Focus on the Customer to Beat Channel Conflict

As the Internet turns industries upside down, allowing virtual upstarts to compete with brand icons, marketers must make fundamental changes in the way they do business or risk losing their competitive edge – or worse.

But there are fundamental marketing principles that never change. The tritest yet truest of these is that the customer is always right. Or put another way, the customer wants what the customer wants, and marketers are on the firing line to deliver.

Keeping your sites locked on this principle is the best way to tackle one of the toughest issues of the Internet age – integrating online marketing and online commerce with traditional channel commerce. The vendor/reseller relationship, a high-maintenance relationship in the best of times, is suffering under the stress of e-commerce to the point that “channel conflict” is a bona-fide buzzword.

The perception seems to be that there are now only two ways to do business: Sell through a channel or sell direct, à la Dell Computer Corp. So here’s the $350 billion question (the amount of commerce over the Internet predicted for 2002 by Forrester Research): Is it possible to successfully integrate the two?

Keep in mind that’s not the question customers are asking. Customers want to know what they’ve always wanted to know: Can I get a quality product at a reasonable price? Increasingly, they also want to know the convenience factor: Can I order it in the middle of the night in my pajamas? Can I gather all the information I need about the product or service with the click of a mouse button?

When a company sells through a channel, they often begin to believe that the channel is their customer. The channel writes the checks, after all. But in the Internet age, where the customer who actually uses the product or service is gaining unprecedented power, that belief is a recipe for disaster. Companies that understand this wonder if the best way to cope might be to cut out the middleman.

Here’s the good news: The Internet doesn’t have to sever your relationship with your channel. It changes the relationship, but it can make it stronger. The trick is finding ways to use the Internet to deliver value to your channel partners at the same time you use it to develop a stronger, more direct relationship with your end customer. When you can find this balance, everybody wins.

Developing this balance is different for every company. But here are four basic guidelines to keep in mind:

• Develop a direct brand relationship with your end customer. The Internet lets you regain control over the way you present your brand and merchandise your products. At the same time, it lets your customers tell you who they are and what they want. Armed with that potent knowledge, you can deliver the products and services customers are willing to pay for – a hands-down benefit for you, your customer and your channel.

Consider Levi Strauss & Co., which last Christmas opened online retail businesses for its Levi’s and Dockers’ lines. While retail outlets continue to pick and choose what items they carry, Levi Strauss ( can show customers the entire line in a single place – customers buy online or generate demand via the retail store. The customer information Levi Strauss collects gives it insider data about how to deliver what customers want to buy, which in turn boosts the channel.

• Shorten the sales cycle. The Internet is the best tool marketers have for giving customers a “conceptual trial.” A clip from a CD. A virtual tour through a car. Not only does the conceptual trial provide value to your customers, when they finally contact your channel, they know what they want and how much they’re willing to pay.

Even if you sell direct, you won’t clinch every sale, and the already-primed customers who walk through your partner’s door will reduce his or her costs of doing business.

Clinique, for example, does a great job of educating its buyers through the “skin typing” it does on its site. Online customers create skin-type profiles and then see recommendations about which products are right for them. They can buy the products online or, more often than not, visit a retail location ready to buy.

• Listen to your channel. What could you provide them on the Internet that would make their jobs easier? Can you automate the processes that link your businesses? Develop an ROI calculator they can show customers to close a deal?

Cleaver-Brooks, a leading boiler manufacturer, has developed an online tool targeted at systems engineers and architects – its end customers – that turns the incredibly complex process of creating a boiler specification into a cakewalk. By making it easier for the end customer to do business, the company gives the channel a powerful competitive weapon. And Cleaver-Brooks is going that one better by also giving the channel an online ordering tool that slashes the time it takes to get an order in the pipeline.

• Communicate with the channel. Let it know how you see your online marketing integrating with their efforts. And make it clear that you both have the same ultimate goal: earning and keeping the end customers’ loyalty.

The Internet changes the way you and your channel work together, but it provides an invaluable tool in giving customers what they want. And that’s the common bottom line for everyone.

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