Directorate of distance education

Channel Design and the Customer
Channel selection and deployment is one of the most critical issues 
facing companies today. Customers are in the drivers’ seats, as they should 
be, when it comes to the buying relationship. Powerful products and, to 
some degree, great brands no longer provide sustainable differentiation to 
customers. Customers are looking for superior value in all the solutions 
they consider. Increasingly, the sales channel creates the most powerful 
and sustainable differentiation in delivering superior value to customers.
However, much of what companies do today in deploying sales 
channels keeps them from establishing the highest performance, most 
effective channels. Many companies are not getting the sales growth, 
market penetration and customer share they should because of ineffective 
channel design and deployment.
In assessing the channel effectiveness of dozens of organizations 
worldwide, we find companies doing things backwards. They are designing 
their sales channels from inside-out, that is, based on a company focused 
strategy. Our work has shown the easiest and most effective means of 
designing and deploying high performance sales channels start with the 
customer.
Traditional Approaches
Unfortunately, many great companies are prisoners of their 
heritage. Their sales channel design and deployment is driven by their 
heritage. They continue to do the same thing, only more and faster, not 

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necessarily better. Those organizations that had a strong focus on company 
owned field sales channels continue to expand that organization, often 
losing productivity, effectiveness, and profitability.
Other companies try to do everything, exploiting multiple channels 
to reach the same customers, confusing the customer, creating channel 
conflict, eroding margins, losing share and opportunity. These companies 
have all the traditional channels in place and are adding all the new and 
fashionable channels (internet, direct marketing, and others) without 
rationalizing the strategy and approach.
Others drive their channel strategies based solely on financial 
criteria, namely cost of selling, not treating their sales channels as 
investments which are expected to produce a reasonable return. We see 
companies downsizing, shifting from a high fixed cost for their own 
organization to the lower or variable costs of an indirect channel structure 
(distributors, resellers, representatives, outsourced telesales). Their 
decisions are driven by expense criteria, not the ability of the channel 
to effectively reach the right customers at the right time with the right 
solutions.
Then there are those that can’t decide, every year changing their 
sales strategy to something different than before. Shifting from indirect 
sales to company owned sales forces. Moving to inside sales. Moving to 
direct marketing. Moving to the internet. Then starting the whole process 
again when each move fails to achieve the results needed.
All of these activities are driven by dozens of task forces, studies, 
organizational assessments and other research efforts to look at the right 
channel design.
These efforts all miss the point! Moreover, they make channel 
design and deployment more complicated than it really is. The easiest way 
to design high performance sales channels is to start with the customer! 
Once you know who your customers are and how they want to buy, then 
you can design the channel that most effectively reaches those customers 
in the way that is most effective.

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