ic_excursion Excursion 46

More About Channel Challenges

The idea that most companies use their competitors’ preferred channels might not seem as obvious. Try re-stating it this way: companies tend to rely on existing channels to get to customers. That probably seems more intuitive; if you think carefully about it, however, you will realize it is saying the same thing. Why do customers obtain products and services through certain channels? Because those are the channels your competitors use.

There are two relatively easy ways, and one difficult way, to find out if your customers are using their preferred channel. The easy ways are to ask them and to observe them. Many companies have embraced the philosophies of lean business and empathic design to better understand what customers want to buy. Far fewer companies have realized that the same concepts and methodologies can be applied to better understand how customers would like to make those purchases. We discussed empathic design in the Transaction Content section of Chapter 6. While it is great to ask customers how they want to complete transactions, observing their actual behavior before, during, and after the purchase will often provide much more insight. Better yet, if possible, observe how they evaluate, purchase, and use competitor or substitute products or servicees. Where are the pain points in that process? After all, you want to differentiate your products and services from your competitors-- you should strive to differentiate the entire relationship experience, including the transaction, as well.

The difficult, but sometimes necessary way is to test customer preferences by offering products and services through multiple channels, or to pilot test channels. In the lean startup model, there is often an implicit assumption that the minimum viable product (MVP) incorporates the “minimum viable channel” as well. This is, unfortunately, a slightly dangerous assumption to make. Just because a given product or service meets the minimum requirement for customer purchase does not imply that channel becomes irrelevant. Entrepreneurs need to carefully align the MVP with the channel(s) that ensure the the maximum probability of sales.

Not all channels are created equal. Direct sales are expensive but effective. Online-enabled transactions are inexpensive but impersonal. Value-added resellers extend the company’s reach efficiently but usually require profit-sharing. Different channels leverage the company’s resources in different ways. Direct sales may offer more insight about changing customer needs; online-enabled transactions may offer hints about new and developing markets because information is shared more widely.

Robert Palmatier has written (and rewritten) an excellent textbook on channel management. If your business will live or die based on channel strategy and implementation, this is probably your next stop:

Palmatier, R., Stern, L., El-Ansary, A., & Anderson, E. (2016). Marketing channel strategy. Routledge.

If, on the other hand, you need a quick introduction to marketing channels just to help guide product launch and growth, a good starting point is Rangan’s Transforming Your Go-To-Market Strategy.

Rangan, V. K. (2006). Transforming your go-to-market strategy: the three disciplines of channel management. Harvard Business Press.

"Buy the book! Amazon.com or Amazon.co.uk"

Here is the link to the book on Amazon.com:
and on Amazon.co.uk: