Don't Let Channel Management Ruin Your Customer Experience

Firms competing in channel-intensive markets are regularly challenged to satisfy finicky and value conscious customers without introducing too much cost and complexity. All too often, however, a firm’s customer experience and value proposition is compromised by channel partners whose objectives, value proposition and capabilities are strategically incongruent. For example, we worked with an IT equipment manufacturer whose premium brand image was hurt by the actions of a deep-discounting, low service distributor. In another case, a leading consumer goods company could not satisfy customer service requirements because one of their retailers was unwilling to invest in new capabilities.

To maximize customer satisfaction, managers should understand how their channel partners – such as resellers, portals, service providers, installers and retailers – interact with buyers through the entire marketing-purchase-service continuum and then work collaboratively with them to enhance that experience.

This will not be an easy exercise. Many enterprises have thousands of SKUs, work with hundreds of channel partners and use multiple platforms to sell, communicate and serve customers. There could easily be over 100,000 different physical and digital touch points between consumers, producers and channel partners. This hodge-podge can only lead to conflicting, poorly integrated and uncoordinated marketing, channel and service programs resulting in failing customer experiences, overly complex operations and lower margins.

The root cause of this problem lies in misalignments between the structure of the channel and how consumers want to get information, purchase products and receive services. Channels that are underperforming or based on yesterday’s requirements are often unable to accommodate current market needs let alone deal with growing consumer demands, new product launches and emerging digital technologies.

In reality, consumers no longer separate the channel from the product, service and message — the channel is the product. In the era of buyer engagement, customer acquisition and retention is a lot about effective channel management and design. To truly engage consumers through a multi-channel world, companies must do more outside the confines of the traditional channel marketing function.

Improving the channel’s ‘customer experience’ requires three fundamental changes: 1) an agreed understanding of buyer needs across the entire continuum; 2) a commitment and action from the entire channel to satisfy these needs — not just from the company’s marketing and service departments and; 3) a redefined channel management function that links the organization to a desired and brand-compliant channel customer experience.

We have helped organizations design and implement new channel management programs that have enhanced customer engagement and reduced operational costs while driving higher revenues and service levels. Some of these principles include:

Expand the channel role beyond just marketing

To better engage buyers whenever and wherever they relate to a firm’s product, companies must expand the channel management role beyond sales and marketing to include input to and co-ownership of all customer-impacted operational, IT, product and service decisions.

Bring the channel into organization

To improve performance, firms need to bring a rich understanding of channel requirements into the enterprise. This can be done by creating internal councils with IT, finance and operational representation. As well, important channel relationships can be managed through integrated, cross-functional teams with P&L responsibility.

Tweak the channel

A good starting point is to think about the channel experience as customers do – a series of related interactions that, added together, make up a ‘moment of truth’ experiences. This approach will naturally identify areas where the channel can be redesigned and better managed to ensure strategic congruency. This process will usually trigger a discussion of who internally is in the best position to manage these activities and what resources and capabilities are needed to achieve the new vision.

Get everyone on the same page

Channel engagement (at key touch points) and performance should be regularly measured with some of the same metrics that are used to evaluate brand image, operations or marketing effectiveness. All channel partners should align around these metrics and goals

Anticipate challenges

Optimizing the channel experience will not be easy given the business risks and the organizational implications to partners, employees, processes, technology and strategy. Change will be doomed if management and the channel: 1) do not have a common understanding of their markets, buyers and value proposition and; 2) do not work collaboratively towards the same goals. If companies and partners don’t make the transition, they run the risk of being overtaken by competitors that have mastered the new era of engagement.

Mitchell Osak is managing director of Quanta Consulting Inc. Quanta has delivered a variety of winning strategy and organizational transformation consulting and educational solutions to global Fortune 1000 organizations. Mitchell can be reached at mosak@quantaconsulting.com