1 00:00:00,598 --> 00:00:04,810 So far, we've taken our business idea, that is Project Management Software for 2 00:00:04,810 --> 00:00:09,250 Small Groups, and broken it down to understand our value proposition and 3 00:00:09,250 --> 00:00:10,920 customer segments. 4 00:00:10,920 --> 00:00:14,050 So we know what we are selling and who we are selling it to. 5 00:00:14,050 --> 00:00:17,080 Now in this section, we are going to 6 00:00:17,080 --> 00:00:21,380 look at how we are going to get our value proposition to our customer segments. 7 00:00:21,380 --> 00:00:24,769 That is, we are going to take a deeper look at our channels. 8 00:00:25,930 --> 00:00:29,399 Channels can be broken down into the following sections, 9 00:00:29,399 --> 00:00:34,630 communication channels, distribution channels and sales channels. 10 00:00:34,630 --> 00:00:38,250 All these channels together serve some really important functions in our 11 00:00:38,250 --> 00:00:39,850 business model. 12 00:00:39,850 --> 00:00:43,350 They help raise awareness about our product or service. 13 00:00:43,350 --> 00:00:47,080 They allow our customers to evaluate our product and arrive at a decision. 14 00:00:47,080 --> 00:00:51,820 They allow our customers to purchase our products or services. 15 00:00:51,820 --> 00:00:55,120 They deliver our value proposition to our customers. 16 00:00:55,120 --> 00:00:59,980 And finally, they provide our customers with support during the evaluation and 17 00:00:59,980 --> 00:01:02,890 purchase process, as well as post purchase. 18 00:01:02,890 --> 00:01:05,380 When we think about the kinds of channels we want, 19 00:01:05,380 --> 00:01:09,440 we need to make sure that our channels hit on all the points I just mentioned. 20 00:01:09,440 --> 00:01:12,080 If we can't deliver on any one of those points, 21 00:01:12,080 --> 00:01:15,730 it leads to a less than optimal experience for our customers. 22 00:01:15,730 --> 00:01:19,090 When choosing our channels, there are two ways we could go. 23 00:01:19,090 --> 00:01:21,600 We could sell directly to our customers. 24 00:01:21,600 --> 00:01:25,780 This is called an owned channel since we are in control of the entire thing. 25 00:01:25,780 --> 00:01:29,760 An owned channel can be direct, where we sell through our own website, or 26 00:01:29,760 --> 00:01:31,160 using a sales staff. 27 00:01:31,160 --> 00:01:35,060 Or it can be indirect, like if we operated retail stores. 28 00:01:35,060 --> 00:01:38,770 It may be odd to think of a company's owned retail stores as indirect. 29 00:01:38,770 --> 00:01:41,730 But since there is technically a middle man between us and 30 00:01:41,730 --> 00:01:44,260 the company making the product, it's considered indirect. 31 00:01:45,460 --> 00:01:47,810 We could get other companies to sell our products or 32 00:01:47,810 --> 00:01:50,020 services through a partner channel. 33 00:01:50,020 --> 00:01:52,170 All partner channels are indirect, and 34 00:01:52,170 --> 00:01:55,380 include things like wholesalers, retailers, or websites. 35 00:01:56,400 --> 00:01:58,800 Partner channels can be easier to manage, 36 00:01:58,800 --> 00:02:01,100 because you don't have to control every little aspect. 37 00:02:01,100 --> 00:02:03,580 But they also lead to lower margins, 38 00:02:03,580 --> 00:02:07,305 since there are lots of people in between you and the customer. 39 00:02:07,305 --> 00:02:10,390 Owned channels have higher margins, but are a lot more involved. 40 00:02:11,410 --> 00:02:15,500 It's easier to understand the type of channel by using examples. 41 00:02:15,500 --> 00:02:17,380 In our example industry, that is, 42 00:02:17,380 --> 00:02:21,730 Project Management Software, one of the companies I like is Asana. 