The senior executive with whom we met said if we could help IBM we should be able to do this project for them. Excited about the prospect of helping them build a new channel, we agreed and they laid out the challenge.
- A well-known consulting firm had been previously engaged but had failed
- ...which left only 41 working days to get the new sales channel up and running
- An internal NCR tele organization was competing for this…which, we would later learn, tried to sabotage the effort...and us
- And finally, we were entering the holiday season…good luck
After collecting the previous project work we quickly went to work on assessing what had gone wrong. It took us a while, but we finally discovered "IT". Once found, this insight became the key to unlocking success. Almost ten years later I’ve seen this scenario play out over and over in B2B companies. The following is what we discovered;
This simple equation is just as true today as it was a decade ago when we discovered it. Oh, you may find one or two exceptions but the majority of the time when we do post mordems on failed programs you find this equation at the heart of the problem. When combined with a few related pieces, like a lack of time in the market and/or funding, the initiative is doomed. The degree of “newness” in these three areas will directly impact the likelihood of success or failure.
NEWness kills campaigns and channels because it takes too long, is too expensive and/or is too risky. Here’s why -- customers/prospects have to go through the buying process…Learn, Shop and Buy. They have to become aware of your product/brand/solution, then understand how it fits their need (known or unknown), then assess how you compare to others in the market, how to buy, etc. By the time you get a customer/prospect to do this..bam...the company runs out of patience and pulls the plug.
Sales Channels
- Why they fail – new sales channels fail because companies aim new channels at the wrong targets -- new customers/markets. An investment in a new sales channel means that it is competing with existing channels for funding. If it does not hit expectations/goals quickly, it will be robbed of the necessary funding and/or resources needed to make it successful.
- How to improve the chances for success - The most successful way to build a new sale channel is to do exactly the opposite of what is described above. Shift coverage of existing customers or products to the new channel and use your existing channels to go after the “new.” Shift dormant or flat growth customers to the new channel to give it revenue immediately and free up your existing most knowledgeable, best trained sales folks to go after new.
Pitney Bowes has a great program run by their Marketing Sciences group that constantly monitors account activities. Regional sales managers receive a monthly report of Accounts that have not grown within a certain time period, and as a result, they will be shifted to an inside account manager. We like to call it “shift” and “lift.”
Marketing Campaigns
- Why they fail – new marketing campaigns promoting new products aimed at new customers typically fail because of reasons listed above...they take too long to produce and/or aren't given the time. Here’s another common problem, agencies will tell you the problem is the "creative" or "value prop"...maybe, but they also could telling you this because they make money on creative and production. “New” works with their business model. More likely, if you did your segmentation right, aligned a solid value prop and offer, your problem is that the campaign has had a chance to work yet…don’t pull the plug. Remember customers have to go through the "learn...shop...buy process and it takes time.
- How to improve the chances for success – build less individual campaigns and invest more in one or two long term programs with many integrated tactics. Keep the programs in the market longer, closely monitor them and modify tactics based on performance. You don’t need a new campaign every month, you need a program that produces…and with tight budgets this will help you be cost effective/efficient.
Years ago we did an assessment of campaign performance at IBM. We found that the highest performing campaigns had at least 7 integrated tactics and stayed in the market for at least 6 months. Use this as a starting point to design your campaigns and programs.
Keep in mind that the “Recipe” should be thought of as a “guideline” and not as a hard and fast rule. It’s kind of like playing the six degrees of Kevin Bacon ; “How can I connect, or create a connection, from a product to a target? How can I minimize the separation between the three key areas; channels, customers and products?” If you’re still stuck, here are some additional tips;
- New to New thru New = level set expectations and invest for the long haul. You will need time and commitment to make it successful. Companies have short term horizons that are getting shorter every day. If you’re going to lead this effort get everyone to agree on what defines success and stick with your timeline.
- New Product/Service/Solution – try to leverage existing channels, customers or both to start...then migrate to new. This way you can learn if you have the right value prop, messaging, pricing, etc. We like to take existing reps, for example, and use them to help launch a new sales channel, like Tele. We like to use existing customers to test new products, etc.
For example, at NCR, we got the tele channel up and running in 41 days. We transitioned existing field account managers to TeleAccount managers and built their territories around their customers. We then began to backfill them with new lower cost resources over time. You'll be happy to now that the manager of the group that tried to sabotage the effort got fired. The program hit our first year sales targets, reduced the expense to revenue ratio from 13% to 6% and grew sales productivity from $1.7M to $3.1M per rep. As a result, NCR then built a full scale tele channel with close to 80 reps. 
Interesting sidebar, the program was shut down a few years later.
It's a long story as to why, but I'll try to summarize. John Patterson, who bought the company that would become National Cash Register (NCR) in 1884 tried to sell the company back after he learned the hard way that no one saw the need for his new technology. So he developed what is viewed as the first modern concepts on sales territories, sales compensation plans, sales training, etc. Bottom line, the company has a strong field sales tradition and culture.
Mark Hurd, now CEO of HP, became the CEO of NCR a couple of years later and decided to shut the channel down, redirecting the resources to the field. Remember my comment about competing for resources…Mark’s a traditionalist...a FTF sales fan.
Culture runs deep, and can also kill channels and programs. Mabye I should update the "Recipe" to include the forth "New"...new leadership. As I said, the "Recipe” should be thought of as a “guideline” and not as a hard and fast rule.
