Sales organizations can no longer survive with a build-it-and-they-will-buy-it mentality. They must be both extensive and diverse, including both third-party distributors and multiple locations. They must also endlessly search for answers to their unique challenges. Stephen Gold knows first-hand about integrating distributors into your company’s sales channels.
Stephen Gold is president, CEO, and co-founder of Intelic Software Solutions, a software company whose product line automates the sales channel in an enterprise. Prior to starting Intelic, Gold was vice president of marketing for Digital Market, Inc., which was named an Electronic Business News Hot 25 company in 1996. Before that, he was vice president of marketing at Reptron Electronics, and president and founder of Computer Renaissance, a nationwide retailer of used computers. Gold earned his bachelor’s degree in mechanical engineering from the University of Illinois and an MBA from Carnegie Mellon University.
TR: I understand you have a large distribution channel for your product. What’s your biggest challenge with this form of selling?
Gold: A traditional manufacturer builds a product and sells it to the customer. In practice, it doesn’t quite work like that today. What we do is build a product and then hire salespeople, contract with sales groups, distributors, and value-added resellers, and create a hybrid selling organization. Then we do that in various continents and locations. So when you look at how we go to market, it’s not as simple as we build it and they buy it.
The challenge, then, is how do I coordinate all the activities that will occur among those channel partners, such as:
- Providing price and availability
- Keeping track of current contracts
- Maintaining forecast opportunities
- Coordinating it all so that we look like we’re a single company
Our customers are often competing against themselves [before they integrate their systems]. They will quote [a price for their product] in Europe, in Asia, and in the U.S. They may quote over the course of a couple days or weeks. Almost universally, [the quotes] will be slightly different. Consequently, they give up margin, they look somewhat disorganized, and they fail to provide really good, accurate information to the customer. And that’s a problem.
If you look at how they manage these different transactions, they’re done through various disparate processes. A sales agent—who may be a distributor, a contract sales person, or an employee salesperson—might use the fax to get a quote, might enter all the orders onto a legacy system, might send an e-mail, might do his forecast on Excel, and might do account management on an Access database. You [end up with] all these separate data repositories for different pieces of critical information.
One of the advantages of integrating the sales channel is that when the vice president of sales asks, ”Why do we spend so much time at Ford Motor Company?”, the answer doesn’t have to be ”because it’s a big customer.“ Sales agents can say, ”Well, Ford is currently looking at these 72 products, 26 of which they’ve sampled, 24 of which they’ve actually quoted. While forecasting for these other four projects, they’ve placed orders on these 17 devices. Those orders came through a combination of channels from these different geographies.”
TR: Whom do you target for your products?
Gold: Clearly B2B has gotten a lot of visibility. The last forecast from GartnerGroup says the market for business-to-business is going to be $7.3 trillion by 2004. Clearly, that’s getting a lot of CEOs' attention. They’re saying, ‘Gee, I need to do something.’ But, not all industries are embracing business-to-business technology equally.
The fastest industry to embrace B2B technology is the high-tech corridor, electronic manufacturers. So, initially, our product today has been targeted at the high-tech community. They currently represent about 40 percent of all B2B business that’s being done. The next market we’ll be moving into is automotive, specifically the automotive after-market.
Who we’re selling to is a manufacturer who is buying our solution on behalf of his selling organization. So the users of the system are internal users—people like marketing, management, and individuals involved with product, pricing, and selling. Externally, it would be their direct sales force, perhaps their engineering group, their contract sales agents, manufacturing reps, distributors, partners, their alliance or affiliate members—anybody who is going to represent them and their products at market.
TR: How do you see a partner relationship management (PRM) strategy complementing—or rivaling—a customer relationship management (CRM) strategy?
Gold: Actually, it’s a pure complement. Harvard just came out with a study that asked that very question. What they said is, you can generally divide technology into two camps:
- Products that are focused primarily on the single organization, like enterprise resource planning (ERP) and CRM
- Products that are focused on what they call the community, like supply chain management (SCM)
Enterprise resource planning is something a company buys to automate their back office infrastructure, their manufacturing, scheduling, planning, production, human resources, and accounting. It’s all very specific to them.
The other type of enterprise product they identify is the customer relationship management, focusing primarily on content and customers. But as an enterprise-based solution, it’s operating on behalf of that single entity. All the account information, the contact management information, personal information management, call center, help-desk type solutions are resident on behalf of that enterprise.
On the other hand, if I look at the community-type solutions and I ask, ‘Well, what’s the equivalent to an ERP in a community product?’ Well, it’s supply chain management. What it says is the ERP does a great job helping the company build the product, but they need to essentially tie their suppliers into their model. So from a community perspective, supply chain management would be one of the offerings.
Another offering would be engineering collaboration, where you allow engineers from various organizations to go online and collaborate for the next design and development of your products. Then the third piece from a community perspective of what we do is really the sales infrastructure and PRM, or partner relationship management.
What CRM does in respect to PRM is a great job managing content, managing contacts, managing account information, and capturing technical data and call center data. What it doesn’t do is move information transactionally back and forth between the company and its sales channels. So, for example, if you ask for a quote, they’ll take what was a published price catalog and put it online. That may work for some industries, but in a lot of the industries we’re working with, it’s almost the exception that a customer would actually pay a catalog or a published price.
TR: How do you contrast your quote module with that approach?
Gold: Our quote module goes through a three-iteration process. It:
- Provides the catalog price. If that’s acceptable, that’s great.
- Reviews information on hand about the customer. Find out who is the end customer. I might have a situation where I’m selling to an intermediary. What is the program or project? What is the assembly? How many parts are they going to use per year? What is the immediate opportunity? How many are they looking to buy? Based on the information that’s put into the system, it will then immediately respond and say, ‘Okay, here’s a new price.’ It essentially looks at an organization’s business rules or business policies, if it’s a strategic account, and if it’s in a targeted market where we’re trying to grow market share, then offers a 10 percent discount from the catalog. Or, go ahead and shift two columns to the right or quote it at lower margin. If that price is acceptable, great. You win the business, you move on.
- Determines if it’s a competitive situation. A lot of times what’ll happen is the customer will indicate that there is a competitive situation. So [you find out] who’s the competitor? What’s the part? What’s the target price? The system literally then can reevaluate the request. It can validate the competitor and can make a determination to meet that price or beat it, or respond with an alternate price. I need real time to go back and forth several times. And when I get to the end of the process, what I want to do if I’m successful is take all of that information and move it to an order.
TR: How do you see a Web channel either complementing or competing with your traditional channels?
Gold: What we have seen is that a Web channel re-identifies or reiterates the value of a traditional channel. If you implement a solution like Intelic’s ProChannel, you’ve essentially put the information out there so that ultimately an end customer could come in, identify a part, quote a part, place an order, and get a delivery. So you just disintermediated the process because you don’t need the salesperson, the distributor, or the rep; you don’t need any of those people. But, in fact, that’s not what’s happening.
What’s happening is distribution. For example, [our sales partners are] logistical suppliers, so they handle the movement of the parts and the inventories. They carry receivables and they give the customer net terms. Their value-add is really not quoting a price or typing in an order to the system. Their real value-add is doing demand creation, going out and finding new business for the company.
Intelic is a manufacturer of software for manufacturers seeking to automate their sales channel. It is a B2B product that automates the sales channels, agents, distributors, and partners. Intelic recently released an updated software line, ProChannel 2.0, which features 16 modules that enable customers to seamlessly integrate their sales organizations worldwide. The company is located in San Jose, CA.
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