Are You Using Channel Marketing For Greater Sales Results?

Be CuriousChannel marketing is one of the least understood roles in marketing.

Channel marketers walk a fine line between sales and marketing. But that also allows channel marketers to have a unique perspective in the organization by:

  • Intimately understanding the distribution channel and knowing the needs and priorities of their customers – and their customers’ customers
  • Being able to build a compelling story as to why their new products and programs will help build their customer’s sales and profits

What are channel marketing’s key roles and activities with Sales?

Channel Marketing Drives Sales SuccessChannel marketing goes by many other names: customer marketing, trade marketing even sales support or admin are other names for the same role. Regardless of what it’s called, the goals for channel marketing are designed to minimize the conflicts with sales.

  • Making the flow of information work for sales, not against them
  • Removing repetitive information requests
  • Building a faster process between questions and answers
  • Pushing information outward

As a result, channel managers strives to…

  • Understand customer strategies
  • Provide marketing direction & support to sales, product, and brand managers
  • Find ways to invest more in growth opportunities
  • Co-develop better ways of selling through product inventory

Sales can – and should — expect support from Channel Marketing with…

  • Channel Marketing Can Help You Through The Customer MazeDesigning & budgeting promotions
  • Tracking annual goals to Results
  • Joint customer planning
  • Building connections with the customer’s teams
  • Getting retail & online merchandising support
  • Sharing insights within & outside channel with the product marketing team

Who Does What?

Sales Needs Channel Mgr Brand Mgr Product Mgr
Establishing Item Pricing No No Yes
Customer Item Distribution Yes No Yes – FYI
Unplanned Promotions Yes No Yes – FYI
Updates to Products POP, Package, Web Yes (1st) Yes Yes- FYI

Financial

Sales Needs Channel Mgr What’s Needed Completed by
New Item Cost & P&L Impact Yes Customer’s potential unit volume Finance
Freight Cost Quotations Yes Item, delivery locations & requirements & unit volume Finance (& Logistics)
Unplanned Promotions & Expenses Yes Item, units, dates, offer level Channel & Finance
Trade Show Offers Yes Items, offers, dates, any Freight needs Channel & Finance

Merchandising

Sales Needs Channel Mgr What’s Needed Completed by
Changes to POP/New POP Yes Objective of changes, timing & process steps with customer Brand
Website Marketing Content Yes UPC, item, data fields that need to be entered Brand
Catalog & Ad Page Designs Yes Items, due dates, offer & output needs Brand
Planogram & End Cap Designs Yes Items additions or deletions, output needs Channel

Channel Marketing is a critical input to the planning process

Your committed actions to drive growth - for you and your customerAll year long, the channel team is watching and documenting the activities in the market. Their insights can assist the entire sales and marketing team with…

  • Product launch requirements
  • Competitive insights
  • Market and channel growth
  • Who’s winning and losing in the channel and why
  • Promotion insights
  • POS insights
  • Merchandising
  • AOP (annual operating plan) roll ups

These activities are all being accomplished within your organization but by breaking them out for a separate team to focus on, you will improve your insights, communication and, ultimately, your sales.

Good Selling!

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Is Your Sales Team Asking The Right Pricing Questions?

Is Your Sales Team Asking The Right Pricing QuestionsMake no mistake; no customer buys anything just because they like you.

Truth is, you either bring a great deal of value to your customers or they take their business elsewhere.  Your products and capabilities must provide customers an opportunity to achieve greater returns on their business.

The nature of price competition

Competition In BusinessIn sports competition, the more intense the process, the better the game.

The key to success is to put you heart in the game and play it as hard as you can. In sports, the ultimate goal is to WIN.

In price competition, the more intense the process, the worse the game.

The key to success is to weigh thoughtfully the cost of each confrontation against the likely reward. In business, the ultimate goal is to PROFIT.

