Mark Mitchell’s consulting service for building products manufactures doesn’t come cheap. Expect to pay $20,000 to get started. But I don’t qualify for his services — I’m not a building products manufacturer — and he (rightfully) appreciates that manufacturers do enough volume that a really skilled marketing consultant probably is worth that retainer level. (I also appreciate the up-front pricing in his blog.)
He has produced this info-graphic,showing the channels from manufacturing source to end-client. It is an eye-opener, though not surprising.
Rightfully, Mitchell asserts there are three classes of end-users in the residential market: New home buyers, repair/remodel and do it yourself. He doesn’t cover in the info-graphic the ICI market, with its own dynamics, where architects and designers (along with project owners) have key roles in the specifications process, resulting in later orders from distributors/dealers and contractors — who need to follow the specifications. The routes from source to end-client vary but involve differing levels of “stages” and complexity. It can be a challenge to figure out which route is best to go, and where the most profitable and lucrative markets can be discovered.
Salespeople generally only focus in the first stage of the relevant channel. I expect that in some cases they fail to see the return-on-investment by looking further down the supply chain channel, and therefore lose the opportunity to really boost sales and relationships. Of course, they can be constrained by immediate “ROI” and sales quota demands. Great sales people are also marketers, and see down the supply chain, focusing their efforts accordingly.
Here is an example from our own business, which might explain the process a bit.
One of our sales representatives, shortly after joining the organization, suggested we spend some time building relationships with relevant economic development officers (EDOs) in different municipalities and regions. He rightfully deduced that these officers both want to promote building and development in their communities, and know their local movers and shakers. As well, they have their own marketing budgets.
We have published several successful community features from these relationships. The features have been successful in drawing calls and inquiries, resulting in profitable repeat business. The EDOs indeed know their communities’ major contractors and developers, and through these relationships, we’ve produced several relevant profiles. Our relationships have now extended to the relevant provincial and national economic development associations.
(I need to analyze our percentage/source of revenue from EDO-related features, to get a better understanding of their relative value to our business, but I know it is substantial.)
My second example arises from the late Walt Hailey, who really discovered the channel concept in selling insurance products. First, however, he started out by selling flour through retail grocers in Texas. Rather than pitching the flour to the grocers, he arranged with them to have a musical show (this is many years ago, I don’t think it would work so well now) with a jig band. People came to the store to watch the show, and then walked to the cashiers with sacks of flour.
Later, once he moved to the insurance business, and experienced painful rejection, he decided to create a special insurance product for grocers and located his agency physically within a grocery wholesaler’s plant. Grocers could order their food products — and insurance — at one stop. Business boomed, because Hailey had discovered exactly the right place to fit his services within the marketing channel.
Key advice here:
- Look beyond your immediate clients to the ultimate end-users. Think about how the intermediaries and influencers decide things.
- Consider the importance of influencers: These could be community leaders, key clients (for other things), family, friend, professional experts, consultants and the like.
- Think broader, deeper, and further down the channel if you want to really caputure your market — and, if you can, seek a way to introude it into a place within the channel where it is natural, easy and influential.
Yes, this stuff can seem complicated, when you need to make sales and generate revenue TODAY. However thoughtful development of marketing channel perspectives can result in reasonably rapid sales, with sustainable and expanding relationships, creating the value along the supply chain that you really need to achieve.