Business Strategy

Route-to-market strategy, getting it right

In the final part of this three-part series, Growth Hub advisor Bob Dackiw concludes his look at the essential elements for a successful route-to-market strategy.

Missed a bit? Start at part one or go back to part two

Route-to-market is a strategy that determines which distribution channels you use to deliver a product to your target customers. It’s a strategy that companies use when they want to achieve a specific business objective or accelerate growth in a given market.

Following on from my last blog, I’ll now look at the final five essentials to a successful route-to-market, which centre upon the importance of channel integration, innovation and fit.

1. Getting channel cooperation is more important than preventing channel conflict

A company succeeds not by separating channels, but by bringing them together in order to produce maximum revenue and profit growth. 

In many situations channel conflict, or overlap, is not a bad thing as it means that a company is covering the marketplace and ensuring all sales potential is being captured. If channels don’t overlap in some way, then it could mean you have insufficient coverage.

2. Total channel provision is not financially viable to each customer

To achieve the right route-to-market strategy, the philosophy is to allocate the right channels, to the right customers, for the right reasons.

Not every customer can be provided with every channel – unless the supplier is intent on going out of business. Likewise, the cost associated with using premium channels in markets of low profitability and customer importance is simply not economically viable.

Instead, make sure that all customers are satisfied with the channel(s) they prefer – which keeps costs down – whilst also making certain that your best customers receive special treatment.

3. A successful route-to-market strategy must have a sound business model

Channel innovation cannot save an organisation if its basic business strategy is flawed.

4. The productivity of new channels takes time

In order for a successful route-to-market strategy to succeed, it needs to be given sufficient time. A good indication is normally 6-18 months.

  • Strategy development – understanding which markets to develop (1-3 months)
  • Channel planning and design – as well as implementing the channels (such as setting up a telesales centres), someone will need to be assigned and possibly trained to manage them as well (1-3 months)
  • Implementation – channels need to be built and made effective (4-12 months.)

It normally takes 10-15 years to develop a successful sales force - investing in a six-month programme to develop a successful route-to-market strategy is small in comparison, especially given the potentially profitable results that can be achieved.

5. A successful route-to-market strategy must be innovative and different

To be winners in the markets of the future, companies need to be innovative and different in their approach to route-to-market. They need to utilise channels and approaches differently than those that are currently available on the basis that today’s unique route-to-market channel, is tomorrow’s standard offering.

To give customers added value, and increase profitability, the company must explore channels that are accepted by their customers, but also give them an offer that is unique from their competitors – these are ‘out of the box’ channel solutions.

This is true of the Manchester business Glazing Systems & Installations, which is offering new technology into a market that has traditionally used fabricated sheets, and low-quality materials.  Instead, they provide products based on high-quality polycarbonate sheet, which they use to install shelters, carports and verandas for domestic and commercial customers.

They had success based on a cost model but needed to up sell and define their USPs and target market. They also wanted to develop a sales strategy, based on account and time management, to improve their market penetration.

The business needed support identifying how efficient and effective they were compared to their competitors, and how to offer something different.

I carried out a diagnostic and strategic review on their existing route-to-market. This allowed them to expand their operational capacity, develop new sales and markets, and improve the efficiency of the operations by reducing the workloads on the senior management team.

Specifically, the company has now developed a focused sales strategy around the Velux products it stocks, and branding for its unique service software, which is helping to differentiate the business.

They also improved service levels and quality of operation as integral to attracting high-end clients, and now offer guidance on quality management for those clients that require ISO accreditation, too. The results have been astounding, with sales growing from £180,000 in 2014, to £1.2 million by December 2016. Eight new members of staff have also been taken on.

So in short, putting together an effective route-to-market strategy allows a company to develop it:

  • Gives the business a strong customer focus
  • Aligns strategic goals and value offerings, which can then be supported operational capabilities
  • Balances customer needs with revenue growth and profitability.
  • And finally, gives the business the flexibility to adapt to changing strategic goals and competitive threats.

I hope you’ve found this series useful and now have a better understanding of how to develop your own route-to-market strategy.

If you have any queries, don’t hesitate to get in touch through Enquire & Grow.

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Bob Dackiw

Bob Dackiw, Business Growth Advisor

Bob has a proven track record of helping both new start and growing businesses, as well as turning round failing organisations. He’s also developed two of his own companies and is familiar with the challenges of running a business. He has senior management experience working with blue chip companies, where he has developed strong influencing skills. Bob can confidently interact with people at all levels, from boardrooms to the shop floors.

He’s also developed two of his own companies and is familiar with the challenges of running a business. He has senior management experience working with blue chip companies, where he has developed strong influencing skills. Bob can confidently interact with people at all levels, from boardrooms to the shop floors.