Retail Channel Management

On the road to Chubbies >$100M exit, a mistake I made was thinking DTC was our most profitable channel. 5 lessons & 1 Action: Lesson 1: DTC isn't really DTC Early on, we thought DTC was the future. It's DIRECT to consumer, after all I was wrong As Facebook acquisition costs worsened over time, we learned DTC is a misnomer Beholden to an algo we have no control over, a more fitting acronym is DTZBA: Direct to Zuckerberg's Bank Account Lesson 2: DTC Has Benefits, but The Favorable Economics of the Good Ol' Days Are Gone: CAC was a fraction of today You could actually reach most of your social following Shipping, 3PL labor, Shopify and Klaviyo were cheaper Free shipping/returns weren't standard etc If you're spending the vast majority of your ad dollars on DR measured on 1d click, solid chance adding disciplined wholesale can generate accretive incremental contribution $$, assuming you're willing to invest in brand Lesson 3: Under-Appreciated Additional Benefits of Wholesale Predictability in CAC: the margin hit you take from retail partners, while large, does not have the volatility of DR, and certainly hasn't 2, 3 or 4x'd like Meta. Forecasting gets a bit easier Access Massive TAM: Wholesale = 7-10x larger than Shopify Diversification of Cashflow Streams: adds resilience, downside protection. A growth story for investors/acquirers Higher Quality Brand Building: Physical products = wearable billboards. The quality of the impression is 1000x more impactful than an IG ad. Fuels DTC too. You look bigger & more legit when in a great retailer Lesson 4: Avoid Hell on Earth: Get your ops house in order Inventory Mgmt: Make sure that's in a good place. If not, checkout Kyle and Dave's new co. Ensure 3PL can do wholesale: Don't learn on the day 10,000 units are going to 3 retailers, each w diff't EDI rules Negotiate COGS or terms: Rationale for "why now?" is sound since buys are going to start 📈 Lesson 5: Brand Building Drives It All To experience any of these benefits, you've got to reach more people and get them to feel something Classic product/offer/urgency creative has some impact, but it won't maximize the chance someone chooses you when they walk into the store, & it def won't get the retail buyer to bang down your door to carry you You'll see Brand dollars go further here Action: Every brand is different, so here's an action to consider as you make the right call for you Review DTC cost increases since day 1 Incorporate the "risk" costs on your biz like CAC volatility Forecast continued trends. See when economic model breaks Takes multiple years to ramp wholesale, so work back to when you need to start Make a call Takeaways: Right now, few things are more important than finding incremental accretive contribution $ While all channels have pros & cons, adding wholesale could help Experiencing those benefits requires incorporation of broad reach, feeling-driven, net-new demand generation (Brand building)

I‘ve spent many years in the Channel Redesigned Channel Programs for IBM, Lucent & Avaya. Moved partners from transaction to profit by selling ‘solutions.’Today, with the same goal, we’re building ‘productized service portfolios.’   Since 2005, we‘ve expanded our client list: Amelia, CloudCoCo Plc, Deutsche Telekom, Ingram Micro, Microsoft, Motorola Solutions, NTT, O2 (Telefónica UK), Oracle, Xerox...   In 2024, we’re expanding our programs: EMEA Copilot Readiness, WW Onboarding Acceleration, Sales Journey Assessments (Secret Shopping), Portfolio Management/Packaged Offer Development, Telco Maximize GTM Workshops, CloudAscent Acceleration...   While looking at 2024, I started to think..   What to do - if I was a Channel Director today?   1. Customer Insight Know to whom, what, where & why my partners are selling. Use these insights to monitor maturity & therefore investments. Add critical updates to Partner Program & cleanup DBs for unmanaged partners. Drive Customer Insight Milestone Attainment for coop access 2. Skilling & Resourcing Most IT companies have skill & resource gaps, particularly at presales & deployment. Add value with GTM Business & technical training. Improve knowledge of & success in Marketplaces. Where it makes sense, make #P2P plays 3. White Space Want partners to sell more? Show them the business case. Analyse their portfolios-capabilities & ambitions. Identify opportunities for growth: upsell, packetized services, bundles, co-sell, skilling, IP… manage improvements through a Development Plan 4. Walk Don’t Talk Customer Experience. Jay McBain said it best while at Forrester: ‘There‘s a clear correlation between superior customer experience & revenue growth.‘ Understand what it‘s like to buy hardware, software & services from partners & help them improve where they can offer better CX. What experience do we want to offer? Is it helping to close - not abandon - the buying process? What is the Benchmark & the Improvement Plan for corrections 5. GTM Advisory Create a Business Academy for learning through best practice key product-sales & marketing motions for growth   6. Create Offer Development Guidance for Compliancy Regulations Many companies will face new compliancy regulations: CSF, CIP, or for any company selling into the EU – NIS2. These are continuous multifaceted compliancy regulations with expensive risk for noncompliance. Ensuring the People-Process-Legal & Technical compliancy for customers is a big value add for CEOs if done correctly – & a significant potential loss of reputation, revenue & maybe even the customer themselves if done incorrectly. I’d put in the planning time to do this right & provide the guidance.   7.  Leads Now that we know where we’re targeting, what we’re selling & are sure we can close, find clever ways to fill the pipeline – eg. using propensity data against customer lists with tools such as Microsoft CloudAscent & others What would You do if You were a Channel Director today? #channel

