have some cold calling success, but for the vast majority cold calling is inefficient.

Old habits die hard and this must be the case for cold calling as a tactic. Most sales leaders today learned a sales methodology in which cold calling was a given. It's time to replace "cold calling" with "permission marketing." Permission marketing is not new. Seth Godin, the father of permission marketing, made the concept famous. His classic line, "How do we get people to raise their hand?", is the question that progressive sales leaders should ask today.

Before you say, "that's marketing's job, that's not my area of responsibility", let me say, "think again." To borrow from fellow blogger, Kristin Zhivago, "the traditional division between marketing and selling no longer matches the customer's buying process."

Why is this so, you ask? The neatly organized idea that marketing captures inquiries, nurtures them into viable leads, and then, when qualified, passes them to sales, just doesn't jive with the buyer's reality. With Google power, a prospective buyer can go from acknowledging they have a problem through the various stages of the buyer's journey in an afternoon. Buyers' questions that BG (Before Google) required a conversation with a salesperson are now answered through online searches that pull from blogs, websites, discussion forums and other social network communities. In short, the line separating marketing and sales functions is blurred.

This is good news for sales organizations who choose to adapt. By looking at the sales challenge differently and by using Modern Marketing, you can create a relationship with prospects in which they warmly welcome a call from your sales team because they're ready to talk to a salesperson. Obviously, this kind of call is much more productive for both the customer and the salesperson.

Old habits and outmoded techniques die hard but the world has changed. Sales teams that adapt to the evolution of the customer's buying behavior will find the click they hear is a prospect clicking to buy rather than a prospect hanging up on an unwanted cold call.

Google Power Has Changed the Buyer-Seller Relationship

Takeaway

As a marketing and sales leader it's just good sales hygiene to have someone regularly "google" as if they were a prospect for your product/service. That way issues that show up can be addressed so they do not adversely affect your prospect's perspective and your pipeline growth.

My recent shopping experience for new health insurance provides a vivid example of the importance of doing this. An insurance salesman called me last week. I took down all the information, got his and the company he represented website, and after the call I googled to find out about them.

The first page of Google results showed three listings that had fraud or something to that effect in the title related to this company. Needless to say, I saved myself time and headache and dropped that candidate fast. My future calls will be limited to only those that have survived my online research and vetting process. You too have probably had your own experience of Google-enabled "empowerment."

The Game Has Changed - Have You?

As the saying goes, the game has changed. Those who learn the new rules of selling brought on by this rebalance of power will have the edge. Those using old game strategies will find they are losing points.

"Google Power" arms your prospects with information so they have a broader view of their options. Expert searcher Chris Sherman, recently published Google Power to help everyone "unleash the power of Google." The power of Googled information acts as an equalizer between buyer and seller.

Consider this new-found buyer power within an enterprise selling situation. Buyers are now armed with much more knowledge and insights about the product/service they need. Just as I found "the dirt" on this insurance company, your prospective customers can find "the dirt" on you and your company. It doesn't matter if the negative news relates to technical aspects of your product/service or to sales tactics. The fact is the news creates a hurdle, and in a worse case a wall, for your prospects and your sales team.

Of course, you work for a reputable company and few Google results for your company are negative. Nevertheless, this "google factor" still changes the landscape for your sales team. Your prospects have likely done their research and know the trade-offs between their top options including your competitors. This knowledge readies them to ask more pointed questions in order to address whatever they found out online about your company. If your salespeople deny, lie, or fail to appropriately address these facts, then prospects will not continue their buying process with your company.

Sales Tactics Must Evolve

Most sales professionals have evolved and truly respect the relationship with their prospects and clients. Yet, I still hear enough commando type stories that I think it's worth mentioning that traditional "pressure tactics" are out of sync with the new balance of power. Companies and sales leaders who allow these outdated selling techniques do so at their own risk. The Google effect means that even one negative sales experience that gets reported on a user forum potentially affects business prospects for your entire sales team. Consultative selling is in. For thought leadership on Sales 2.0 see the interview with Jill Konrath called "Don't become a dinosaur".

Don't let Google results work against your sales efforts. Good sales hygiene includes regular googling the way your prospective clients use Google, training your salesforce and channel partners on how to address the issues that show up in Google results, and updating sales tactics to ensure they fit with the new balance of power between buyer and seller.

Modern Marketing Matters to Sales

Takeaway

Modern Marketing helps sales leaders make their numbers by getting them in sync with their marketing counterparts. Modern Marketing is the combination of things that a vendor does to build relationships with prospective customers via traditional and new forms of marketing communications such as blogging and social networking.

