Whose Customer Is It Anyway? The Challenge of Channel Surfing

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15th November 2019

Whose Customer Is It Anyway? The Challenge of Channel Surfing

There’s a common problem that many B2B and B2C customers we work with face: channel conflict. It’s a natural, normal problem that stems from the challenge of getting your product in front of a customer by way of a third party – usually a distributor, dealer or even just a local farm shop.

Because when a potential buyer goes into a shop, browses a distributor’s website or gets in touch with a dealer, whose customer are they?

Are they yours – the company whose product they are buying?

Or are they your suppliers’ customer – the place where they’ve gone to buy the product?

Take Kellogg’s Cornflakes as an example. A customer can go to a supermarket and buy Kellogg’s there. Are they the supermarket’s customer, or are they a Kellogg’s customer? Both right?

What if the customer then goes to a large bulk-buy supplier, and buys 10 boxes of Kellogg’s? Whose customer then? Or what if the customer decides they can get better value buying online from Amazon and having Kellogg’s delivered to their door?

Who owns the customer then? Who is going to work hardest to “win” that customer?

The conflict of channels

This is where the conflict comes in, the fight between manufacturer and distributor, the supplier and the retailer. There’s a constant tension over how to engage the customer effectively.

For the manufacturer:

  • Their product placement is key – right in front of the customers eyes
  • They want their product to be pushed by the distributor
  • They’d like to run promotions – like Buy One Get One Free (BOGOF) to get more sales

But for the distributor:

  • Best value is the absolute driving force, as they’re competing against other distributors
  • Variety is key too – they need to stock a range of similar products
  • They’ll often to recommend the cheapest product – perhaps even manufacturing their own version…like “flakes of corn”!

And so, there is a constant conflict between manufacturer and distributor, with each looking out for their own business and trying to take ownership of the customer.

Manufacturers may decide to go down the direct sales route, cutting out the distributor. Or the distributor may opt to relegate the manufacturer’s products to the bottom shelf or the end of their sales brochure, to be largely ignored.

Conflict is rife if the relationship breaks down. A manufacturer could punish a distributor by pulling their stock and sending it to a competitor. Or a distributor could refuse to stock a manufacturers product and encourage customers to switch to a rival.

You could say it’s like a marriage of convenience on the brink of divorce, with each fighting for custody of their child…the customer.

But customers don’t want to be owned

Gone are the days when a customer shopped in just one place. They don’t just visit a store or buy everything they need from one supplier.

They move around, switching, changing and dropping one location for another. Sometimes they return, sometimes they don’t.

Today’s customer might get product advice directly from a distributor, but then pull out their phone and buy online from another supplier. They hunt for bargains and shop around.

And they’re more strategic too. They delay a purchase to wait for a sale, or buy in bulk from different places when offers are on. They know how companies market to them, and they’ll use it to their advantage.

For example, it’s not uncommon for online shoppers to add products to their basket and then close their browser, waiting for and expecting an email with a discount to encourage them to return to their basket and check out.

The key is in understanding the customer and their behaviour

To sell more effectively in this multi-channel environment, manufacturers and distributors need to work together to understand the customer.

They need to accept that neither can own the customer, and they must share the information they have. Data is vital, and it’s no good protesting about who’s gathered what data from instore or online. That knowledge should be shared.

A lot of manufacturers don’t want to go down the direct route. It means changing your business model, working out complicated logistics, and a lot of hard work and effort.

And distributors don’t want to refuse to stock a product. If a customer likes a product, they want to sell as much of it as they can, so that both manufacturer and distributor profits.

It doesn’t have to be a conflict when the end goal is the same for both.

The best way that manufacturers and distributors can cope with channel surfing from customers is to work together strategically.

This may involve:

  • Manufacturers assuring distributors they won’t sell directly
  • Distributors sharing purchasing behaviours with manufacturers to help them make better products and market more effectively
  • Manufacturers bringing distributors into their marketing plans and asking for their input into future strategy
  • Distributors listening to manufacturers marketing teams and getting involved in the business plans
  • Manufacturers sharing in-store materials to support channel partners in their selling
  • Manufacturers marketing their products to channel partners, not just to customers

The key is communication and trust – from both parties. Everyone has the same goal of keeping the customer. By working together, both parties stand a better chance of accomplishing this and keeping the customer interested and engaged.

Do you need help with a multi-channel marketing strategy? Get in touch with the Hillsgreen team, and we’ll arrange a strategy session.

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