Inter-Divisional Synergy

The overall concept of account optimization is complicated by conflicting goals, contrary compensation plans, and field driven behavior in opposition to corporate objectives.

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Feature Article:

Today's Changing Channels

by Jim Kahmann

demoVirtually every channel of wholesaling and distribution is undergoing, or has undergone, change and consolidation. There may be fewer competitors, but they compete differently than they have in the past... learn more

 

Inter-Divisional Synergy

Influencing Behavior Impacts Goals

Maximizing sales penetration within a given company's customer base is often an elusive if not totally frustrating objective. The overall concept of account optimization is frequently complicated by conflicting goals, contrary compensation plans, and field driven behavior in opposition to the overall corporate objectives.
Channel Distribution Strategy, Jim Kahmann

Focus?

Corporate vision is a primary responsibility of upper management but implementation begins at the bottom of the sales chain. At the divisional level, the buzzword for the past number of years has been "focus" and following that analogy, the closer one focuses on something, the narrower their field of vision becomes. While upper management wishes to meet the shareholders' objectives for growth and profitability, the individual sales rep, divisional VPs, and independent channel resellers are each concentrating on a personal set of metrics. Frequently, corporate goals and the individual metrics don't coincide.
Channel Distribution Strategy, Jim Kahmann

Conflict Through Self Defense

An extended product and service family eventually reaches a point where separate sales forces are required just to insure adequate product knowledge. It is not uncommon for a sales force compensated largely or wholly by commissions, to be very protective of their income source accounts. Concerns are that "intrusion" by another rep, even from a sister division, may unravel the relationships they have developed or cloud the issue of account control or account ownership.
Channel Distribution Strategy, Jim Kahmann

The Fabric Unravels...

But how does one motivate and compensate the primary rep without breaking the bank with double commissions or fouling up sales tracking with double bookings? Revenue or gross profit splits at the divisional level will lower the overall margins and reflect badly on management. This would be in spite of any sales growth unless there are proven economies of production sufficient to hold or better yet, improve net margins.

Channel Distribution Strategy, Jim Kahmann

Special Skills Needed Here...

The architects of such a plan must possess refined skills in finance, sales and marketing, planning, and organizational behavior with emphasis on the latter. Like working your way through a maze, making too many directional decisions before attending to the field sales behavior as the last priority, generally leads to dead ends, far from the objective. Know where you need to get to first, and determine the group behavior required to get you there. Then, plan backwards. While not the commonly accepted way to do things, this approach generally leaves more strategic options open and can be creatively stimulating.
(The balance of this treatise outlines steps to building synergistic strategies that work.)
Channel Distribution Strategy, Jim Kahmann
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