Peter Coy, President Prodigm Inc. & Steve Gilpin, President Centtric Marketing Inc.
Direct marketing and direct sales shouldn’t be viewed as the foe of Agency sales. " Feet on the street" remains an essential part of an integrated channel strategy.
Some products require the expertise of an agent and cannot, or should not, be sold through a direct route. On the other hand, margins may be too low on certain products to make an agent sale effective. An integrated approach, using both agency and direct sales, may offer the best combination of convenience, value and efficiency. Customers can be nurtured, retained and serviced by both a direct sales process and an agent.
When does an agency sale make sense, and when a direct sale?
For a simple self-service product, the direct sales process likely offers the convenience that the customer is looking for. However, when a customer’s needs are more complex, the agent should build the relationship. Moreover, the agent should have the entire customer history at his or her disposal, even if the initial sale was through a direct channel.
Direct sales offer intelligent ways to upgrade existing products.
Direct sales can be used to maintain a customer relationship while the sales agent is busy making new sales. Often, a simple upgrade to an existing product can be handled most effectively through the direct sales process, even if an agent made the initial sale.
Should an agent be able to upsell a direct sales customer?
Absolutely! Should the agent receive credit when one of his or her clients buys direct? Certainly! Obviously, if the direct channel is used, the commission percentage is lower than for an agent-initiated sale, but still of great perceived value to the agent.
Direct sales should be an agent’s best friend.
Direct sales can provide an agent with additional income and incentives, while adding little in the way of service requirements. It can help qualify and refer good prospects, as well as identify upsell opportunities.
For example, an agent could spend several days making a sale that results in a 40% commission on a $1,000 per annum product ($400 per year). In that same time frame, he or she could receive a 10% commission on 40 sales of a $200 per annum self-service product ($800 per year), that involved no agency selling at all.
Advertising helps generate leads for both channels.
In one instance, a key demographic group perceived a company that extensively advertised a direct-marketed product over a number of years on radio and television, as the second largest Insurance Company in Canada. In reality they were much smaller. As direct sales grew for this company, agency sales grew almost exactly in tandem. The name recognition factor and public image helped their agency sales.
Integration is the key to success.
Many major companies are in the process of integrating direct sales with agency sales. Any company that does not adopt this integrated model will miss out on major opportunities to take advantage of the strengths of both channels.
All articles Copyright Prodigm Inc. 2001, 2002, 2003 and 2004.
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