Managing Your Channel Options
Keeping Pace with Distribution
The evolution in patterns of consumption, with consumers expecting greater choice and convenience in the purchase process, has forced companies to reassess their distribution strategies and more carefully consider their channel selection and choice of channel partners.
Findings from the latest CMO Survey underscore the watershed changes in the distribution ecosystem. In this survey, marketers reported a drastic decline in the use of channel partners over the last decade. Services and smaller companies in particular have become less likely to use channel partners instead opting to sell directly and online. The companies that continued to use channel partners were consumer packaged goods companies and large companies with $10B+ in sales.*
Companies that opt for direct-to-consumer sales benefit from owning the entire customer relationship and controlling access to customer data, not to mention cutting out the added expense of a middleman. For these firms, it is essential to make sure that their customer interface is optimized for user friendliness and that their fulfillment processes are satisfactory. It is also important to have the right technology in place to collect, store, analyze, and apply all available customer data points to sustain and enhance customer relationships after the sale.
Selecting Distribution Partners, Raising Expectations
Survey results have also indicated that the companies still using channel partners are getting more value out of these relationships. Possibly due to the shift to online distribution, businesses have more leverage with channel partners than before. This has led to a shift from being transaction and price focused to emphasizing collaboration and the value-added services partners can provide.
With this new relationship in mind, businesses may be well-advised to raise their standards for what makes a good channel partner. Beyond market reach, businesses can demand such things as tools to facilitate customer purchases, such as Amazon’s Dash Buttons or additional customer services, like Best Buy’s Geek Squad.
In the digital age, where information about and access to a global product shelf has expanded exponentially, optimizing distribution, whether online, through channel partners, or both has become a competitive necessity. As you design and build out your distribution strategy, we at Washington Trust are here to make sure you have the resources you need to prosper.
*Highlights and Insights Report, The CMO Survey, February 2022
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