Are You Struggling With Your Selling Channels Strategy?

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Sales productivity is the #1 challenge for businesses. Choosing a sales channel strategy, and the level of investment in each channel, is crucial to the success of an Energy Service Company (ESCO). Today the sale channel options available to a company are numerous, but the key requirements a company must include in their strategy are effectiveness and efficiency. Sale channel options available include direct mail, social media, tele-sales, door to door, brokers and in-house sales.  The rise of social networking and digital marketing options has reworked the channel marketing strategy guidelines. ESCOs must weigh the new versus the older options, and determine an effective mix of these sales channels.

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One specific sales strategy is not a universal fit for all companies and will vary from business to business. Ultimately, the strategy must fit the company’s needs. In helping your company choose its sales channel strategy, this article will briefly examine the options you have available and some additional data to help you decide which strategy is right for you.

Direct mail

This method can be traced back to 1,000 BC in Egypt. While many believe that the strategy to utilize snail mail is dead, it is, in fact, still breathing and still sees quite a bit of success. The Direct Marketing Association (DMA) has found that direct mail maintains a response rate of 4.4%, compared to email’s average response rate of 0.12% . These numbers do sound favorable, but in considering this strategy, a company must consider costs and the target market that you are reaching through this channel. The cost for postage, marketing design and print of the direct mailer is not cheap and must be considered. What type of budget does your company have, and how much can you spare for this more traditional sales method? The last aspect of direct mail a company needs to consider is the audience that is responding. Most of those that respond to direct mail are older and tend to favor brand loyalty, while younger generations are more in tune with social media and other methods of communication. Ask yourself: are you looking for longer-term customers, or customers that could potentially only be viable for a few contract cycles?

Social media

This sales channel has only existed for a few decades, but it is the fastest growing channel utilized to reach new target markets and increase sales. This channel works best when geared toward younger generations, as the usage rate for these platforms is simply higher for them. The social media sales channel is also best utilized in a B2C strategy. Different platforms have different effectiveness rates and the cost to advertise on these platforms varies as well. The mix of social media platforms employed by a company should be carefully chosen and diverse. The overall cost for this channel tends to be less than direct mail, with the possibility of reaching a larger target market. With that said, the response rate decreases dramatically compared to other channels. 

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Tele-sales

The tele-sales channel is another that has been around for decades, but has become more complicated due to “no call lists” and low levels of respondent interest and participation. Over the years, potential customers have been driven to despise robo-calls, international call centers and the occasional direct text message.  These factors, among others, will determine this sales channel’s effectiveness ratings. While navigating this complicated channel, the response rates tend to be higher than most other channels, at about 9-10%. In the end, the strategy to utilize tele-sales needs to be well thought out and thoroughly planned to prevent wasted resources and maximize profit.

Door to door

This sales channel can be effective depending on your sales team and the pitch you establish. Many companies in the industry have found this method to be successful in expanding their residential customer base in territories in which they already operate, or new territories they are hoping to enter. The amount of investment this strategy requires, as well as its profitability and value, depends on many factors: the compensation structure, hiring and training practices, and the technology and support reps need as they go. Some companies use iPads with mapping, sales and other assistance programs to make this strategy more effective. Response rates vary for this channel, but companies that allot resources wisely see the highest reward.  The return on investment (ROI) greatly increases for most companies that invests more initially in the door to door practice.

Brokers

Brokers can be a valuable tool that allow suppliers to conserve resources and have smaller in-house sales and marketing groups. They allow companies to save on employee overhead costs, while also cutting the marketing costs to obtain customers. Some businesses rely heavily on brokers to deliver over half of their customer volume, while others prefer to keep sales efforts in house. While there are benefits to utilizing brokers, they decrease the margins of new accounts. Depending on how competitive your rates are, brokers might bring you a large amount of business… or none at all. To combat these issues, most companies diversify their sales channels, and utilize brokers only to assist in building a customer base in particularly competitive markets.

In-house sales

The final (and sometime) most costly channel is an in-house sales team. Like the door to door sales channel, the cost can be high due to high turnover and the constant need for hiring and training.  Outsourcing your sales team can save between 25-50% of your costs, but in doing so, the response rate and ROI decreases. Companies that choose to have an in-house sales team must take into consideration the current effectiveness – and strategic growth plans – of their current team, and manage this area of business constantly. In recent years, many companies have either favored an inside sales team, or maintained a hybrid system in which reps spend sales time inside while also occasionally traveling to clients. Research shows that reps are now spending over 50% of their time in the office rather than out in the field. National data also shows that inside sales rep positions have grown 7.5% annually, while outside sales reps have only grown 0.5%.  The art of in-house sales is on the rise once again, but many factors must be taken under consideration to determine if an in-house sales team will provide the value and ROI your company seeks.

A company’s sales strategy should not simply mirror others in the industry; it must be uniquely designed to cater to the company’s needs. It should consider the company’s strongest attributes while aiming to be efficient and effective. The success rates of each sales mix strategy will vary, but a higher success rate is guaranteed by simply having a sales channel strategy rather than having none at all!

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