43 00:02:21,730 --> 00:02:24,340 Asana, sells through their own website. 44 00:02:24,340 --> 00:02:27,550 Therefore, Asana sells through an owned channel. 45 00:02:27,550 --> 00:02:30,670 On the other hand if you want to buy a Samsung TV, 46 00:02:30,670 --> 00:02:34,940 you can go into a local electronics store, and find the one you need. 47 00:02:34,940 --> 00:02:39,010 In this case Samsung is selling its products through a partner channel. 48 00:02:39,010 --> 00:02:43,350 This partner channel allows Samsung to expand its reach. 49 00:02:43,350 --> 00:02:46,640 You can also have a combination of both types of channels. 50 00:02:46,640 --> 00:02:50,410 Apple sells it's products through it's website, retail store and 51 00:02:50,410 --> 00:02:52,860 sales force under it's own channel. 52 00:02:52,860 --> 00:02:55,060 They also partner with stores like Best Buy and 53 00:02:55,060 --> 00:02:57,980 Target in the US to sell through indirect channels. 54 00:02:59,440 --> 00:03:04,320 There are advantages and disadvantages to the strategy you pick, so choose wisely. 55 00:03:04,320 --> 00:03:08,340 In our example, when Asana sells its software on its own website, 56 00:03:08,340 --> 00:03:10,530 they get to keep all of the revenue. 57 00:03:10,530 --> 00:03:15,110 This is a characteristic of an owned channel, the margins are higher. 58 00:03:15,110 --> 00:03:18,190 However, because you are in control of the entire channel, 59 00:03:18,190 --> 00:03:19,970 you have to handle all aspects, 60 00:03:19,970 --> 00:03:25,920 including raising awareness, purchase, delivery, and post purchase support. 61 00:03:25,920 --> 00:03:28,750 Samsung, on the other hand, uses a partner channel. 62 00:03:28,750 --> 00:03:31,780 And its partner helps with most of those aspects. 63 00:03:31,780 --> 00:03:35,390 They handle some of the marketing in their cities, they provide the means for 64 00:03:35,390 --> 00:03:37,900 purchase, and offer some support. 65 00:03:37,900 --> 00:03:39,448 However, Samsung pays them for 66 00:03:39,448 --> 00:03:44,280 these services, making the margins a lot lower than if they sold the TV themselves. 67 00:03:44,280 --> 00:03:47,500 Whatever strategy you go with, one of the mistakes you could be 68 00:03:47,500 --> 00:03:51,510 making early on is to overreach on these initial efforts. 69 00:03:51,510 --> 00:03:55,000 Don't try to maximize your sales by hitting every channel. 70 00:03:55,000 --> 00:03:57,450 Until you know which channels works best for 71 00:03:57,450 --> 00:04:02,070 you, you should pick the channel that represents the greatest potential revenue 72 00:04:02,070 --> 00:04:05,250 and focus all of your channel efforts around this. 73 00:04:05,250 --> 00:04:09,830 Also when developing a channel strategy, keep in mind that your revenue model and 74 00:04:09,830 --> 00:04:12,870 pricing scheme are closely tied to the channel. 75 00:04:12,870 --> 00:04:15,830 So you should explore these simultaneously. 76 00:04:15,830 --> 00:04:19,110 When considering among the options of channels, keep these points in mind. 77 00:04:20,320 --> 00:04:23,900 Do your customers already have any expectations regarding your product, or 78 00:04:23,900 --> 00:04:26,040 service, and the channel. 79 00:04:26,040 --> 00:04:29,590 If I wanted to sell an Android app, I could get more by selling it 80 00:04:29,590 --> 00:04:33,420 on an owned store, like my website, and capture higher margins. 81 00:04:33,420 --> 00:04:36,440 But customers are accustomed to buying it on the app store. 82 00:04:37,470 --> 00:04:42,200 I need to keep this in mind when selecting the right channel for my business. 