Defining Distribution Opportunities
Ask various groups within an organization, and you will get different answers: "I am not sure" from the new hires, to the general, "They grow the business." Only rarely will you hear, "They create distribution channels to help sell product." The last, of course, is the most correct.
Even creating distribution channels can have different meanings to different people and internal groups. If you ask a marketing person how to create a distribution channel to sell a product, he will give you a different answer than someone in sales. Many times, even groups within groups will have a difference of opinion.
Thus, defining what are valuable distribution opportunities for your business is critical. Once defined, the task is to effectively target partnerships based on your criteria.
How many times have we heard in the news lately that company X folded because of a poor business decision -- from pouring too much money, too quickly, down the drain? More alarming is that this is becoming more common each day. In many cases, too much emphasis has been placed on who the branding partner is, and very little emphasis is placed on what type of traffic the deal will create.
Establishing strong lines of communication between your business development and marketing departments is essential. These two groups can work effectively together to identify key drivers such as current site demographics, customer buying patterns and new distribution channels -- all of which eventually contribute to the bottom line.
Once a solid relationship between these groups has developed and the target goals have been identified, it is up to your business development group to take the reins and identify, structure and close the deals.
How should business development create its target list? Two great industry resources are Web traffic measurement firms Media Metrix and Nielsen//NetRatings. Between these two services, business development should have enough information at its disposal to identify sites that at least look good on paper. Also, picking the top 100 and dividing them by category within the group works well. Each team member then has the opportunity to contribute to the company and champion his own field of interest.
But business development can fall into the trap of becoming star-struck when dealing with some of the large players. It is important to remember that the goal of each deal is to structure it to reduce a company's normal acquisition costs.
A good way of measuring the success of each deal is to have two measurable acquisition costs between the business development and marketing teams. A competition between the groups for who can achieve the lowest cost can be an interesting company dynamic.
Once business development has identified the players, it is on to the sales aspect of the job. This is where it gets fun.
The most potent arrow in business development's quiver is flexibility. Each deal, large and small, often requires involvement by multiple groups within the company. In some instances, the deal is so large that every group within the organization contributes in some way.
So, with all of this flexibility, what is the best way to structure a business development deal? The possibilities are endless and are limited only by the creativity of your group. Be open to new ideas and revenue models. Just because you have structured 50 deals one way does not mean the 51st cannot be different.
It is critical for business development success to think outside the box and keep your target partners goals closely in mind. Are they seeking revenues, database growth, audience growth or other objectives? Ultimately, success depends on finding the commonalities between your goals and theirs
Also, always remember to involve your finance and legal staffs as appropriate. While it is rare that partnerships break down, clear structuring of the deal up front helps avoid conflicts and other challenges down the road.
Business development is an integral part of any customer acquisition business operation. Internal groups that work together with the business development team, especially your marketing department, can create a powerful combination when targeting, negotiating and closing deals. The key is to infuse creativity, innovation and business savvy to ensure all of your deals meet your goals and those of your partners.
•Tim Choate is chairman/CEO of online direct marketing network FreeShop.com Inc., Seattle. Reach him at Timc@freeshop.com.