How companies must make more aggressive changes in their sales and channel approaches to address new marketplace realities—with a focus on cutting the “tail” that adds the least value.
Mark is a worldwide Sales/Channels topic leader within BCG’s Marketing and Sales practice.
Before BCG, he headed the Los Angeles office of The Monitor Group and was also a captain in U.S. Army Military Intelligence.
What challenges are companies confronting today in their sales and channel strategy?
The major challenge most companies are facing is paralysis: they do not know what the best path forward is. Should they drastically cut their sales exposure? Should they slash sales costs? Or should they preserve their sales function and capabilities so that when the turmoil ends they can flourish in the marketplace?
The less successful companies are holding on to history. They are clinging to their current arrangements. Although we certainly support the idea of doing the right thing by the people in the organization, and by the customers, in some cases the markets have evolved so much that it really is imperative to act.
Are there key differences across regions when it comes to managing sales and channel strategy?
The channel structures can vary significantly outside North America. In developing economies, for example, we have seen rapidly growing channel structures and new types of players entering the market. From a sales perspective, the variation makes it very difficult to determine what the best place is for the sales force to operate and which customer segments it should be attending to—and with which services.
The Americas, generally, consist of a more evolved set of markets, so greater “task clarity” tends to exist there and more specialization is possible. And because of better data, usually, the sales representatives can be more precisely managed.
In your experience, where are opportunities most often found for companies to improve their sales and channel effectiveness?
The major opportunities in sales and channel effectiveness have to do with what we call the “tail”—by which we mean the least valuable customers, the lowest-performing sales reps, and the most expensive and worst-performing channels. Companies that analyze the performance of their reps and their accounts, and then really consider where they want to focus, usually find there is a pretty sizable segment of the market or the reps that is not adding much value.
My proudest moments come when we have really opened to our clients a new way of thinking about the market, we have explained to them clearly what they need to do to capitalize on those opportunities, and the clients have acted. We often work with our clients to implement our recommendations and to make sure those actions are bringing the benefits that we thought they would.