When the rapid adaptation of sales channels pays off

Greater agility in the sales system – that is, a company’s ability to rapidly adapt its sales channels to changing market conditions – is associated with higher operating profit, but only under certain conditions. That is the result of an observational and survey-based study involving 356 predominantly European companies carried out by retail and marketing experts from the University of Cologne, the École des hautes études commerciales Paris (HEC Paris), the University of Mannheim and the University of Manchester. The study, led by Dr Boas Bamberger at the University of Cologne’s Faculty of Management, Economics and Social Sciences, has been published in the International Journal of Research in Marketing under the title “When does sales system agility lead to organizational performance?”.

The pandemic, trade and customs disputes, and AI-driven digitalization are forcing companies to constantly adapt their sales systems in order to reach customers. A regular survey conducted by Duke University shows that 61 per cent of companies added new sales channels between 2020 and 2023. However, a survey conducted by the provider Quantive in 2024 had revealed that approximately 90 per cent of companies were struggling with agility. This may be because greater agility is not always beneficial. The agility of the sales system is influenced by external sales partners, many of whom pursue their own interests. Any restructuring may trigger mistrust and can lead to resistance, the withholding of market knowledge, or even competitive behaviour directed against the company. These reactions can impose significant costs. Agility only pays off when these costs remain low.

A possible solution for keeping these costs low is highlighted in the current study in which researchers surveyed senior sales managers – primarily from B2B companies – about the agility of their sales systems. They linked these results to objective financial indicators. The study shows that agility does not automatically lead to higher operating profit (before interest and taxes). On its own, the correlation in the sample was statistically indistinguishable from zero. The channel structure and management are crucial to keeping the friction costs of agility in sales systems to a minimum.

For the study, the researchers first developed a seven-point scale that measures distribution system agility on the basis of three capabilities: to identify changes in the market quickly, make timely decisions in response, and continuously streamline the company’s sales structures. They used this scale to quantify the economic benefits. The results show that sales system agility only contributes to profit if it fits the channel structure and management. With an average annual turnover of approximately 460 million euros, a one-point increase in agility was associated with an increase in operating profit of up to 52 million euros. Of this amount, around 37 million euros could be attributed to an appropriate channel structure and around 15 million euros to effective management.

With regard to the channel structure, the study finds that having more direct (i.e., company-owned) channels reduces transaction costs, provides unfiltered market feedback, and allows for rapid, unilateral adjustments to the distribution system. This applies in particular to channels that are primarily intended to generate interest before a purchase or to provide customer support after a purchase. However, in the case of pure sales transactions, indirect channels, including collaborations with partners, can be beneficial: commissions paid to sales partners align their interests with those of the company, leaving company-owned channels with little additional value. However, it is important that multiple channels do not compete for the same customer, as such overlap between channels intensifies competition amongst partners and makes it more difficult to make rapid adjustments to the sales system.

A distribution channel management system that gives the company extensive decision-making powers over products, price ranges, product ranges, and territory definition can further reduce costs. Two levers ensure that the system remains balanced despite constant change: first, the company established key decisions and rules centrally and in advance, rather than delegating them to partners (centralized control rather than decentralized decision-making). Second, it actively and continuously coordinates its partners whilst the system is operating (orchestration).

“Agility does not happen automatically. According to our data, the rapid adaptation of the sales system only pays off if the channel structure and management are aligned with it,” says Dr Boas Bamberger.

Professor Dr Arnd Vomberg of HEC Paris adds: “For companies, this implies that they should first review their sales channel mix, the allocation of responsibilities across their own channels, and potential channel overlaps.”