Situation: A company has developed a disrupting technology that allows OEM manufacturers to produce high-end machines at a fraction of their current cost. The challenge is that the company does not possess the capacity to reach producers of high-end machines. The CEO seeks advice on how to efficiently focus channel development. How do you build channel sales?
Advice from the CEOs:
The dilemma is having a major disrupting technology in a market with a strong division between OEMs servicing the low/medium-end market and those servicing the high-end market.
This technology collapses the division between the low/medium and the high-end markets.
This shift disrupts the current business models of either group of OEMs, as well as their technology development plans. This is the source of resistance.
Therefore, the most promising channel development partner is either:
A low/medium-end OEM who is also a disrupter and who has the capability to develop a high-end sales and marketing effort; or
A high-end OEM that knows the market but who’s current strategy is failing and needs an entirely different solution to revive their prospects.
The near-term task is to gain market capability – both manufacturing and marketing/sales – and to use this capability to gain early market acceptance.
If, over the next 12 months, the company can begin to impact the market shares of the high-end OEMs, this is the surest way to gain their attention. Once the company starts to gain share, a likely outcome is that one of the high-end OEMs will buy the company to lock up their IP.
Another company used a similar strategy several years ago.
They entered a new market by way of a business collaboration with a high-visibility partner.
In one year, they took 30% market share from the market leader through this collaboration.
As a result, the market leader bought them because “it was less expensive to buy you than to spend the marketing dollars that we would have had to spend to compete against you.”
Situation: A company has customers scattered around world. When the company was small, the CEO was very involved at all levels of sales and customer relations. Now that the company is larger, the CEO is more strategic but misses client contact, particularly for gathering market intelligence and understanding. The CEO does go on regular sales calls with reps but is getting push-back from the Sales VP. What is the CEO’s role in sales?
Advice from the CEOs:
Make an effort to understand the push-back coming from the Sales VP. Probe – where is the resistance coming from? What is the basis of the resistance? Is it personal or functional? Keep probing until the roots of resistance are clear, and then deal with these.
As CEO, insist on continuing customer contact. This is essential to your role and your understanding of your market.
Sit down and discuss this with the Executive Team. Go over your travel schedule and your objective in meeting with customers. Where appropriate meeting opportunities exist, let them know that you want to be included. Follow-up and repeat the message if they do not schedule you for calls.
How does the sales rep position this with a client? Let the customer know that the CEO will be visiting the area and would like to meet you. Here are the broad objectives and the benefit to you. Knowing that the CEO is interested in meeting with the client can be a powerful way to deepen the relationship with the client.
Having the CEO accompany the local representative on the first meeting with a customer sends the wrong message. Let the representative establish the relationship first. Then bring in the CEO to deepen and strengthen the relationship when the opportunity is right.
Situation: A company produces a high performance product which is priced modestly higher than competing products. They are finding customers resistant to cost increases, even when they acknowledge the advantages of the higher cost product. The company needs to develop a new way to position their product. How do you introduce a product to new customers?
Advice from the CEOs:
Don’t compete directly with existing technology. Position yourself distinctly, as a new solution to address unmet needs.
Sell your solution “for those times when you need to save time.” Once they start to use your product, they will find it simpler and easier to use than the old product and will convert themselves to your product.
Use the pitch: Book an extra client today because this will save you this much time. This plays to customers’ incremental revenue opportunities to justify the cost.
At conventions, conduct contests among attendees – try our product versus your old product. Those who can use it fastest, or below a set time have their business card placed in a jar for an iPad drawing several times a day.
Sell a lower priced “starter” kit – or provide a free sample with easy to follow directions. Once the customer is sold on the product’s advantages they will be less resistant to the modest cost increase.
Focus on specialty functions within larger target clients – the functions that will benefit the most from your product’s advantages.
Situation: A CEO manages more than one company and is overcome by the complexity of the task. The biggest challenge is the oldest of the companies which is increasingly resistant to change. How do you overcome resistance to change?
Advice from the CEOs:
Regardless of the age or experience of any company, meeting on-going performance objectives is critical. The fact that strategic imperatives have led to the formation of spin-off entities does not change this. Managers and key personnel are expected to perform to reasonable expectations, whether in a family or non-family business.
