Focusing Your Multi-Channel Strategy on Your Customer
By Diane Krakora, Principal, Amazon ConsultingWhat is your single most important enterprise software channel strategy consideration? In a word: customers.
Organizations dedicate resources to developing an effective multi-channel strategy for one primary reason – to gain and retain customers. When embarking on a multi-channel strategy, focus on the following fundamentals:
By understanding the value of each of these elements, you can determine how to optimize your multi-channel strategy to better serve end-customers.
Remember who the customer is. Although a modem manufacturer might consider retailers to be its customers and a financial services company looks to its agents as its customers, the real customers of any business are the end-customers – the individuals and businesses that buy and use the products and services. If these end-customers don’t value your products and services, sooner or later you will be out of business, no matter how good your channel is.
Therefore, your first step is to develop an understanding of who your customers are and what their preferences are.
? How do my customers like to purchase this type of product or service?
In complex purchasing decisions, this question expands to: How do your customers become aware of, understand the value proposition of, get recommendations on, and finally purchase the product, solution, or service?
Let’s say that you are an anti-virus software company, and I am your target customer profile (IT Director or CIO in a company with over 1,000 employees). Your main question for identifying a multi-channel strategy is: How does the target consumer (that’s me) want to purchase your product? Systems Integrator (Accenture), Security Solution Provider (En Pointe Technologies), Reseller (Avcom), eTailer (Software Plus) or on-line with the vendor (www.symantec.com) – which are the most effective channels to reach me?
By focusing on how your customer prefers to purchase, you can identify several “channels” to reach each type of customer. In most cases, you can utilize a channel that already exists versus creating a new one. Why try to create a new channel to reach your target customers? It’s more effective to discover how they already buy similar products and services and adopt that channel.
Design service options to meet customer expectations and needs. Customers may want to purchase products and services from different channels primarily because they have different service needs. Some like the self-service of the web and others prefer the individual service of a consultant. Thus, the second key question in defining a multi-channel strategy is:
? What level of service do my potential customers need and want?
Software vendors are increasingly providing value to customers through a variety of additional services – from logistics and customer care to complementary products and services that enable a complete solution sale. Services range from consulting, design, and testing to implementation, integration, optimization, and maintenance.
Even when purchasing a movie, customers have several service options. At the high end, patrons pay $8.50 each for stadium seating, surround sound, and fresh popcorn cooked with canola oil. Another customer may choose to reduce the level of service by going to an older theater with sticky floors, a springless seat and a well-worn movie track by attending the $2 theater. As another option, a customer may select video rental with self-provided seats, screen, sound, and popcorn, and a flexible show schedule (whenever they want). Finally the lowest level of service in a movie “purchase” is to view it on cable or network television. Here the customer provides the self-service seating, screen, sound and popcorn, and is also limited to the networks’ schedule.
Enterprise software companies deliver service options through channel partners. For example, companies purchase Oracle software through a variety of channel partners, depending upon the end-user organization’s service needs. End users can decide if they need consulting for vendor selection and business process methodologies; system integrator services for installation, configuration, and maintenance; or just the reseller sales of the software wherein the customers themselves provide the other services needed to use and maintain the software. Thus, in order to meet and exceed customer expectations, software vendors need to align channel partners with customer requirements.
Make it easy for customers to do business with you. In addition to helping customers purchase your products and services how they want to and with the services they desire, you can also make it easy for customers to purchase by partnering with organizations that round out the customers’ full solution needs. Just as a toy might need assembly and batteries to be operational, your customer may need to purchase several products or services to be able to use any of the products – a full solution.
For example, to meet a customer’s need of a wireless-enabled enterprise application, such a Siebel, requires several additional products or services, as shown in the Figure 3.
The solution requires five additional products or services to be complete and usable: a wireless device (such as a RIM pager or a Palm device), the service from the wireless provider (such as Bell South), services of the Network Operations Center (NOC) that translates Wireless Application Protocol (WAP) to Internet Protocol (IP) (like Aether), a corporate gateway server (such as Neomar), a content server (from Hewlett Packard or Sun) and the application (from Siebel).
All of these products and services must work together to provide the wireless solution customers want. In today’s market, disparate companies offer these products and services. Rarely can the manufacturer of one of the solution pieces sell its product without the customer buying the rest.
Thus, partnering to bring the whole solution together for a potential customer is critical to each manufacturer’s success.
Most of the time this role of “aggregator” or “integrator” – the organization that brings it all together – is played by channel organizations. These channel partners provide a great value to customers by creating relationships with each manufacturer for the disparate product pieces and then adding their own integration and support services to provide a complete product solution.
Sometimes in an early market (before channel partners have adopted the notion of selling particular products), the manufacturers create alliances among themselves to offer the customer a full solution – through either technology enhancements or sales and marketing support of each others’ products and services. (We will discuss alliances further as we examine the types of channels next month.)
So, if we focus on the customer, we discover three ways to enhance the purchasing experience through developing effective partnerships:
Now that you have studied your customers’ purchase preferences and prepared your product offering, next month we will examine the types of channels that can help you increase awareness, sales leverage, and customer satisfaction of your enterprise software.
This is the second of a 4-part column on increasing sales through a multi-channel strategy.
To view Part 1 of this column, please click here.
To view Part 3 of this column, please click here.
To view Part 4 of this column, please click here.
Questions and comments welcome to dkrakora@amazonconsulting.com.