The Revenue Cycle

In the world of Modern Marketing, sales and marketing are linked in the revenue cycle. Before implementing Modern Marketing (MM for short), sales leaders might say that they have no influence over marketing and that marketing contributes little towards helping them make their number. In contrast, modern marketers care about engagement and lead conversion, which is what builds the sales pipeline.

In a B2B world, sales leaders who closely sync with their marketing counterparts have a much easier time making their number than those who don’t. Laura Mashina at Marketo supports this point in her blog post The Marketing and Sales Handshake. She wrote that, with MM, "the traditional hand off from marketing to sales has become a solid handshake." As a result, MM can serve as a bridge for sales leaders to get a conversation going with their marketing counterparts. This conversation is essential to ensure that the marketing spend produces strong leads that build the pipeline (or funnel, if you are of that persuasion).

Modern Marketing Savvy

Modern Marketing is how companies communicate and nurture relationships with prospective customers during the early stages of the customers’ buying process. These communication touches have a significant influence on whether or not strong leads result.

Modern Marketing might be a new term to you but its effect is something you are already quite familiar if you have ever been offered a live chat session, registered to attend an online or live seminar, downloaded a paper to learn more, commented on a blog, participated in an online community, or googled to research something you wanted to buy.

You are Modern Marketing savvy if you:

1. Align your marketing messages to your prospects' interests and point of view.
2. Establish trust and relationship with your prospects throughout their buying experience.
3. Ensure your content and service helps your prospects solve their problems.
4. Use a mix of technology to programmatically touch your prospects.

Use Sales Insights to Develop Prospects' Trust

A sales orientation is absolutely essential to the success of Modern Marketing. Because the sales team is closest to the customer, they often have the best input for what the customer will respond to. MM programs infused with effective answers to a prospect’s real concerns will create trust with the prospect. When trust is developed at each stage of the buying process then MM generates engagement and drives pipeline growth. This is why Modern Marketing matters to sales.

Optimize Online and Offline Sales and Marketing with Web Analytics

Information about online customer buying behavior and decision making can now be used to improve offline as well as online marketing. With web analytics, companies can test alternative sales messages, offers and promotions on their e-commerce websites, and then use the most successful message, offer or promotion in offline media (such as print publications or radio) and offline sales processes (such as direct sales, telesales or retail).

Jim Sterne, Chairman of the Web Analytics Association, has been promoting this approach in interviews, webinars and conference presentations since 2006, when he noted that a few companies were just beginning to get “insights coming out of their web analytics tools that were powerful enough to impact decisions the corporation made about offline marketing.”

The approach works like this:

1. People search online for information on just about every product or service that they are thinking about buying, whether they intend to buy it online or offline. This means that companies can reach people online, even if their purchases will be offline.
2. People’s responses to online information are very similar to their responses to the same information when it’s provided offline. This means that their responses to online information are excellent predictors of their responses to the same information provided offline.
3. The information presented to them online can include choices between two or more alternatives, such as a “buy 1 get 2” offer vs. a “50% off” offer. Even though these offers are mathematically the same, one offer will be selected by customers much more often than the other. Web analytics tools can identify the more popular offer from the customers’ online choices.
4. For every group of alternatives, the most popular alternative online turns out to be the most compelling offline as well. The company should use that alternative online and offline.
5. The most popular alternative then becomes the “control.” Other alternatives can be tested against it to find an even more popular and compelling offer.

In addition to testing alternative offers, companies have been using the Internet to test alternatives in marketing strategy, creative approaches, positioning, pricing and promotions. Online testing is quick. Hundreds or thousands of alternatives can be generated automatically and tested thoroughly in 24 hours, if a website has enough traffic. Web analytics tools can identify the most popular alternatives in minutes.

When I discussed this approach with Jim Young, Market Research Manager with BrandSolutions, he suggested that the most efficient and customer-friendly method for determining the optimum set of product features to meet customer preferences and maximize profitability, is conjoint analysis. This analytical technique obviates the need to test every combination of features, which would be daunting for customers to sort through.

With conjoint analysis, customers are asked to make price/feature tradeoff decisions as part of the product selection process on an existing e-commerce website, or via online surveys. In fact, the conjoint analysis solution works for situations where there are many variations in any of the alternatives in marketing strategies, creative approaches, positioning, pricing or promotions.

By using conjoint analysis in conjunction with web analytics tools, the most popular and profitable alternatives can be identified quickly, and they can be put to productive use online and offline immediately.

To optimize your online and offline sales and marketing, please contact Peter Raulerson.

