In the current time there is a much talk about ‘content’. Statements such as companies with content will make it and that content should drive a digital strategy is partly true. But somehow the picture is skewed. Content can only bring get a company so far – the rest is still up to distribution.
To understand there are a couple of icons in history that have used content as a strategy and that may provide some insight.
Ted Turner – started buying the right to broadcast sports shows and turned this into a worldwide distribution of sports channels. He practically invented modern TV sports. His motivation – he needed a source of cheap content. His success – building a distribution channel that later became CNN.
Oprah Winfrey – made money out of the distribution of her shows across the world. Her shows is the content – the distribution that she was able to build that way, was used to distribute her own and other content.
Felix Dennis – made money out of building distribution for newspapers. He also owned a number of Bruce Lee photographs and made massive profits distributing these as posters.
Bill Gates – got one piece of software and sold it many, many times. The content was the software, the distribution is what made it a multi-billion company.
Steve Jobs – created great products but also made sure that they were distributed very cleverly. Created the largest distribution networks for applications, music and connectivity.
Google – great company – but they do not own their own content. They make money out of the distribution that they achieved and through integrating with every device and system in which search, mail, video and other applications they focus on.
Distribution fits into place in the classic 4 Ps of marketing. It’s a key element in the marketing strategy of any organisation. Distribution is the element in marketing that ensures that the company expands reach and grows revenue. It does not matter how much product (content) an organisation has, but until it is distributed – it does not bring money into the bank.
So how do organisations grow distribution? Practically the best way to think of it is as selling. Selling and distribution is slightly different but for now lets look at how they link.
Having a sales team allows for direct sales to companies or individuals. While the company is selling – the distribution is to companies or individuals.
Websites may provide a second distribution channel in which marketing campaigns are used to attract people to websites and then sell specific items there. It may not be active selling – but it is the distribution of the product to someone that is interested.
The organisation may also work with partners in related industries that will benefit from selling the product – this is called partner channel marketing or value added reselling.
This speaks to three markets and three distribution channels. For each new market that needs to be tapped into there must be an analysis of how to distribute to these customers.
Opportunities to design new distribution channels come when products need to be sold in new territories where new or existing products may not be sold. There may also be customers that remain un-serviced or underserviced. This is an ideal opportunity to design the distribution channel that will service those markets.
To achieve these objectives it may be meaningful to create a geographical network of dealers who sell to customers in those areas. It may be meaningful to create a service network so that the company benefits from the revenue while delivering the product closer to the customer, while offering more value added services. There may also be a need to scale back presence there and move to simple retail with an effective returns policy, rather than building a full service and support network.
The focus of the business may then be in addition to supplying product for these dealers to sell, to provide additional marketing, support and training to ensure that the network brings in revenue and maintains targeted levels of income.
A good distribution program will focus on satisfying the needs of customers and will enable the partner to create a personalized service to a customer.
This type of thinking can be extended online, into applications, through wholesalers, resellers, retailers, consultants and agents already have resources and relationships to service the product in the market. Always look for the distribution flow.
Selling through these groups instead of (or in addition to) selling direct, maximize everyone’s revenue in the process, if these partners are treated as customers that have needs and that need to be serviced, in order to resell the product.
The benefits of an effective channel strategy include:
- Growing revenue and market share more quickly than would have been possible otherwise.
- Customers get the information and service they need before and after the sale.
- Through wholesalers, VARs or other channel partners, the product is close to the customer and marketing campaigns focus on driving revenue through the successful channel partners.
For each customer segment, consider:
- How and where they prefer to buy
- Online, physically in a showroom, in a meeting, over the phone,
- Whether the customer needs personalized education and training
- Solution sellers, sales force, telephone sales, training seminars
- Whether the customer need additional products or services to be used along with its
- Web sales, Catalogue sales
- Whether the product needs to be customized or installed
- Sales, Installation and Service partners
- Whether the product needs to be serviced
- Service partnerships
Decide which part of the distribution, either the host or the partner will be offering these services and design a programme that ensures quality and effectively delivery. Make sure that there is sufficient margin for each partner to deliver and to make it meaningful.
These elements will be essential in ensuring that the correct product or service is delivered to the end customer.
Some of the options in designing direct selling channels include
- If the product is complex or customers need a great deal of information and service consider selling and distributing directly through a sales force.
- High touch products may also be sold by channel of qualified resellers or consultants. Market size, deal complexity and value will be part of the decision making process here.
- For simple buying and selling it may be possible to sell direct via a website or catalogue.
- It may be meaningful to set up a wholesaler that sells to retailers, and possibly in time to run direct retail.
- Inbound telemarketing group combined with advertising is another sales model.
- A field sales team is more focused on outbound sales and visits and services customers.
- If there is a need for complete control over the product’s delivery and service, adding a channel probably isn’t the right strategy.
- If there is a need to grow beyond the direct model, look for companies that have relationships with the targeted customers. If consultants, wholesalers or retailers already reach the same customer base, there may be a basis for becoming natural partners.
Some advice in setting up a distribution channel includes:
- Approach the potential channel partner and “sell” the value of the partnership. With a clear value proposition, good pricing models and clear expectations upfront, most partnerships succeed.
- Establish goals, service requirements and reporting requirements as soon as the project starts.
- Deliver inventory (if necessary) and lots of sales/support materials.
- Train the partner to be able to sell. Set up a continuous programme of training, reviews and enable the partner to call on support.
- Run promotions and programs to support the partner and help them increase sales.
- Minimize pricing conflicts through controlling the exit price of the product or through giving sufficient margin to enable the partner to sell and make money.
- In using multiple channels, carefully map out the price for each step in the channel and include a fair profit for each type of partner.
- Service the channel partners as if they are the best customers and work with them to drive revenue. For example, provide them with incentives, marketing funds or materials to promote products; run campaigns to generate leads and forward them to partners to enable them to benefit from selling the product.
- When creating a new channel the pricing strategy and a sales process needs to be considered carefully. When the channel is up and running, it opens the possibilities in terms of starting to launch marketing campaigns to channel partners and customers.
Distribution as explained here as a channel or partnership strategy is as valid online as it is “offline”. We think that just because we create a website and make content available that it will just be used. This “build it and they will come” mentality is shortsighted and ignores the fact that people buy products.
To sell products there is a human element. This human element is the basis of service and is essential to deliver a “well distributed” product. Distribution channels need to be effective and add value. Having automated many things is great and allows us to be more effective with distribution, but at the end of the day it is still about a customer, making a choice to part with money, because they perceive value and great copy make it easier, but the hard work still lies in effective distribution.