When pricing, don’t get constrained by tactical thinking

When pricing, don’t get constrained by tactical thinkingTo achieve the greatest profitability, a sales person’s job is to ask strategic pricing questions.

Do Not Ask:

“What price do we need to cover our costs and achieve our profit objectives?”

Ask:

“What changes in our prices or product mix would increase the contribution available to cover our costs and increase our profits?”

Do Not Ask:

“What prices are the buyers willing-to-pay?”

“What level of price will enable us to achieve our market share objectives?”

Ask:

“What level of market share can we most profitably achieve?”

“Which portions of the market can we profitably fight for (with what weapons?) and which should we yield to the competition?”

“How can we minimize the adverse effects of price competition in pursuit of sustainable profits?”

Managing price competition without undermining profitability

Don't THink Tactically About PricingThere are only two ways to prevent price competition from undermining profitability:

  • Develop competitive advantages
  • Manage the competitive process

The ultimate goal in managing price competition is to create stable competitive environment in which you can earn the best possible sustainable return on investment.

Recognized market leaders are likely to initiate price increases but often do not initiate price cuts.  Often, the price leader role is filled by a firm that has technical leadership and low unit manufacturing cost.

The market leader often has the largest and strongest distribution system. Market leaders generally also have technical leadership. Customers are anxious to maintain relations with suppliers who are in the forefront of technology.

As a sale person, your goal must be to implement a pricing plan that provides leadership to the industry and communicates your desire to stabilize the markets and capture your value. It should incentivize your customers to trade up and earn you a reasonable return.

That’s a win-win for everyone.

How do you communicate your value and pricing with your sales team and customers? Let us know.

Are You Pricing with Your Customer’s Profitability in Mind?

Are You Pricing with Your Customer’s Profitability in Mind?How do you determine your pricing?  It’s probably a rigorous process, but is it science or art?

Do you start with your profitability and go from there? Or do you start with the market price and let your profitability fall wherever it may?

Neither approach alone will help you win in the marketplace. Because neither approach puts your customer‘s profitability into the picture.

Use a pricing strategy that considers your customer’s profitability

Use a pricing strategy that considers your customer’s profitabilityDelivering a market price to your customer will certainly be geared toward improving your top line. Here the logic is that your customer will be looking closely at a few high volume, highly competitively priced products to evaluate your overall pricing proposal.

If you price those product “footballs” correctly, everyone seems to wins. You get the business and they get the pricing they need to be competitive in the marketplace.

But that strategy embodies the whole point of pricing – that your customer is competitive in the market. If they are making the money they need to be successful, you will stand out.

But are you making the money you need to stay in business?

Take a P&L approach to pricing

Take a P&L approach to pricing

It’s no surprise that there’s no one sure way to approach pricing. It really is part science and part art.

But do you approach the science part with a fact-based strategy? To do that, you need to be able to answer a few simple questions:

  • What is the product’s market price?
  • What is the customer’s margin % expectations
  • What can we make?

As one senior leader recently commented to us about pricing: “If you manage pricing from only your profitability – you’re going to be dead.”

Which is why pricing is art as much as science.

Inside of a company, pricing is really a continuum

How do you determine your pricing?  It’s probably a rigorous process, but is it science or art?The sales team is, understandably, all about making the sale. They want a price that will help them achieve that goal.

On the other hand, the product marketing team is looking to get credit for the innovation they are bringing to the marketplace. They want to get paid a premium.

Straddling both sides of the fence is channel marketing (also called trade or customer marketing depending on the company). Channel marketing sees both sides of the fence, is grounded in reality, and keeps perspective throughout the process.

Having a group like channel marketing manage your pricing is the secret sauce. They have perspective, collect all the facts, and keep the customer’s profitability balanced with your own profitability.

For other Channel Instincts posts on pricing, see What Does “Your Price Is Too High” Really Mean?, Is Pricing Making You Go Bananas? and Are You Pricing for Volume or Profit?

Good Selling!