sma experts’ exchange managing sales channel conflict · pdf fileoptimizing sales...

© 2010 The Sales Management Association . All rights reserved

October 12, 2010

Alberto Sa Vinhas

Assistant Professor of Marketing

Washington State University

SMA Experts’ Exchange

Managing Sales Channel Conflict

An Expert Panel discussion featuring:

Ro Katrak

VP Exclusive Channel

Nationwide Insurance

Juliann Larimer

VP North American Channels

NCR Corporation

About The Sales Management Association

A global, cross-industry professional association for sales

operations and sales management.

Focused in providing research, case studies, training, peer

networking, and professional development to our membership.

Fostering a community of thought-leaders, service providers,

academics, and practitioners.

© 2010 The Sales Management Association . All rights reserved Slide 2

Today’s Session

Panel format

• Each panelist will present for 10 minutes

• I will moderate discussion following these brief presentations

• We will take your questions

Today’s Panelists

Slide 3

Alberto Sa Vinhas



Ro Katrak



Juliann Larimer


NCR Corporation


Managing an Indirect Sales Force

Channel Conflict and Intra-brand

Competition

Alberto Sa Vinhas


Washington State University The conclusions described in this presentation are based on the author’s extensive research on this topic in collaboration with both suppliers and independent distributors. For additional information, see the author’s work published in the Journal of Marketing Research, 42(Nov), 505-515.

The “Normal” Question: Direct OR Indirect?

Slide 5

“OR”

The New Trend: Dual Distribution

Slide 6

“AND”

The Rationale that Seduces Managers

Slide 7

• More coverage (different segments with different

needs)

• More choice for the prospect

• More convenience for the prospect

• Inter-channel rivalry spurs both parties on

– “Let the best one win”

• Serve each segment in the most efficient way

• “Each channel will find its market”

Concurrent Channels: The Trap

Slide 8

• Your indirect players fear you will favor “your

people:” Give them the best products, terms,

leads, support

• You are competing with your own 3rd parties:

Fear of “unfair” competition

• And your own employees fear you will drop them

when problems arise:

“Run the numbers, then shed the overhead”

As a Result, Concurrent Channels Can Go Badly Wrong…

Slide 9

• Channel conflict between the two sales

forces (in-house and 3d party) can destroy

performance

– 3d party channel members reduce support

or switch to another supplier

– Employee (vertically integrated) channels

lose motivation

• The net: supplier has high overhead

(needed to service both channel types)

and low results

So, When to Use Both Channels?

Slide 10

When potential for conflict is lower:

• When the sales forces can avoid each other

– Market easy to segment

– Higher market growth

• When there is lower potential for customer

arbitrage:

– Lower variability in customer behavior over

purchasing occasions

– Lower product standardization

– Customers do not buy product-line as a group

How Can You Make It Work?

Slide 11

• Try to create differentiated offers

• Create a system that clarifies order ownership

– Note, however, that this may decrease

customer satisfaction

• Double compensate when both sales forces

interact with a customer for a given order

The two sales forces will actually collaborate

with each other!

Intra-brand Competition

Slide 12

• Different types of intra-brand competition

– For customers

– For manufacturer resources

– For the performance of distribution

functions

• Can lead to lower levels of distributor support

and increase negotiation costs

• However, limited levels of competition

actually increase customer satisfaction!


Managing Sales Channel Conflict

Managing and Motivating an

Indirect Channel

Juliann Larimer


NCR Corporation

True or False?

Channel

Conflict is

Bad.© 2010 NCR Corporation. Used with permission by The Sales Management Association . All rights reserved

False!

There is a difference between good and bad

channel conflict:

Good

Customers have choice.

Bad

The channel you want starts to divest

from your solution.

© 2010 NCR Corporation. Used with permission by The Sales Management Association . All rights reserved

Elements that Drive Partner Loyalty - Gartner

• Program Elements

That Most Affect

Partner Loyalty

• Loyalty gains of 5%

will likely increase

sales volumes by

10%+


Source: Gartner Research

ID:G00131030 by Michael Haines

Creating a Healthy Eco-System


Tools to Manage Internal Channel Conflict

• Rules of Engagement document

• Teaming Agreement

• Territory definition in program agreements

• Compensation plans that are channel neutral

• Deal Registration


Teaming Agreement

Critical Elements to include:

• All Parties involved (customer, partner, vendor)

• Definition of the opportunity

• Timeframe of the agreement

• Roles & Responsibilities of each party

– Communication

– Service

– Provide pricing

– Deliver/configure product

• Cost of Sales Assumptions

• How/when/why to terminate

• Confidentiality clause


Example Teaming Agreement


Rules of Engagement

Critical Elements to include:

• Channel account coverage and support (who, how)

• End-user segmentation for direct vs. channel

(by named accounts, deal size, products)

• Who to team with in the field and how in what type of deals

• Who gets paid on what deals within your firm

• How to handle non-standard deals

• How to handle multiple partners in a deal

• Under what conditions do you take a deal direct

• How direct vs. channel conflict will be resolved/managed

(who, how, when)


Channel Conflict “Guarantee”

• Commitment to investigate and resolve channel

conflict issues with defined timeframe (e.g., within

48 hours)

• Commitment to compensate partner for lost deals

to direct sales team

• Compensation should be fixed payout to simplify

defined petitioning process

• Visible marketing effort around this as

“commitment from your company”


Summary

• Channel conflict is not always bad

• Internal tools can help improve communication and

minimize awkward situations

• Review tools and processes on an annual basis to

ensure they are current and socialized

• Honesty is the best policy



Managing Indirect Channels

Nationwide Insurance:

Optimizing Sales Distribution Channels

Ro Katrak

VP Sales, Exclusive Channel


Nationwide: Who We Are

Diversified insurance & financial services organization

More than $140 billion in assets*

50 states & District of Columbia

* 2009 Nationwide consolidated assets

© 2010 Nationwide Insurance Company. Used with permission by The Sales Management Association . All rights reserved

How We Size Up

1. A.M. Best, 2008 DWP. Based on premiums written. 2. A.M. Best 2008 DWP. Based on premiums written. 3. Fortune Magazine, 2009.

4. VARDS. Based on Q4 2009 figures. 5. Plan sponsor 2008. Based on total plans. 6. LIMRA. Based on Q4 2009 figures.

© 2010 Nationwide Insurance Company. Used with permission by The Sales Management Association . All rights reserved Slide 26

How Do We Sell?


How Do We Sell? (cont…)


Nationwide Financial

Health & Productivity


Where We Do Business


What Products Do We Sell?


Key Drivers for Leading Our Sales Force


Reaching Financial Customers


Nationwide Sales Channel Distribution


Sales Challenges

• Channel Conflict:

Where are the friction points?

• Internet Use:

How to Inform Customers / Prospects About

Sales & Service of a Contract-Based Intangible Product

• Independent Contractor Environment:

Managing Advantages vs. Contractual Complexity

• Independent Contractor Lifecycle:

Beginning with Recruiting Performance Management

Thru Contract Termination


Thank You.

Thank You


Questions and Discussion

Alberto Sa Vinhas



Ro Katrak



Juliann Larimer

VP North American

Channels

NCR Corporation

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