October 1998

Closing The Broken Sales Loop: Increasing Revenue Through Strategic Partnering

BY LORI E. CARR, SUPPORT CENTER SOLUTIONS

If your business manufactures hardware or publishes software that you do not sell directly, but still handle your customer presales telephone inquiries internally, PLEASE READ ON. You could be losing significant revenues because your sales loop is broken! If you are a typical manufacturer or publisher, your telephone agents handle sales inquiries, then refer the customer to the reseller channel to purchase your product.

Unfortunately, many customers - almost half of them - do not take the next step to purchase your product. If you cannot complete a purchasing transaction for your customer in one "closed-loop" process or from your customers' perspective, one telephone call, your sales loop is broken. You require your customers to take another step or make another call before they can buy your product.

Every telephone inquiry into your call center from a customer who needs product features and benefits information, assistance in making a purchasing decision, or to simply place an order is an opportunity to close a sale on the spot. When you cannot fulfill an order on the first call with skilled sales agents who can process credit card orders, you lose sales - possibly significant sales.

A large New England hardware company that does not sell a product directly, but handles its own telephone sales inquiries, launched a 12-month pilot program and outsourced its Small Office Home Office (SOHO) telephone inquiries to several catalog resellers. The resellers were trained to answer customer questions on the manufacturer's product, assist with appropriate product selection and fulfill the order - all in one call. Almost immediately, this hardware company's closure rate soared from the mid-40s to the mid-60s, which resulted in a significant increase in sales revenue - from the same number of calls. The benefit extended beyond the sales increase when the manufacturer reduced its call center labor budget by 15 percent because the catalog reseller did not charge for the phone calls it handled! How could the company achieve such significant increases in its close rate?

The answer is so simple: it's about "closing the broken sales loop" through fulfilling customer orders in one complete transaction while the customer's interest in buying is high and leveraging savvy sales agents to follow up if the customer does not order on the first call. Through strategic partnerships between hardware and software manufacturers and publishers and the reseller channel, companies effectively close the broken sales loop and increase revenues.

The benefits to "closed-sales-loop" partnerships can be astronomical, especially for the manufacturer's and publisher's customers who enjoy one-stop shopping for their buying needs. Manufacturers and publishers using the "closed-sales-loop" strategy can see significant benefits in many areas. Closure rates increase because customers only need to make one call, and if they receive expert product advice from a friendly and savvy sales agent, the customer buys sooner and more often. Customers do not have to search for a place to purchase; they can order conveniently by phone with a credit card without having to wait in a long queue (some catalog resellers have less than 30-second queue times).

Companies that do not sell direct and opt to implement the "closed-sales-loop" strategy must exercise careful consideration and know that executing such a project is no small task. The hardware manufacturer or software publisher must understand what takes place on their telephone sales inquiries so they can decide if the calls are appropriate to outsource.

Using a four-step process for evaluation and implementation, hardware and software companies should look at the following.

1. Decide which sales calls to outsource. Outsourcing your pre-sales calls to anyone is serious business because your partner's performance impacts your revenues. Companies that align the sales outsourcing effort with their strategic goals are more likely to succeed. For example, if you are embarking on a companywide effort to provide enterprise customer support and you differentiate your product and services with that support, then you may not want to outsource those calls. You may, however, differentiate your medium-sized or SOHO business with low-end product pricing rather than high-end service offerings, so these may be excellent calls to outsource. Regardless of the calls being outsourced, involve staff from all levels of the organization early in the process. Early involvement and communication helps to ensure internal understanding, acceptance and buy-in, which makes the transition easier.
   
   
2. Choose a reseller partner. This is an important task to complete and should be carefully considered. When choosing a partner, consider resellers that have a solid financial history and a strong growth pattern. Align with a partner who has a history of strong market share and sales with your product - they know your product best and are able to sell it to the market. Goals for the partnership must be developed to determine which channel partner is best suited to meet the call-handling needs. Additional items to consider are their philosophy and ability to deliver outstanding support as well as their ability to close sales at a high rate. Ensure that the channel partner has the people, processes and technology to deliver the high standard of performance you expect from the relationship.  Interview several partners and determine if they are providing outsource services for other companies. What results have they achieved with the program? Some catalog resellers are reluctant to disclose such information due to confidentiality agreements, but should be willing to share enough information so you can make an informed decision. Last, channel conflict can be an issue when you begin outsourcing calls and must be fully evaluated before you move forward.
   
   
3. Construct the service level agreement (contract). The service level agreement or contract, which outlines key performance metrics required to deliver world-class service, is a critical piece of outsourcing success. The agreement should serve the best interest of the manufacturer's or software company's customers and include quantifiable metrics for high customer satisfaction, speed of answer, abandonment rates and sales closure rates. Also include metrics for reporting customer data such as name, address, phone, etc. Without this information, manufacturers and publishers may not recoup a return on marketing dollars or be able to measure the effectiveness of individual marketing campaigns, not to mention the replenishment of their own customer database information. All effective agreements include a clearly defined exit strategy should the relationship fail.
   
   
4. Implementing sales outsourcing. The first 90 days of the contract are critical. If due diligence was exercised during the agreement phase, many issues have been anticipated and planned for, but you cannot plan for every scenario. Sales or the operations account managers should be designated to the account to handle issues as they arise. Anticipating and addressing customer issues, communicating with catalog resellers and working as a team to resolve unexpected barriers are essential to the long-term success of the relationship. Weekly conference calls and quarterly review meetings eliminate any surprises and should be mandatory during the implementation phase and beyond. If necessary, hire an outsourcing expert to assist with all four outsource phases outlined above.

The catalog reseller must perform their own due diligence to ensure their ability to meet the agreed-upon contract metrics. Resellers should analyze call volumes, staffing requirements, technology and their profit margin on the product to determine if this is a desirable relationship for them. In most cases, it is not only profitable, but also preferable over not handling the calls at all. Think about this - the channel partner receives the pre-sales telephone inquiry, which means their competitors do not. They obtain customer information, including name, phone numbers and addresses, that can cost catalog companies from $25 to $100 per lead to obtain elsewhere. Last, their revenues increase - and sometimes significantly - depending on the scope of the project and the call volumes expected.

Outsourcing strategic partnerships require careful planning up front by manufacturers and publishers and their channel partners and may not be appropriate for all companies. A solid understanding of what is desired from the relationship on both sides, a clear contract that outlines all metrics and a mutual desire to succeed are key elements for a successful, long-term partnering.

As companies struggle to gain market share, increase sales and revenues and reduce costs, this is one strategy that cares for all three issues and has been successful for some companies. In these strategic alignments, everyone benefits. The customer benefits through one-stop shopping and ease of purchasing. The manufacturer and publisher benefit from increased closure rates, increased revenues and reduced labor costs. Reseller channel benefits include increased market share and revenues, as well as the acquisition of valuable customer data.

Closing the broken sales loop through strategic partnering is a win-win-win for all involved.

Lori E. Carr is the president of Support Center Solutions. The company's consulting services enhance client profitability and market share through strategic outsourcing alliances that provide clients with high-quality, innovative, results-oriented sales support and services.