Using RTM in a Marketing Life Cycle Process

In 2001 Adobe Systems executives made the Routes-to-Market methodology the cornerstone of their Marketing Life Cycle process. Their goal was to transform the company’s engineering culture to focus on customers. The results were exceptional — over the next 6 years Adobe’s sales grew 179%, profits increased 252% and its stock price rose 179%, more than 5 times the gain in the NASDAQ Composite Index and more than 6 times the S & P 500 Index. In the video below, Peter Raulerson interviews Mamta Shah, Adobe’s Director of Strategic Planning, about Adobe’s experience in adopting Routes-to-Market.

 

Using RTM with Distribution and Alliance Partners

The Routes-to-Market (RTM) methodology has been used extensively by product vendors and their distribution partners to develop and execute joint business and go-to-market plans. Using RTM in this way has generated significant incremental revenues and profits for the vendors and their channel partners. IBM, Microsoft and Cisco have done this with thousands of their resellers, distributors, independent software vendors (ISVs) and systems integrators. RTM has also been used by partners in strategic alliances to develop and execute joint go-to-market plans. Alliance partners that have used RTM in this way include IBM, SAP, Cisco, Wipro, Nortel and Sony. In the video below, Peter Raulerson interviews Dhun Zwirble and John Skinner of the consulting firm Alliances & Channels, LLC, about using RTM with distribution and alliance partners.

 

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Crossing the Chasm with Wireless Scanners

Using the Routes-to-Market methodology, the management of technology start-up Baracoda changed the go-to-market strategy to take their innovative wireless barcode scanners across the chasm and became the leader of a new product category. Here’s a video interview and case study explaining how they did it.

 

Bluetooth Scanners

In 2002 Baracoda, a French start-up manufacturer of wireless data capture devices, introduced an innovative line of barcode scanners that used Bluetooth instead of physical wires to connect to data networks. Bluetooth is a standard for wireless communications between devices, widely used today to connect headsets wirelessly to mobile phones. Barcode scanners read barcodes printed on packages and manufactured goods, for applications such as managing inventory in a warehouse. Baracoda’s innovation was embedding Bluetooth technology in barcode scanners before the established barcode scanner manufacturers did that.

Hitting the Chasm

A few early customers bought Baracoda’s Bluetooth scanners, but Baracoda’s management was surprised that sales did not pick up as expected after they signed distribution agreements with barcode scanner distributors throughout Europe. Management thought that customers would buy Bluetooth scanners for their existing barcode projects because they were easier to use than scanners requiring wired connections. But the distributors were returning Baracoda’s scanners one after the other because they could not sell them.

RTM to the Rescue

In 2003, interviews with Baracoda’s early customers found that, instead of using Bluetooth scanners in traditional barcode applications, they were rolling out new applications which required data entry via barcode for mobile workers, such as field engineers recording part numbers when doing repairs, and delivery teams doing product replenishment. Baracoda’s early customers were enthusiasts and visionaries in phase 1 who invested in developing their own software to make Baracoda’s Bluetooth scanners work in their mobile environments. The reason that sales had stalled was that pragmatic customers in phase 2 could not buy scanners without software for their specific needs. The customer interviews also revealed that customers who had bought wired barcode scanners did not see the business benefit for replacing their existing scanners with wireless units.

Crossing the Chasm

With those insights, Baracoda’s approach changed radically. They started contacting independent software vendors who were developing solutions on mobile platforms, and gave them free scanners, technical training, support, and co-marketing help. Sales picked up as each software vendor completed development and their customers started buying Baracoda’s scanners.

Success in the Mainstream Market

In 2004 Baracoda’s US sales team closed a significant contract with Nextel (which later merged with Sprint) to distribute and support Baracoda’s Bluetooth barcode scanners to Nextel’s application partners, so that they could deploy mobile applications for Motorola and Blackberry handheld devices on the Nextel network. Nextel’s application partners did not want to deal with multiple vendors of Bluetooth scanners because that would greatly complicate their deployments. Nextel chose Baracoda and acted as a “value-added” distributor by providing an immediate physical point of presence across the US and access to all Nextel partners and customers. The result was a rapid increase in Baracoda’s sales as Nextel partners sold Baracoda scanners combined with mobile applications software in several industries including construction, field services, professional services and real estate.

Conclusions

Baracoda succeeded in navigating the transitions from phase 1 to phase 2, and from phase 2 to phrase 3. When management understood how phase 1 customers were actually using Baracoda’s product, they realized that it met different customer needs than they had originally thought, and they changed their approach to exploit that opportunity, bringing Baracoda’s product across the chasm. By showing Nextel management that they could accelerate the success of their applications partners by giving them a single, common product to deploy (instead of a variety of incompatible products), Baracoda drove the transition from phase 2 to phase 3 by triggering a tornado of orders.