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Please distribute via unconventional channels
One of the critical things for a startup is the right choice of distribution and sales channels. Naturally, a limited budget means limited sales power. Therefore, it is important to choose the appropriate channels wisely. Appropriate channels are those that will significantly increase your sales capabilities and your market presence.
In the previous column, I wrote about an important criterion in choosing a channel – the magnitude and nature of the product’s customization component. In this column, I would like to describe a different and unconventional approach to selecting channels.
Contrary to convention, which prefers sales channels that sell similar or supplementary products, the criteria that I am proposing here are somewhat different. I believe that thinking outside the box is important, especially for a startup company, which cannot compete with veteran companies because of the limited sales volumes that it brings to the distributor. Moreover, a new product also requires more attention and effort, especially when it is an innovative and product that creates a new market.
Therefore, in my opinion, when we want to choose a channel, we must
answer the following questions:
1.What are we expecting the channel to contribute to thesales process?
2.What does the channel need to know to do?
3. What connections does the channel need to have?
4. What are additional ways in which the channel may benefit from selling our product?
I think we need to choose a channel according to these criteria. Other considerations have a significantly lower
Let me give an example:
I was looking for a distributer in Australia for a very youngstartup at the time. In order to characterize the profile of the best distributer, I answered the four aforementionedquestions as follows:
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The channel’s contribution to the sales process:Since it is an innovative and market-creating product, the
sales process will be led by us. The local representative’s
contribution will be in promoting the sales process inside
the company from an administrative rather than professional
aspect. Also, since the sales process for a product such as
ours includes a trial stage at the operator, the
representative must be able to provide the required computer
for the trial stage. Even though it seems like a marginal
detail, because as a startup we could not provide every
operator that wanted a trial with a computer, allotting such
a computer by the operator usually entails a long
bureaucratic process, which we wanted to avoid.
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What the channel needs to know: We need a representative that will know how to install a SUN
computer on the customer’s network, and that will understand
a little about a certain type of switch and computer
networks.
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Connections that the channel must have: We want the representative to have good connections will the
cellular operators.
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Additional ways for the channel to benefit from the sale: A representative that sells products that are required for
the complete installation of our product, will not only
benefit from the sale of our software but also from the sale
of accessory products – the computers on which the software
runs and the correct switch.
After answering these questions, I knew what I was looking for. I
then started searching for suitable candidates, and I met
with four entities in Australia that were interested in
becoming our representatives there. Two of them sought me
out as a result of a notification that the economic attaché
sent out. The other two met with me after I contacted them.
The two companies that sought me out specialized in selling
software and hardware solutions. One of the companies
focused on our market, the cellular market, and in solutions
akin to ours. The second company sold media-integrated
hardware solutions. They were both disqualified, because I
didn’t think they matched what I was looking for.
The two companies that I contacted, I found online. I found the two
main SUN distributors in Australia, and I met with them
both. The first distributor was very large and bureaucratic.
I disqualified it as well. The second distributor didn’t
exactly understand what I wanted from him, since he sold
computers and switches (to all the cellular operators in
Australia), but regardless, we scheduled a meeting. I
demonstrated the product, explained what the sales process
would be, and what would be required of them during the
initial stage (not much). I don’t actually think they
believed anything would come of it, but we signed a
representation agreement. From my perspective, I liked the
atmosphere of the place and the dynamics of the meeting. As
the meeting progressed, more people were invited to
participate. The discussion was open and frank. I felt that
I had found a stable and established company that was also
hungry and dynamic.
Several months later, when we reached the trial stage with an
important cellular operator, the distributor’s value became
evident. Within days, the system was installed on the
customer’s network. The distributor provided the required
hardware, and because of his prior acquaintance with the
customer, he easily acquired access to his network. His
acquaintance with the customer enabled him to promote the
sales process within the organization. Even though the
distributor did not have the professional capability to
promote the product with the professionals in the
organization (CTO and Marketing Dept.), his contribution to
the sales process was significant.
We signed the deal with the operator during our Sales Manager’s
next visit to Australia.
And the Australian distributor? After working with us, he
discovered the value and profitability in software sales.
More Israeli startups came to him. Since then, several years
have passed, and he is a large and versatile IT company.
Exactly the type that would have a hard time representing a
small startup with an innovative product…
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The column was written by:
Neta Weinrib, an expert on marketing technological
products. Information about Neta appears here.
Note: This is Neta’s last column for LaZOOZ. We
hope you have enjoyed her guest column, and we wish to
thank her for it. Neta is currently promoting her own
enterprise, and we wish her the best of luck in her
future endeavors!
- More information about marketing assistance for technological products appears here.
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