We recently sat down with V. Kasturi Rangan, the faculty chair behind the Managing Sales Teams and Distribution Channels program at Harvard Business School (HBS) Executive Education. In this interview, he describes how this program helps participants optimize their sales team and channel management for better performance.
How would you summarize the program's content and focus?
The main theme of the program is how to go to market to achieve the best sales outcomes possible. When we go to market, we have two key functions to consider: sales force management and channel management. As sales leaders, we have to use our salespeople effectively, and we have to determine the kinds of channels to go into—whether that's a digital channel, an indirect channel, or a direct sales force channel—as well as how to manage the salesforce within those channels. The main question we want to answer is: How are we going to go to market using these two key functions to achieve high performance?
We're also going to talk about what happens after a company has developed its big-picture branding strategy and value proposition. Take Starbucks, for example. After developing great coffee, Starbucks has to think about issues such as: Where to locate outlets? How to franchise them? When to own them? How to achieve transactions in the store? How to compensate people? What is the appropriate level of distribution?
Distribution is hard to change. Once you hire or get external contracts into place, changing them can take a lot of time. This makes a lot of firms feel stuck. In this program, we'll show you how to evolve and keep up with the changes in the marketplace; how to design and manage a multichannel structure; how to recruit, supervise, motivate, and compensate a salesforce; and how to apply a sales channel strategy for the future.
What are some of the key themes covered in the program?
We'll start by looking at the sales strategy framework and how different elements of this framework drive sales outcomes. We'll look at the outcomes that different firms want to achieve. For a startup, that might just be about getting a good sale. For an established company, it might be about the quality of the sales or sales management. For other companies, it might be about the number of customers or the caliber of the customers. Then we'll look into the sales strategy elements in detail: how to evaluate, manage, and compensate your salesforce to stimulate behavior that leads to an ideal outcome.
We'll also map what the distribution and sales territories look like and then play out a strategy, building and editing what we do. We will discuss channel stewardship—how to create value for customers and channel partners—and how to manage vertical channel conflict. For example, we'll talk about how to deal with market giants like Walmart or Amazon if you're a smaller player (or even a big player) who needs them, yet can't afford the price squeeze they will place on you. And since the internet provides multiple ways of distributing a product, we will explore questions such as: How do you manage multiple channels? How do you price a product? How do you brand it? These are the nitty-gritty questions of sales and distribution.
What does the "building and editing" process look like in this program? Do you have specific exercises planned?
Yes. Participants will complete a simulation in which they'll design a channel of distribution based on various combinations of data inputs. As a participant, you can design a channel of distribution that goes from producer to wholesaler to retailer to customer. Or you can design a distribution channel that goes directly from the producer to the retailer, or some combination in between. We'll give you feedback on the various costs of doing business in different ways, review their effectiveness, and discuss the trade-offs involved.
How does today's digital world fit into this program?
We will look at how you can take advantage of new channels that have opened up—whether through the internet or mobile apps or other technologies—that allow you to better serve your customers, increase your revenue, and reduce your costs. We will also examine how to use direct channels to collect information that enables better customer service.
Obviously, technology has improved to the point where we can literally track everything that a salesperson does, such as how many calls they make in a day. And artificial intelligence and machine learning are starting to handle more of the lead generation for companies. But at the end of the day, the human element is still critical. You still have to go into the field and see whether the numbers are true.
Who is right for this program?
The program benefits managers and directors who are directly or indirectly involved in sales and work for a company with an established sales force. For example, it would be useful for a regional sales manager, key account manager, or vice president of sales, marketing, distributive management, or trade marketing channels. We also think it would benefit a human resources director, because they’re typically responsible for working with sales managers or directors to create compensation plans or recruiting strategies.
In general, we want participants to have some kind of supervisory role. It's not for frontline salespeople or for someone who manages strategy from 30,000 feet. It's for someone who manages distributors and a reasonably sized sales force. We also encourage teams, so we can bring together people who view sales from different angles. For example, it can be useful to bring together the pricing folks who work in the back room with the sales and distribution managers who work in the field.
Are there certain industries that would especially benefit from this program due to the degree of change they're experiencing?
The consumer durables industry is going through a phenomenal period of change. Previously, if a consumer wanted to buy a washing machine, they would go to Sears to buy it—and at the same time sign a service contract with Sears. Now you can buy a washing machine direct but then take it to a different outlet to get service and use another outlet for its disposal. Automobiles, which also have a complex set of attributes, have gone through a similar evolution. For these kinds of products, the channel of distribution is diverging from tradition and presenting all kinds of challenges to incumbents, but also opportunities to new entrants.
Does it matter whether you come from a firm that's considered an incumbent, a newcomer, or a disrupter?
This program would be especially valuable for people from incumbent firms. We often hear incumbents say, "I have all of these stores and assets on the ground, and I'm losing market share like crazy, but my boss keeps saying, 'Get sales.' How can I get that done?" Management is still pushing for illusory sales growth. And we say, you can't change overnight—and it's going to be hard work—but there are ways to be more flexible and make evolutionary adjustments to keep moving forward.
If you're from a startup or considered a newcomer, you can benefit from learning about new ways of designing sales and distribution systems. We'll show you how to start with the customer and essentially work backwards from the value proposition to design a structure. It's a great opportunity to start with a clean slate.
How does this program compare to the Aligning Strategy and Sales program?
Aligning Strategy and Sales is for people who design the strategy for their company. That program aims to show you how to organize sales activities so they're aligned with a corporate strategy. In our program, we assume that all the big strategy work has been done and handed down, and it's our responsibility to get the job done through sales and distribution. We might consider a scenario such as: I am meeting with Walmart tomorrow about my product, and I know they're going to squeeze me on the price. But I need them. How do I manage this? How do I keep them in check? How do I negotiate with them? We try to sort out these conflicts in vertical and horizontal channels. Our course is more for the operating, marketing, sales, or distribution manager.