Our main job as partnership professionals is to identify, understand, enable, and expand SAM (serviceable available) and SOM (service obtainable) opportunities inside our firms. While every CEO and board member can tell you the vast multi-billion dollar TAM they are chasing, very few have a realistic view of the market that their products actually compete in, and then further narrowing the view by buyer type/role, industry, segment, geo, route to market, and partner influence. In the decade of the ecosystem, market sizing is no longer a static spreadsheet exercise; it is a dynamic assessment of your direct and indirect reach. Vendors (and partners) must stop viewing TAM, SAM, and SOM through the narrow lens of direct sales capacity: --> TAM (Total Addressable Market): This is the global demand for your company. It is the theoretical ceiling of all product offerings added together, often inflated by ambition and embellishment. --> SAM (Serviceable Addressable Market): This is the portion of the TAM that fits your current product-market match. It is gated by geographic reach, product sub-category, and specific subindustry vertical. --> SOM (Serviceable Obtainable Market): This is the reality check. It is what you can actually capture within the next 12–24 months based on your business capabilities and capacity today. SOM is where competition, internal resources, sales capacity, brand awareness, quantity and quality of integrations, alliances, as well as channel and services partnerships play a huge (and often sobering) role. Omdia reports 66.7% of the technology industry flowing through partners, and 96% of deals highly influenced by an average of 6.3 partners. ** Your SOM is effectively capped by the size and maturity of your channel. ** Over the past 50 years, the tech industry is notorious for the "best product" not end up winning the market. Nor does the best price or promotion. Place, or today known as platforms or partnerships, is what differentiates winners from losers. Partners no longer just provide the "last mile" of transaction. They own the majority (or all) of the 28 moments before the sale and rely on trust, specialized integration, and local expertise that a centralized sales team cannot replicate. It doesn't end there. A big portion of SAM and SOM is expansion of current clients (or wallet share gain). In an industry that is now 2/3 subscription and consumption based, partners are also surrounding the customer on every renewal forever. Upsell, cross-sell, and enrichment is also through the partner channel (not just a great internal CS/CX team). If you aren't co-selling with hyperscalers, aligning with regional and global SIs, managing long term with MSPs, integrating/stacking with ISVs, understanding the SAM of resellers/distribution, or incentivizing the long-tail of influencers, your SOM will remain a fraction of its potential. In modern tech, you don't "own" a market; you orchestrate an ecosystem to capture it.

Managing channel conflict is one of the biggest risks to DTC brands launching in retail. With the proliferation of omnichannel as the dominant GTM strategy, one of the biggest risks I don’t see talked about is how to avoid channel conflict between mass retail, Amazon, and DTC. Let’s take a pretty realistic example.   A brand sells a single product for $7 on DTC. But they sell that same product for $10 on Amazon, to account for the higher cost to serve. Finally, Walmart comes knocking and wants to bring this product in, great!  But they want it priced at $5.97. See the issue? The risk is that with Amazon and Walmart as major competitors, they’ll price match off each other. All of a sudden, by launching in Walmart you’ve just majorly cannibalized your Amazon business and now have the potential to do the same thing to your DTC channel. Understanding this risk, planning for it, and mitigating it is one of the major pitfalls to avoid when going omnichannel. 

