The Startup Playbook, 2nd Edition

Chapter 27Sales and Distribution Strategy

When we started Viewlogic Systems, we knew we needed a direct sales force. That is, a group of salespeople who interacted with the customer on a one-to-one basis and usually face-to-face. To me (Will), this made a lot of sense. After all, it's how all our competition sold their products, and it seemed like it was the way that purchasing agents in the large companies that made up our market were accustomed to buying. So, we went with what we knew and had worked in the past.

And it worked well for us. Still, it didn't always feel right. One of our differentiators was price, and direct salesforces cost a lot. There are more people involved, and there are usually high associated traveling expenses. So, as we became more established and started to take the market lead in several areas, we added new channels. Tele-sales (sales over the phone and now often called inside sales); original equipment manufacturer (OEM) sales (other companies including our product with theirs); indirect sales (an external sales force selling our product, often with complimentary products); and reference sales (providing a commission to someone outside the company for referring a potential customer).

We didn't add them all at once and never sold all our products through all the channels. It would have been a mess. As it was, it took a lot of energy to sync up the channels and avoid overlap. Commissions for the salesforce (the compensation to the sales force based ...