Reduced selling costs

The Wing Model

Many businesses use the traditional direct sales model, where every task in a relationship lifecycle, from the generation of sales leads all the way through to customer support and care, is performed by a single channel, i.e. sales reps.

Figure 2.4 illustrates this using a simple matrix where the y-axis represents the costs of sales for a few common channels—the field sales force, value-added distributors, volume distributors, call center, direct mail, catalog and the Internet—arranged based on their relative cost-of-sales. The x-axis represents typical stages in a customer relationship lifecycle. The canvas shows the pathway that channels use to move a prospect from one task to another.

Figure 2.4: Single Channel selling model

The pathway in this matrix shows that, in a typical direct sale, all sales tasks are performed by the sales force, which results in high selling costs. A migration of any selling tasks to lower-cost channels will provide margin improvements, as well as the means to reach more customers, in more markets, more efficiently.

Salespeople usually spend anywhere from 20 to 30 percent of their time in prospecting i.e., finding and qualifying new leads by cold calling, networking, trade shows, etc. This is an enormously expensive and wasteful way to generate leads. Just about any other channel can generate more qualified leads at a lower cost than field sales reps.

Figure 2.5: A Wing Model

Thus, if the responsibility of generating leads is taken mostly or entirely out of the hands of expensive high-touch channels such as field sales reps, and transferred to low-cost, high-reach channels like the call center or the Internet as shown in the "wing model" in Figure 2.5, a business will:

• Increase its field sales reps' selling time by at least 20 – 25 percent (Imagine the top-line impact of a 20 percent increase in selling time. Like an eagle who has spotted its prey, a salesperson will be able to nab the best pre-generated leads with very little wasted movement i.e., close more deals!)

• Decrease the cost of sales by at least 10 – 15 percent, causing its profit margins to soar

• See the total volume of sales leads take flight

• Ultimately increase the volume of profitable sales, allowing everyone to feather their nests with a new-found profitability

This is the simplest form of an integrated multichannel selling model, and it requires relatively little effort. If you are not using this approach, do it! Implementation of this model could be as simple as hiring a few telemarketers or, even better, outsourcing the effort to a telemarketing firm and/or building a new website. For this low investment, you will get an increase in sales as well as significant improvements in selling margins due to a reduced cost of lead acquisitions.

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