Buy Lines: Why vendors need channel sales
- By Steve Charles
- Jun 22, 2005
In the world of commercial commerce, "channel" refers to the path a product travels to market, beginning with the manufacturer and ending with the consumer. Channel systems typically are hierarchical, starting with wholesalers, which sell to retailers, which sell to customers.
Metaphorically, these channels, or manufacturer distribution models, are like an irrigation system. Tapping into the river is an irrigation canal. Branching off from the main canal are successively smaller branches that distribute water throughout the land. In this view, the public sector is served by one branch of the manufacturer's channel system. Other branches serve markets such as banking, insurance or manufacturing.
Here in the federal market, where the government is ultimately the customer, we emphasize the "buy" side rather than the "sell" side, a supply-chain model rather than a distribution model.
In this model, it is the government that leads. It sits at the center of this ecosystem, supplied by multiple separate irrigation systems ? its prime contractors, subcontractors, suppliers, consultants and manufacturers, each able to provide unique expertise and service, each with its own profit model, each with its own ambitions for the future.
To manufacturers outside this supply-chain watershed, reaching the government customer, which owns a mission and a budget, seems much more complicated in contrast to reaching agencies' private sector counterparts. Here in the federal market, the real customer often is insulated from the marketplace by many layers of management, contractors, consultants, influencers, contracting officers and even auditors ? few of whom can articulate what is needed at functional levels.
With this government-centric view of the world, is it any wonder that government executives are disinclined to listen to pitches from dozens of manufacturers introduced by high-paid lobbyists who seem to have no idea what goes on in their organization? It doesn't matter how cool the technology may sound if the executives can't see how it relates to what's on their plate at the moment. It's much more effective, these executives say, to have government program managers simply define the requirements, advertise them to the world, and let agencies' prime contractors propose a solution.
Manufacturers respond by trying to develop relationships with prime contractors in the hope that they will push their technology into the government. But the primes want to know where the government has a requirement for the technology. Without a concrete requirement, they can't justify investing the time and training to learn about the technology. Bring them an opportunity, then they'll talk to you about developing a relationship.
What this illustrates is the need for specialized sales and channel representation activities that the manufacturer, a trusted partner or both must perform in order for government buyers to understand the capabilities of the latest commercial technology that corporations and other governments are adopting successfully. These educational, promotional, relationship-building activities need significant investment and management by someone accountable to the manufacturer, or they simply won't get done.
In my world of working with commercial enterprise technology developers, the complex network of partners in the public sector brings manufacturers face to face with unique channel and partnering issues not encountered in the private sector. For manufacturers outside the established channels, the situation presents a challenge, an opportunity and a hard question: How can I build programs that will let me show these partners how long it will take and how much they will make by investing in the services needed to bring my products to market?
Steve Charles is cofounder of immixGroup, a government business-consulting firm in McLean, Va. Steve welcomes your comments at Steve_Charles@immixgroup.com.
For the past two decades Mr. Charles has helped hundreds of technology manufacturers succeed in the government marketplace. His breadth and depth of expertise on every dimension of the government technology ecosystem provide technology manufacturers with a strategy and clear focus for the greatest success. Mr. Charles is adept at mapping technology product lifecycles and revenue models with appropriate channel and contract vehicle strategies in light of current procurement law, regulations and policy. He receives glowing reviews from the training workshops he facilitates to help sales teams understand the sales tactics needed to address each step in the government acquisition process. Mr. Charles is actively involved in government-industry associations including TechAmerica, ACT-IAC, Coalition for Government Procurement, and the National Contract Management Association. He meets regularly with leaders in government and industry to increase understanding and positive action. Mr. Charles co-authored The Inside Guide to the Federal IT Market, a how-to book for technology companies selling to the government. He is regular contributor to Washington Technology.