83 00:04:42,200 --> 00:04:46,520 What advantages does a particular channel add to my sales strategy? 84 00:04:46,520 --> 00:04:49,530 How can I balance the cost of these advantages with my bottom line? 85 00:04:50,730 --> 00:04:54,770 Are there any price issues or other complexities regarding a given channel? 86 00:04:56,290 --> 00:04:58,740 When starting out, focus on one channel, and 87 00:04:58,740 --> 00:05:01,720 conduct experiments to determine its success. 88 00:05:01,720 --> 00:05:04,740 We'll talk more about experiments in just a bit. 89 00:05:04,740 --> 00:05:08,110 There's a high chance you won't get your channel right the first time, 90 00:05:08,110 --> 00:05:10,840 or you will have to refine your strategy. 91 00:05:10,840 --> 00:05:11,740 In my example, 92 00:05:11,740 --> 00:05:16,230 since I will be selling software as a service, the choice here is pretty simple. 93 00:05:16,230 --> 00:05:20,690 I will have owned direct channels where I sell straight from my website. 94 00:05:20,690 --> 00:05:24,340 Now I can also use a sales team to handle the larger accounts first, but 95 00:05:24,340 --> 00:05:26,670 that would be spreading myself too thin. 96 00:05:26,670 --> 00:05:29,240 Instead, I am going to focus on the one channel, 97 00:05:29,240 --> 00:05:30,863 until I know its return on investment. 98 00:05:31,890 --> 00:05:37,320 Regardless of the channel I choose, each channel has five distinct components. 99 00:05:37,320 --> 00:05:42,490 Awareness, we need to reach out to our customers and let them known who we are. 100 00:05:42,490 --> 00:05:43,770 Evaluation. 101 00:05:43,770 --> 00:05:47,000 Once they know of us, and end up on our front door, we need to 102 00:05:47,000 --> 00:05:51,390 explain our value proposition to them in a fun, engaging, and informative way. 103 00:05:51,390 --> 00:05:55,130 We need to show them how we solve their problems. 104 00:05:55,130 --> 00:06:00,100 Then, if they're convinced, we need to let them evaluate our product or service. 105 00:06:00,100 --> 00:06:04,610 No one is going to pay for our service without any idea what they're paying for. 106 00:06:04,610 --> 00:06:07,270 They need to play around with the product first. 107 00:06:07,270 --> 00:06:09,292 Let's look at how Asana achieves this goal. 108 00:06:09,292 --> 00:06:10,950 [MUSIC] >> Asana allows my team to collaborate in 109 00:06:10,950 --> 00:06:12,360 a way that they never have before. 110 00:06:12,360 --> 00:06:17,870 At the Sacramento Bee, we use Asana at the same speed as a Word document. 111 00:06:17,870 --> 00:06:20,590 We're able to push tasks into the system quickly. 112 00:06:20,590 --> 00:06:23,340 If a team member can, they will jump right on it. 113 00:06:23,340 --> 00:06:26,160 If not, then they can push that over to another individual. 114 00:06:26,160 --> 00:06:27,300 So it gets me out of the middle. 115 00:06:29,410 --> 00:06:32,890 >> Purchase, our channel should also make it very easy for 116 00:06:32,890 --> 00:06:36,820 a customer to purchase the product, once they have made their decision. 117 00:06:36,820 --> 00:06:40,000 For our product, since we're selling it through the web site. 118 00:06:40,000 --> 00:06:41,790 We're going to create the product, so 119 00:06:41,790 --> 00:06:44,350 that it easily flows from an evaluation, to purchase. 120 00:06:45,680 --> 00:06:48,030 The next step in our channel is delivery. 121 00:06:48,030 --> 00:06:51,570 We need to deliver our value proposition to our customers. 122 00:06:51,570 --> 00:06:54,330 This can mean different things in different industries. 