Resistance to change may be a symptom of more fundamental issues. Is the older business receiving adequate attention from upper management? Are they receiving sufficient funding and resources to complete their objectives? Do they have the latitude to make decisions necessary to achieve their objectives? If the answer to any of these questions is no, then address this first.
Presuming that the answers to the questions mentioned above are positive let the key personnel in this company know that they remain a critical business entity. Telling them this 1-on-1 is not enough. They need to hear this in public forums within the company. They need to be clear on the opportunity that the company enjoys, and what this means both for the company and for them as employees.
You cannot over-communicate the vision, mission and opportunity. They already know that you are juggling multiple balls and need ongoing assurance that they remain important.
Make sure that you have a right person handling day to day matters in the core company and in each of the other entities so that as they grow that they can support themselves.
Situation: A company has lost the team spirit that they had when the company formed. The CEO has struggled to revitalize this spirit but encounters resistance from some employees. What techniques have you found effective in building or rebuilding a strong team culture and improving team performance?
Advice from the CEOs:
If an individual is resistant to team meetings, work with them one-on-one. Listen to their concerns about meetings and ask questions to focus them on a higher level of concern – individual and team performance and the need to build effective teams to enhance this performance.
If an organization has divided into functional silos, form multidisciplinary teams around initiatives to build inter-team synergy.
Choice of leader is critical in team formation. The best teams have the most effective leaders.
Crisp, clean communication is important. Document verbal commitments in writing.
Select team membership with an eye to team compatibility. Avoid putting individuals with a history of conflict on the same team, particularly if this is a management team.
Engineering product teams – where individuals work independently on distinct aspects of a larger project – may be more tolerant of past conflict as long as team activities do not require collaboration among individuals with a history of conflict.
Look for common value systems and common focus when assembling teams. This helps to build the team as a strong unit.
Recommended Reading: The Five Dysfunctions of a Team – Patrick Lencioni.
Situation: A company has recently introduced a disruptive business proposition. The immediate focus is pitching the solution as an attractive alternative and building early traction. What are best practices for building acceptance of a disruptive model?
Advice from Marc Rochman, CEO of Openbucks:
Any business, especially an innovative start-up, is bound to meet a wall of resistance; the key is finding the cracks in the wall. To do this, you must demonstrate a significant benefit to both the company and its customers. However, most important is finding a partner who has an early adopter attitude or culture.
Often the principal resistance is not with the product or solution being presented, but fear of being the first through the gate – particularly with a product and company who haven’t yet proven themselves. This stems from a perception that if the solution turns out badly the penalty may be severe, especially for the executive who made the decision.
Openbucks recently introduced a new payment solution for people who don’t have bank accounts or credit cards such as teenagers and people without strong credit and those hesitant to use credit cards online. The solution allows people to purchase a gift card from a retailer and use that gift card to buy in-store goods as well as to buy and pay for digital goods inside hundreds of online games.
Openbucks’ first partner is Subway. They are innovative, imaginative and not afraid to be first with a new concept. In addition, Subway also happens to have a subsidiary that specializes in payments and payment processing so they immediately understood the model.
Another early partner is CVS Pharmacy. To CVS the appeal was the model of convenience and a way to encourage repeat customer visits. Since people routinely visit pharmacies to get prescriptions and a host of other products, it is easy for them to buy a gift card during a routine visit.
The keys to overcoming objections to innovation are:
Be resilient and patient, especially when working with large companies. Once they begin to see a trend of success, they will more likely be ready for mass adoption.
Strike the right balance between persistence and a willingness to adapt your product when you see an opportunity. Pivot or tweak your model to take advantage of a new opportunity that you did not anticipate originally. The pivot allows you to take an easier path instead of banging against the wall too long. Sometimes you just have to go around the wall.
Subway has more stores than any other retailer in the US. Adopting the Openbucks solution came naturally for Subway because they understand payment processes and how to use them to create loyalty and foot traffic.
The program is simple and a win-win-win for the consumer, retail outlet, and merchants who can collect cash-like payments from the unbanked, under-banked and those who prefer not to use a credit card online. The purchase of a $10 Subway gift card can be used to buy a Subway sandwich, and inside mini digital stores in hundreds of online games. Fifty-four percent of those who buy a Subway gift card also get a sandwich – a clear value to the retailer. Further, since they have the card, they are more likely to be repeat customers.