The 2020 Mid-Year Economic Update_long

The Problem with Monolithic Sales Coverage Models

Appropriately segmenting customers and aligning sales and marketing service levels help to maximize growth and manage overall cost to serve.
Portrait of call center worker accompanied by his team. Smiling customer support operator at work

Successful distributors differentiate commercial service levels (CSLs) based on customer need and value. In this series that explores the inputs required to define and differentiate service levels, part one covered inputs — gathering opportunity data, voice of customer and other information required to build CSLs. Part two examined capabilities and responsiveness — differentiating product and service offerings, response time, solution customization and lead times.

In part three, we address support: differentiating access to the resources (e.g., sales, marketing, service and support), technology and tools that span the buyer journey.

Support service levels address the number, type and quality of resources distributors offer customers at times throughout the relationship. The support function is traditionally the most people-intensive customer service level and therefore can be the costliest. However, the true cost and associated ROI of the customer-facing organization is often misunderstood and misdirected. As technology becomes a competitive differentiator, tool cost should also be considered as distributors look to differentiate support levels for customers of differing value.

Sales & Marketing Service Levels

Monolithic sales coverage models (i.e., serving all customers with the same model, usually territory sales reps) are relics of the past in distribution. Current models feature a portfolio of roles, including territory sales reps, inside sales account managers, key account managers and digital account reps. While no role is considered to be “better” than another, roles differ in competencies and productivity expectations and succeed when deployed to a specific customer type. An example sales service level model may resemble the following:

Horvath Part 3 Image 1

Service levels also apply to marketing resources. Digital marketing or account-based marketing can be used to push standard materials to the broader market, but distributors can dedicate senior marketing resources to customize materials and value propositions for highly valued customers. Additionally, lead generation resources can be aligned to the marketing function and are typically deployed to growth or key accounts only.

Also see: “Why You Should Consider Differentiated Service Levels to Grow Margin.”

Appropriately segmenting customers and aligning sales and marketing service levels help to maximize growth (by matching customer needs to role competencies) and manage overall cost to serve.

Technical & Customer Support Service Levels

Similar to the sales and marketing example, technical and customer support functions are competitive differentiators but come at a cost. The responsibilities under the “technical” umbrella differ across distribution segments. Chemical distributors deploy specialists to help create proprietary blends. Industrial distributors assign automation specialists with engineering skills. Distributors across segments offer technical resources to help install and integrate complex systems. Whatever the work entails, these resources often function as overlays and increase the cost to support customers.

The customer support function encompasses typical post-sales activities – order entry and tracking, issue resolution and remote support. The main distinction between customer support service levels is whether support is “paired” or “shared.” In a paired model, a customer has an assigned customer support contact(s) that acts in a concierge or white glove capacity. In the shared model, customers call in to (or digitally interact with) a pool or resources, similar to most B2C models. Typical technical and customer support models resemble the following:

Horvath Part 3 Image 2

Technology & Tools Service Levels

Another service level category that differs by end market is technology and tools. Depending on the customer, distributors can differentiate by offering digital engagement and e-commerce tools to automate ordering or data sharing. Supply chain tools also fit into this bucket ― distributors can offer customized packaging or free samples to customers. Distributors can also provide certification to customers or dealers to be able to sell certain brands or products.

Service level differentiation for digital tools is a contentious issue. One argument for providing digital commerce avenues is that it lowers cost to serve and is easy for customers to use (depending on the tool). The counter argument is that if the wrong customers are pushed onto the e-commerce platform, the relationship might become overly transactional, reduce stickiness with the sales organization or allow for cherry picking of products.

The universe of technology and tools available to distributors is rapidly expanding; the following list includes typical offerings.

Horvath Part 3 Image 3

Distributors grow at above-market rates when they effectively align support service levels to customer segments. Commercial teams should consider buyer needs, growth potential, ROI and strength of partnership when allocating limited support resources and tools across the customer universe.

Part four of this series will cover terms & pricing — differentiating the payment terms, shipping practices and pricing agreements.

Andrew Horvath is a principal at the Alexander Group, a management consulting firm specializing in revenue growth. He leads the Distribution practice, monitoring trends and creating strategies to help growth-focused organizations stay on top of a rapidly changing market. 

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