Most brands make the same mistake 👇 They run the same growth playbook across every channel. This will cost you in the long run. DTC and retail are different growth systems entirely. So your team needs to act accordingly. I have operated inside both. Here is what changes between them: 👥 Audience and data access DTC: You own the customer relationship. Every purchase, browse behavior, and lifecycle signal is yours to act on. Retail: You are largely selling to the retailer (not the end customer). The data feedback loop is out of your control. 🛍️ Buying cycle DTC: It is often faster, and driven by creative and offer. Retail: Think longer lead times, seasonal buys, sell-through targets, and retailer relationship management. The growth levers look nothing like each other. 🎨 Creative strategy DTC: Creative is a direct performance variable. You test it, read the signal, and iterate. Retail: Creative is about brand positioning and shelf presence. The feedback loop is much slower. 💿 Channel mix DTC: This involves paid social, email, and owned channels. Retail: Wholesale relationships, co-op marketing, in-store placement, and retailer-driven promotions. 📈 Success metrics DTC: CAC, LTV, MER, retention rate, and contribution margin by channel. Retail: Sell-through, replenishment rates, margin by door, and wholesale revenue. 🚆 Decision speed DTC: Test, learn, and reallocate in days or weeks. Retail: Decisions made months in advance. Most brands today are running both. The ones that struggle apply DTC logic to retail decisions, or retail logic to DTC growth. The ones that win understand the distinction and build their operating system around it. Growth is a system, and it has to match the right model. Applying the wrong playbook to the wrong channel is one of the most expensive mistakes brands make at scale. Which DTC model are your team running right now, and where does the friction show up?  Drop it below. If you are managing both and want to pressure-test how your growth stack is set up, send me a DM. ♻️ Repost to help a founder or operator navigating the same complexity.  And follow me, Jacob Rokeach, for more operator-level reads on growth and brand strategy.

For 20+ years, I’ve lived in the gray area of “channel conflict.” Direct vs Indirect. Dealer vs Rep. National vs Regional. If you’ve been in sales long enough, you’ve felt it. Territory tension. Comp overlap. The “who owns this account?” dance. Here’s what I’ve learned: Channel conflict never fully disappears. But it can be engineered. This week at our National Sales Meeting, I used a Formula 1 analogy that felt fitting. Championship teams race two cars. Are they technically competing with each other on track? Yes. Are they racing for the same constructor’s championship? Also yes. Sometimes one car fights for the title. Sometimes the other plays defense. Sometimes one blocks. Sometimes one creates space. But they always race for the same team. At STARC, Direct is our title contender. Indirect? I’m good being your Checo to your Verstappen. The Cal to your Ricky Bobby. Why? Because championship teams don’t win with one car. They win with strategy. They win with positioning. They win with alignment. After two decades of managing channel friction, I now get the opportunity to shape indirect from the ground up — intentionally, not reactively. Clear lanes. Clear rules. Clear collaboration. Will there still be tension at times? Of course. But tension inside a team is different than friction against a competitor. One is healthy. The other is destructive. We’re building the kind of team that can control more of the grid. And if that means I occasionally throw elbows to give you clean air — I’m good with that. Championships require both cars.

A really common trap with early (B2B) teams I see is them getting super excited about a large number of paying customers - even though they're not paying them very much. But feeling great about a large number of low-value customers doesn't necessarily translate into a sustainable business model if the cost to serve them exceeds the revenue they generate. I know it feels super obvious to say it but this is why it’s vital to match the price point to the appropriate distribution channel, focusing on the actual price rather than aspirational pricing. Otherwise you have the financial strain of underpricing and over-servicing, which is particularly crushing for startups that need to manage their burn rate carefully. So what does this mean tactically? From experience and conversations with others: 1. High-Value Subscriptions (Over $50,000): Use Direct Sales Teams This channel is best suited for high-touch, complex sales cycles where personalized interactions can significantly impact the buyer's decision. The investment in a direct sales force is justified by the high revenue potential and the need for detailed product demonstrations, customized solutions, and negotiation flexibility. 2. Mid-Range Subscriptions ($10,000 to $50,000): Leverage Inside Sales or Partner Channels (Resellers/Distributors) These channels can efficiently handle moderately priced offerings without the intensive resource allocation required by direct sales. It balances cost and customer acquisition efficiency, allowing for broader reach and scalability without the overhead of field sales. 3. Low-Value Subscriptions (Under $10,000): Automated Self-Service Platforms This reduces the cost per acquisition dramatically and cater to customers expecting quick transaction times. Minimizing human intervention cuts costs and aligns with customer expectations for fast, seamless purchasing and onboarding experiences at lower price points.