If your salespeople aren't sure who their boss is--the district manager? the regional manager? the customer?--it could be a sign that your company's sales force controls are working at cross-purposes and that your sales function is in trouble. Sales force controls are the policies and practices that govern the way you train, supervise, motivate, and evaluate your sales staff. They include the types of compensation you offer your people and the criteria your sales managers use to evaluate the reps' performance. These controls let salespeople know which trade-offs the company would prefer them to make when the inevitable conflicts arise between what they want to do (spend lots of time and money to get a sale) and what they actually can do (use limited resources and still get the sale). When sales force controls aren't aligned--when, say, the system simultaneously encourages reps to be entrepreneurial but also to file detailed call reports and check in frequently with their bosses--individuals become discouraged and unproductive, and they eventually leave the company. The authors' research suggests there are significant differences between the control systems of companies that encourage salespeople to put the customer first--outcome control (OC) systems--and those that encourage reps to put their managers first--behavior control (BC) systems. In this article, they list the characteristics of OC and BC systems, describe the potential fallout from conflicts within these systems, and explain how you can tell which control system is appropriate for your firm. In most cases, the right choice will be a consistent system somewhere in the middle of the OC-BC continuum.

This is an MIT Sloan Management Review article. Forming close relationships with suppliers or customers is a popular business strategy, but such partnerships can be problematic. Many close business relationships--whether joint ventures or loose alliances--fail. Describes a phenomenon called the "dark side" of close relationships and maintains that close relationships that seem quite stable can, in fact, be vulnerable to decline and destruction. Draws on surveys of business relationships and other examples. The same factors that strengthen a partnership can also open the door to relationship problems. For example, when an automaker and a supplier built up personal relationships between employees at the two firms to facilitate their alliance and just-in-time manufacturing process, the trust and personal relationships also enabled the supplier more easily to cut corners in the production process. Discusses strategies to prevent the dark side from taking over a business relationship--for example, to ensure that both parties in the relationship make investments in it, in effect swapping "mutual hostages." In cases where damage to the relationship already exists, possible strategies include rotating in new personnel, reconfiguring the relationship, or terminating it.

Should you set up your own sales force or should you outsource it? The standard analysis is cost based and assumes that the direct sales force is a fixed cost and that the outsourced sales force's cost varies with sales. The standard analysis then calculates the sales volume at which the direct sales force's costs equal the outsourced sales force's costs and suggests that for sales volume above that quantity, firms should use a direct sales force. This analysis has two problems. First, several other cost factors are not considered in the standard analysis. Second, the standard analysis considers only cost, ignoring coverage efficiency and selling effectiveness differences between the two sales forces. Details and develops both problems.

This is an MIT Sloan Management Review article. When companies first plunged into e-commerce, they thought success meant cutting out middlemen. That approach didn't work, in part because e-businesses misunderstood the role of intermediaries. Middlemen are not costly, necessary evils. They solve problems for customers and, in so doing, enable sales and create value for producers. INSEAD's Philip Anderson and Erin Anderson show how intermediaries are helping smart companies realize the promise of the Web. They explain intermediaries' nine ways of adding value, suggesting that three will change, three will survive in a new form, and three (reducing uncertainty about quality, preserving customer anonymity, and tailoring offerings to customer needs) present growth opportunities. Middlemen can co-opt the Internet by offering services that would be too difficult for individual producers to provide. However, the authors caution, intermediaries must be open to new ways of doing business with suppliers and vice versa. The Web transforms but does not eliminate the advantages of the middleman's central lookout position. But what was once thought of as a straight distribution channel from supplier through middleman to customer is now more accurately described as a service hub. The player that takes the customer order--possibly a Web site--occupies the center and interacts with many partners. The authors specify appropriate, fair incentives (for example, Ethan Allen's quasi-independent furniture stores that customers browse before buying directly from the manufacturer's Web site automatically receive a 10% tip). And they describe service-hub management that will generate enough trust to permit producers to get closer to customers--indirectly.

This is an MIT Sloan Management Review article. Three forces are changing the customary rules of distribution channel management: proliferating customer needs, shifts in the balance of power in channels, and changing strategic priorities. Many firms are outsourcing the distribution function to third parties. Others, using IT, direct marketing, database marketing, and other variations, contact customers directly, so the roles of the distributor or dealer are evolving. And some firms are simultaneously experimenting with a number of distribution options before committing to one system. Firms are also dealing through specialists rather than generalists, because specialists tend to be more focused and nimble than the manufacturer in a turbulent environment. The authors propose a strategic approach to planning for future channel configurations, control of the channel, and resource commitment. The channel must address customer needs, ensure that the customer sees the value in the company's offering, be cost efficient, and handle any new products and services that emerge. The authors suggest that a company first assess its current distribution channels, each channel's profitability, its market coverage, and the cost of each channel function. Next, a company should choose a channel arrangement based on sound design principles that recognize that the distribution strategy must contribute to the business' overall objectives.