In the contemporary business landscape, distributed sales have emerged as a common and efficient method of bringing products to end-users. This comprehensive guide aims to elucidate the distributed sales model, providing insights into its intricacies and offering strategies for optimization within your organization.
Understanding the Distributed Sales Model
Distributed sales entail two primary approaches to selling products:
Direct Sales
To customers through an in-house sales force.
Indirect sales
Through third-party organizations such as value-added resellers, affiliate marketers, or independent retailers
The distributed sales model is activated when an organization collaborates with a distribution company, functioning as an intermediary between the organization and the end customer. The distribution company acquires the product at a discounted rate from the organization and subsequently sells it to the customer at the full retail price, thereby profiting from the margin. This model proves advantageous for the primary organization as it eliminates the need for an extensive in-house sales force, while the distribution company benefits by sidestepping the challenges associated with product manufacturing.
Three Types of Distribution Strategies
Intensive Distribution
Involves engaging numerous distribution or retail outlets, with a focus on saturating the market rather than forming exclusive partnerships with specific distributors.
Selective Distribution
A more discerning approach where organizations strategically choose a limited number of distribution channels to collaborate with.
Exclusive Distribution
Occurs when a distributor secures exclusivity, often through a significant financial investment.
Advantages of the Distribution Model
Reduced Challenges with a Sales Force
Streamlining the sales process allows organizations to focus on product innovation, with distribution partners handling customer interactions.
Increased Focus on Building and Improving Products
Organizations can channel their efforts into product development, relying on distribution partners to connect with customers.
Ability to Target New Markets
Leveraging established relationships, distribution partners facilitate entry into new markets, saving organizations the effort of building trust with customers from scratch.
Sales Expertise
Distributors possess the skills to effectively market and sell products, especially in cases where the technical intricacies may be challenging for the product-creating organization.
Disadvantages of the Distribution Model
Potentially Lower Profits
Organizations may experience reduced profits due to the margin shared with distributors, impacting the overall financial outcome.
Lack of Control
Inability to control the workflow and expectations of a distributor’s sales team may pose challenges for organizations accustomed to overseeing their in-house sales representatives.
Challenges with Lead Distribution
Timely and effective lead distribution becomes complex, relying on intricate communication processes between the organization and the distributor.
Lack of Visibility into Channel Partner Activity
The absence of integrated technology, such as a connected CRM, results in a lack of visibility into the activities of channel partners, hindering attribution, reporting, and optimization efforts.
While the distributed sales model presents notable advantages, organizations must carefully weigh the potential disadvantages. Solutions, such as integrating lead distribution software, can address challenges and enhance revenue streams, providing a strategic edge to organizations seeking to optimize their distributed sales model.
You can navigate the intricacies of distributed sales explore the dynamics of modern sales ecosystems, optimize your approach, and unlock unprecedented growth opportunities.
