This is the way of sales channels, and there is nothing new in the challenges they represent. But Valcon’s recent Quarterly Growth Survey shows that the dilemma of sales channels is still very much in focus with commercial executives. Our survey showed that many executives see new sales channels as a critical tool to create growth in their business, but they are also aware of their challenges in improving efficiency in the current sales and distribution channels.
It is currently very popular to focus on omni-channel sales strategies in which the customer is targeted through all available channels. Anytime Anywhere is the mantra. But just because it works for Starbucks does not necessarily mean that it will work for your business. The higher the number of sales channels, the higher the complexity and costs.
Pernille Mehl, CEO of Danske Lotteri Spil, is aware of this challenge. She states, “What makes our set-up so complicated is the combination of many and highly diverse sales channels and touch points. With 4,400 distributors, we cover the entire country from the large supermarkets to the local kiosk, a wide span, which we must try to cover in the best possible way with our products, services and consulting.”
Quit trying to be the answer to everybody
The major risk in an omni-channel sales strategy is that you risk forgetting who you are in the struggle to be something to everybody. Are you an exclusive brand or a discount label? It is worth considering if you want to be a web store, or if you want a flagship store on the high street in the capital. The more you try to expand your sales over a wide range of different sales channels, the more you risk losing focus on who you really are as a business, and what your core service is. And this is where you risk losing money.
However, if you do select an omni-channel sales strategy, it is essential to be aware of the challenges inherent in this type of strategy. For the lingerie company Triumph, this means a gradual development of their channels into an omni-channel set-up rather than a sudden change. “This is a real paradigm change, which is a development which must take place gradually over time. It is therefore important that we continuously translate what “omni” means to Triumph and with what speed we invest and develop,” says Christian Drachmann, Head of Business Development, Triumph International Textile.
Find the purpose of each channel
A good place to start in the optimisation of your sales channels is to define the purpose, strengths and weaknesses of each sales channel. This can in itself be a challenging exercise, but only then will you be able to selectively choose the sales channels which match your business and needs optimally.
Christian Drachmann puts it this way: “Where it used to be about forcing products out through our channels, we currently work with a far more targeted approach where we sell a narrower product range in the individual channel with a point of departure in our knowledge of our consumers, distributors and channels. This means that we target our product range and customer experience towards higher loyalty to our brand and are consequently able to establish a strong customer loyalty, which increases our market share. We sell more by selling deeper.”
It is also critical to prioritise your resources to be able to create a strong cooperation with these channels. Your sales channel plays a critical role in defining the customer experience and consequently also the customer’s experience of your brand, which is why it is important to focus on your sales channel’s ability to and priority of creating the good customer experience.
The partially state-owned gaming company Danske Lotteri Spil is a perfect example of a company which has realised the importance of a strong cooperation with their sales channels. “This is why we have a focused approach to our work on how our distributors convert traffic into sales, and also very much on how they provide the customer experience which we have strategically defined as a differentiator for Danske Spil. And we will be doing much more in this area in the future for it is often the shop assistant who is the final touch point in the customer experience. And that employee is not employed by Danske Spil This could represent a challenge, but we have very good results with enabling our distributors to be able to create a great customer experience through e-learning, training and campaigns,” says Pernille Mehl.
The dilemma can be overcome
Commercial executives are aware of the dilemma in wanting to create growth through new sales channels while acknowledging that the utilisation of existing sales channels still has room for improvement. But our experience shows that this dilemma can be overcome if you use the same approach to your sales channels as Danske Lotteri Spil and Triumph:
- Understand what your customers want with respect to buying your products and services
- Create focus to ensure that you sell the right products to the right customers through the right channels
- Ensure the necessary support in the channels through training and incentive models
It is thus more of a “both … and …” rather than an “either or”. Those companies which succeed are often those which execute development and efficiency improvements gradually and continuously prioritise their investments in accordance with the needs and requirements of the selected customer segments to ensure the good customer experience.
Originally published in Børsen Ledelse.