Channel Management Strategies: Using CPQ to Improve Customer Experience
Every company wants to grow. Growth through channel management strategies is imperative. Using a CPQ (Configure-Price-Quote) solution can improve customer experiences with businesses.
Companies achieve growth through increased sales and channel management strategies. This can be done by selling to new customers or by selling new products. For companies using a direct selling model, that may mean new marketing messages and additional sales training. It may even mean adding sales headcount.
An alternative is a multi-channel strategy.
Moving to or adding an indirect channel can be very effective, but there are issues to consider, and your end-users will frequently be the ones affected by the issues involved. If your company is used to communicating directly with the customer, adding an indirect selling channel between you and the customer is going to cut off much of that interaction.
You have messaging that you feel is critical to understanding your product. Your sales channel may or may not understand or embrace that messaging. It’s important that this is included in your channel management strategies.
You may see a specific target audience as prime recipients for your messaging. Again, your indirect channel may not see things the same way you do.
If these types of things are assumed, the end-user will suffer, your sales will suffer, your indirect partner may quickly give up on your product and any anticipated advantage will be lost. In these situations, the indirect channel becomes a wall in between manufacturer and buyer.
Technology, especially things like CRM or CPQ, can help break down the wall to ensure that the right information is being communicated to your target prospects or customers.
Here are several conventional wisdom strategies or beliefs that while commonly accepted by manufacturers are not always beneficial to the customers. Let’s take a look at how technology can mitigate some of these issues.
1. Great partners should get exclusive territories – One partner handling all customers and all types of customers can be problematic. Most partners address a self-defined market segment. If your end-user is outside of that sphere, your partner will likely ignore them. Exclusivity may be appropriate if the partner is unique in terms of knowledge about the product or market. If sales volume is important, look for multiple partners.
Example: Bob buys Atlas Engine parts for his company for use in lawn tractors and small construction vehicles. Atlas has recently been awarded an exclusive distributorship for its engine-part business because the partner is the number-one supplier of engine parts to the automotive sector. Bob hates dealing with the distributor because they have no experience in the lawn and construction vehicle business.
Technology to the rescue – CRM can help you isolate vertical market segments by pulling target listings based on NAICS codes. Coupling this with CPQ and the specific business rules driving the tool can help the manufacturer better address multiple verticals or specialties within any given geography. Territory protection is great, but it serves no purpose unless all of your potential market is served.
2. All partners are the same. One is as good as another. – Most partners provide some kind of value add. If that value add is of no use to your end-user, that end-user will not be adequately served by that partner. You must include the end-user in your selection and planning.
Example: Don buys industrial lightbulbs for his company. He finds out that a new distributor for his favorite brand has replaced his previous supplier. The new distributor mainly sells in retail space and offers a lot of expertise on how lighting can enhance product presentation in brick and mortar stores. Don uses the lights in their production plants and warehouses. Their needs are driven by lifespan and energy consumption. The distributor is not well-versed in these areas.
Technology to the rescue – CPQ can enable you to provide special configurations for specific markets serviced by a given indirect partner. Look for special expertise in your indirect partner, then reinforce that expertise with product and messaging aimed at that market. Manufacturer, seller and customer all benefit.
3. Adding partners with little or no training or instruction – Some see additional partners as a quick revenue source. Unleashing untrained salespeople on your prospect base is a sure way to confuse, antagonize and lose the very prospects to whom you are trying to sell.
Example: Mary buys industrial cleaning compounds for a chain of restaurants. A sales rep from a local distributor is trying to find new customers, and he targets Mary. She likes the presentation and the product and buys a carload for use in their stores. She later finds out that the compound contains a strong perfume that affects the flavor of food stored nearby—it’s a disaster.
Technology to the rescue: CPQ reduces the amount of technical knowledge that sales folks have to personally remember. The business rules prevent configurations or pricing that don’t meet the needs of a given application. Questions related to usage would steer the sales rep away from products that are not acceptable.
4. Expecting partners to articulate your complex message on your behalf – Your message will be filtered through your partner network, and the resulting communication will be built upon your partner’s own expertise, value add and message framework. This can confuse the end-user prospect and over-/under-promise results.
Example: Donna is thrilled to hear about a distributor in her area that specializes in conveyor belts and material-handling systems. Donna is looking to buy replacements for their company warehouses and shipping centers. She is well into the buying process when she learns by accident that the new equipment offered does not perform well in sub-zero temperatures. Donna’s company stores frozen food for overnight delivery to regional grocery stores. The whole sales cycle must start over because the distributor failed to explain that their conveyors are for normal, shirtsleeve, ambient temperatures only.
Technology to the rescue: Again, CPQ’s business rules related to usage and product specifications would limit or eliminate the misapplication of a product to an unacceptable use.
5. Conflicting messaging delivered from multiple partner voices – If your product is sold via multiple channels and those channels feature different messaging, pricing or other market-related variables, your end-user may conclude that you are being deceptive. If nothing else, they will be confused.
Example: Dave is extremely frustrated because he is trying to select a supplier of gaskets for their company engine business. He is talking to multiple dealers that will supply the brand he wants. However, one dealer offers attractive terms while another only provides rapid response and a third is offering a cash-only super discount. Dave wants it his way and no one is offering that alternative.
Technology to the rescue – Flexibility is key to serving customer needs. A good CPQ system will support multiple pricing models and various service levels driven by volume and customer-type campaign activity. The end-user should be able to find a reasonable amount of consistency between similar sources. The sales channel needs to be able to offer multiple types of arrangements to satisfy the customer and their unique needs.
Communicate, Facilitate and Guide the Process – There are three relationships in the indirect world: manufacturer and buyer, manufacturer and seller and buyer and seller.
Guided selling, CPQ and estimating technology can all contribute to a more coherent selling and buying process over the three relationships. CPQ can provide the primary communication vehicle through various portals, and mobilization provides greater availability and portability of customer, product and process knowledge.
Potential misalignment between buyer and seller, application and use, configuration and intention are mitigated with the guidance of these technologies. In the end, that is what will keep your partners and their customers happy.