Improved margins

The Whale Model

Squeezing out maximum selling margins means moving as many tasks as possible to lower-cost channels. There could be many, many variations on how to achieve this. Figure 2.6 shows the whale model illustrating two such variations:

Figure 2.6: The Whale Model

The blue path is modeled after successful software companies like Google that are using the Internet to generate leads. Next, these leads are qualified by account associates over the phone. Qualified leads are then handled by dedicated account executives that handle complex bidding, proposals, and negotiation. Google uses the Internet to allow its loyal customers to promote its offerings.

This model has allowed Google to generate a huge amount of leads, allowing it to swallow the competition. With touch points available both above- and below-the-surface, the whale model offers a truly effective route to blue ocean opportunities!

The red pathway, on the other hand, is a typical distributor model where a manufacturer sells through wholesale distributors. It uses the Internet and/or call center to generate leads that are handed over to the distributors who handle the deals, from bidding to negotiation to fulfillment.

In both cases, customer support is provided by phone through a call center. For example, American Express uses this model to sell its credit cards, either directly or through co-branded deals e.g., Delta. In both cases, the call center provides all the support.

This is a complex model to implement. Making a splash with this approach requires much up-front design work to identify the appropriate channels to assign to each task. Further work is then needed to monitor channel performance and ensure that a "seamless" face is presented to the customer. Nonetheless, it is a model that can send your company to the top of the food chain.

Companies that move to a profit-seeking multichannel model, such as the one illustrated above, have achieved cost-of-sales reductions of 20 percent or more; immediate reductions of 10 – 12 percent are commonplace and typical. The secondary benefit of this approach is the increased coverage that comes with more expansive use of low-cost channels to reach customers early in the sales cycle¹.

Related:

• Table of Content
• Red Queen Effect – An Introduction
  
• The Billionaire Code
  • Secret of World Class Companies
    
  • Impact of Using Secrets of World Class Companies
    
• Cracking the Code
  
  • Customer Experience
    
  • Customer Engagement Channels
    
  • From Multiple Channels to Integrated Multichannel Selling
    
  • Benefits of Integrated Multichannel Selling Models
    
  • Customer Relationship Lifecycle
  • Integrated Multichannel Selling Models
    
    • Reduced Costs
      
    • Improved margins
    • Broader market coverage
    • Rapid revenue growth
      
  • In Conclusion

Reference Material:

1. Go To Market Strategies by Lawrence Friedman