123 00:06:54,330 --> 00:06:57,490 From physical delivery of the product to your customers, or 124 00:06:57,490 --> 00:07:01,580 a well executed flow from purchase back into the product. 125 00:07:01,580 --> 00:07:04,410 Each step in the channel should be carefully considered, 126 00:07:04,410 --> 00:07:06,909 because it is a chance to delight our customers. 127 00:07:08,080 --> 00:07:11,640 After the product has been purchased, our job doesn't end there. 128 00:07:11,640 --> 00:07:14,990 Offering post purchase support is a critical component in 129 00:07:14,990 --> 00:07:17,950 keeping customers happy and back for more. 130 00:07:17,950 --> 00:07:19,730 Our channel should offer means for 131 00:07:19,730 --> 00:07:23,400 post purchase support to take care of our customers with any concerns they have. 132 00:07:24,540 --> 00:07:25,890 As I mentioned earlier, 133 00:07:25,890 --> 00:07:29,650 I'm going to offer my service through a website, an owned channel. 134 00:07:29,650 --> 00:07:33,100 Similar to how Asana did it, I'm going to display an intro video to 135 00:07:33,100 --> 00:07:37,300 quickly highlight to potential customers their existing pain points, 136 00:07:37,300 --> 00:07:41,790 how I'm going to solve their problems, and show a quick demo of the product. 137 00:07:41,790 --> 00:07:45,710 Once the video ends, I will move them straight into the evaluation phase, 138 00:07:45,710 --> 00:07:48,220 by allowing them to play around in a sample project. 139 00:07:49,410 --> 00:07:53,580 Each stage in a channel has its own strategies, so it's very important to pick 140 00:07:53,580 --> 00:07:57,840 a channel and focus on the strategies that will bring you the most benefit. 141 00:07:57,840 --> 00:08:00,620 For example, in my chosen channel, one of the ways we 142 00:08:00,620 --> 00:08:05,820 can increase acquisition rates, is via a free to paid evaluation strategy. 143 00:08:05,820 --> 00:08:10,130 This can help accelerate adoption at a very low cost, but it makes it harder for 144 00:08:10,130 --> 00:08:13,280 me to determine who my actual paying customers are. 145 00:08:13,280 --> 00:08:16,170 Now these nuances are specific to each strategy, so 146 00:08:16,170 --> 00:08:20,130 it is best not to spread yourself too thin by targeting multiple channels. 147 00:08:20,130 --> 00:08:23,300 We will get into more of these strategies later on in the course. 148 00:08:24,330 --> 00:08:27,440 Your channel is the main point of communication between you and 149 00:08:27,440 --> 00:08:31,700 your customer, and you need to make sure you have all your bases covered. 150 00:08:31,700 --> 00:08:33,190 Let's recap. 151 00:08:33,190 --> 00:08:36,740 Channels cover three very important aspects of our business, 152 00:08:36,740 --> 00:08:40,090 communication, distribution, and sales. 153 00:08:40,090 --> 00:08:43,770 There are two types of channels, owned or partner channels. 154 00:08:43,770 --> 00:08:47,470 Owned channels have higher margins, but are harder to manage. 155 00:08:47,470 --> 00:08:52,960 Partner channels have lower margins, but allow easy distribution and greater reach. 156 00:08:52,960 --> 00:08:57,850 In addition, owned channels can be broken down into direct and indirect. 157 00:08:57,850 --> 00:09:02,372 However, all partner channels are, by their nature, indirect. 158 00:09:02,372 --> 00:09:07,480 Regardless of type of channel you choose, all channels have five main stages. 159 00:09:07,480 --> 00:09:11,360 It is crucial that you think through your approach for each stage. 160 00:09:11,360 --> 00:09:16,880 Awareness, evaluation, purchase, delivery, and post purchase. 161 00:09:16,880 --> 00:09:18,400 Now, on to our next section.