How We Structure the Sales Channel

At Zend, we sell anything from a certification prep exam at ~$10, through a PHP app server subscription at ~$5,000 and all the way to a 7-digit enterprise deal.There are 5 orders of magnitude between the small recurring deals and the very large enterprise ones.

This calls out for a plurality of sales methods that warrant addressing the following:

• To sustain required margins, the cost of sale must adhere to the ASP and number of transactions;
• The skill-set and sales behavior varies widely between a honed inside-sales rep that makes 50-100 calls a day and an enterprise rep that feels triumphant when meeting a CIO;
• The sales process, marketing efforts, lead gen programs and level of technical support all differ significantly at each level.

So how do we structure the organization to address this almost absurd range?

In essence we break down our selling efforts into different channels based on deal size.

The on-line store is the ultimate stop for the smallest deal sizes ranging from a few $ to a few thousands. This channel represent the highest transaction volume for the company and any man-in-the-loop approach would fail miserably trying to match the efficiency and scale of a fully automated self-service store. Main drivers for this channel are web marketing and social media governed by a healthy doze of analytics. This is a lucrative highly-sought after channel and quite challenging to succeed in building.

The inside sales team is a high-call-volume operation handling deals that are bigger than the ones commonly addressed by the on-line store but are still transactional in nature. These would generally be in the $X,000 range and occasionally higher. The main characteristic is a simple, rapid, repeatable sales process that is pursued remotely. We further split the efforts and recruit talent to create specialization between new accounts and renewals and further split renewals into small and large deal sizes.These high-talent teams need to be constantly fed with a high volume of leads, detailed call scripts and a managed utilizing sales call-center measurement and reporting systems.

The major global enterprises represent a lucrative market segment with the largest opportunities in unit volume and potential bookings. The enterprises are accustomed to purchasing on their terms and according to their playbook and in most cases take their time in making a decision before they spend. This channel is traditionally characterized by aggressive highly-experienced and well-paid enterprise sales execs who regularly take good care of their customers, where wine & dine and golf are common treats. The reality is that most of the work on these deals can be done remotely by an inside enterprise sales team at much lower cost with only occasional face-to-face meetings. This sales channel requires focused relationship management, enterprise sales tools, professional services offerings and the like.   

The partner channel serves as an extension of our sales team into additional territories which are out of our reach and into specialized markets that require domain-expertise that would not be profitable for us to obtain in-house. The target customers often speak a variety of different languages adding more complexity to doing this internally. Supporting the partner needs warrants product training and education, sales tools and technical assistance that often over-arches beyond the tools required by the internal sales force. It is especially evident with partners that carry multiple products and have limited bandwidth.


Some Takeaways
The optimization of sales channel to ASP is a big undertaking and at the same time a sales yield improvement opportunity. Measuring the cost of leads and cost of sales per channel is instrumental to getting this right.

An on-line self-serve e-store provides a huge leverage in sales efficiency and also serves as a lead generation opportunity with customers who have already identified themselves as paying customers. Measuring the yield on this one is somewhat fuzzy when employing multiple sales channels as most on-line efforts serve as both an ingredient in e-store sales and as a funnel activity for selling by reps.

Most open-source and "freemium" companies strive to get to the large deal sizes while at the same time have a low-cost low-barrier-to-entry package thus establishing a challenging ASP range. Managing a multitude of channels implies significant effort and resource allocation, generally defocusing a small organization. More is not better in this case as each sales channel demands the tailored tools, processes and resources from multiple constituents with the company. My take is to work diligently to narrow the ASP spectrum to a small number of discrete price points to allow focus and tune the channel to optimize those.