Sales and Distribution (15.390, Wednesday, Week 10)
new-enterprisesyear-twoBroad options for sales: direct sales, indirect sales, OEM, distributors, retailers, Internet, Freemium ("Children's Crusade" distribution model)
Often use different strategies for different customers: direct sales for large customers and distributors for smaller customers.
Rule of thumb: selling cost should be 10-20% of sales (long term). May be much higher initially...
Remember that the distributor is a channel, not the end customer. The consumer STILL must actually buy your product.
Example: Selling new wetsuits to scuba shops. Purchasing agent for store actually buys the product. But store manager still must pull the product through the channel/convince customer to buy. Need to worry about both of them...
Establishing credibility selling to big customers:
"How many people are in your company? Ten? Olive Garden laughs you out of the building. But they do it with all due politeness, because when you're here, you're family!" -- Howard Anderson
On founding motivations:
"A couple of Wharton students decide that they're going to start their own company. They live in Silicon Valley, and in Silicon Valley you can't meet women if you don't have your own company." -- Howard Anderson