Insight

How to optimize routes-to-market for faster COVID-19 recovery

Balancing indirect-direct sales focus can lead to more sustainable go-to-market actions

Jorgen Ericsson

Jorgen Ericsson

Principal, TMT Strategy, KPMG US

+1 408-367-1529

Per Edin

Per Edin

Principal, TMT Strategy, KPMG US

+1 408-367-6080

Tucker Serenbetz

Tucker Serenbetz

Director, Corporate Strategy, KPMG US

+1 415-963-7998

Peter Kuck

Peter Kuck

Director, TMT Strategy, KPMG US

+1 571-389-4238

Technology companies face a storm on many fronts today: demand has dropped significantly, customers have turned extremely cautious, and both recovery timelines and trajectories remain uncertain. But the COVID-19 turmoil also presents a unique opportunity to holistically reevaluate the route-to-market (RTM) mix underpinning a company’s growth strategy and to take quick, decisive actions that can accelerate its emergence from the recession.

The current disruption presents several core challenges for go-to-market (GTM) teams, including maintaining profitability through cost reduction and protecting pricing in the face of near-term pressure to push sales even at suboptimal prices. In light of the shifting reality, companies need to reevaluate where they play, how they win, and how these and customer behaviors may change, post-disruption.

But equally urgent is supporting segments of the distribution channel and customer base that have lower resiliency to withstand the prolonged impacts of the COVID-19 disruption. In our new report, Optimizing routes-to-market to accelerate COVID-19 recovery, we discuss how companies can extend triage support to targeted customers and partners, and how companies can optimize the whole RTM approach to position themselves for the new reality following the COVID-19 recession.

Targeted triage

A rapid triage process provides targeted support to improve partners and customers financial health—to help them through a difficult time and strengthen relationships. Companies may want to use a high-touch approach with high-priority partners and a less involved “keep the lights on” approach for others. Speed is of the essence, as customers and partners may be on the verge of default or collapse.

Triage activities may include:

  • Extension of customer and partner payment terms
  • Operational resources (e.g., remote collaboration tools)
  • Increased co-investment in partners’ GTM personnel, collateral and activities
  • Expanded coordination and personalized support for partners and customers
  • Extending partner certification, competency and specialization requirement dates
  • Providing market and white space data to partners

A key enabler of triage and recovery success may be increased data sharing. As suppliers provide additional support and resources to partners during the triage initiative, they can gain deeper visibility into a share of wallet metrics, partner health indicators, and sell-out pricing detail. Suppliers can also gather insights on feature adoption/usage, customer health indicators, and enablement needs across their customer and partner bases.

RTM assessment

Following triage and preparing for a prolonged recession, companies should holistically re-assess and enhance their RTM mix. Times of disruption provides a unique opportunity for tech companies to step back and use a data-driven method to determine the right combination of direct and indirect sales channels.  

The RTM assessment should be conducted in tandem with the overall review of the growth strategy and forecasts required by the COVID-19 economic disruption. Augmented forecasting approaches should involve a segmented evaluation of market and customer sensitivity and opportunity, churn patterns and risks, and what-if scenario-based revenue plans. A data and analytics-driven evaluation of the customer landscape should inform a corresponding assessment of the new serviceable needs and opportunities that may shift product and offering decisions, customer support mechanisms, and GTM focus areas and buying centers.

Once growth strategy and forecasts are refreshed, companies should determine the optimal RTM mix to achieve their updated targets with advanced analytics. In many cases, the optimal channel may be a purely partner-led action, with robust enablement mechanisms as well as automated and self-service capabilities. A direct-led approach may better serve other markets and customer segments. In either case, thoughtful analysis of past performance, current dynamics, and strategic potential is necessary to find the right balance to optimize GTM efficiency and effectiveness.

While the cost elements for direct and indirect channels vary, a thorough analysis of relative performance and fully-burdened ROI of each channel is critical in determining the most efficient and effective mix in each market and segment. The analysis starts with a detailed breakdown of associated cost drivers (directly attributable and indirectly supporting) to compare relative revenue and margin performance. These factors include discounting patterns, contra-revenue expenses, rebates, support and sales resource costs, programmatic expenditures, and any other elements. Analyze this data for priority markets and segments first while balancing the relative effort with efficiency improvement potential to identify the most significant opportunity areas for optimization quickly.

Conclusion

In our paper, we stress that a full RTM optimization can offer a powerful competitive advantage, enabling companies to scale efficiently and free up capital to invest in growth and innovation. This competitive advantage can be even more important during a downturn, when companies that can make strategic bets and invest in growth can leapfrog companies that only play defense.

Additional KPMG COVID-19 materials are available on our COVID-19 resource page.