When it comes to distribution and sales channels, you may come across complicated theories about multi-channel, omnichannel or the online evolution of B2B purchases. For your company, however, the logic of your distribution system is often quite simple. To complicate things in these processes, in fact, are the stakeholders involved such as, for example, your partners, distributors, agents, your foreign branches or even the managers of your retail stores or your franchising chain.
Their choices and expectations, their behaviors, their opinions about your products and their challenges in distributing them to your end customers are, in a word, the Experience that makes the management of your distribution complex and intricate.
You could be a company that sells products to other companies (B2B) through a direct channel (Direct Sales), or you could have partners, distributors or a network of agents to resell (Indirect Sales) your products and services.
Depending on what you sell, at the end of the distribution chain your end customer can be a consumer (B2B2C) or a company and the sale can take place through a physical channel or online.
Normally you measure the performance of each individual channel and the overall ones, then compare the results with respect to multiple sales KPIs, sell-in sell-out data or income statement indicators. When an imbalance becomes clear, you intervene where possible (e.g., renegotiate commissions), or become aware of it without being able to intervene, as when it turns out that it would be necessary to raise prices, but it is not possible.
However, what is your approach when you realize that something is not going as it should and that it is not clear what is the full potential of one of your sales channels? Or what do you do when you can’t say for sure what the effect would be on your Income Statement if, for example, you discontinued the retail channel to invest only in the indirect or online one?
We live in a world where everything is moving towards digital automation and data. It is therefore not surprising that personal interaction, although now more and more often mediated by a screen, is easily forgotten as a key element of investigation, even when it is not possible to avoid it. “If you want to make effective decisions about your distribution strategy, on how to manage your B2B channels and on how to change your approach with your partners, you need to start a real F2F dialogue with them”.
In B2C there are thousands if not millions of consumers; it’s normal to choose automation, artificial intelligence and machine learning, to understand your customers. The costs of research and investigation must not exceed the profitability of the individual customer, which is generally lower than in B2B.
When, on the other hand, you turn to your B2B customers or to the stakeholders in your distribution channels, numbers are smaller, while their weight on your turnover is greater. This is when a technology-first approach rather than personal interaction to understand customers and channels would be a mistake.
If you are a B2B player, you have different channels, agents, branches or partners and you need to clarify Key Success Factors of your distribution model, avoid running to the IT department in search of the top-notch tech solutions to have automatic answers. Start with a structured method of investigation that involves personal interaction; technology will be useful in later stages of this process.
This the only way to be able to describe your company position with respect to your customers, distributors and partners in the various distribution channels, gathering insights which provide you with answers for the difficult initial questions: How correct is your Channel & Distribution Strategy? How well do you know your (PX) Partner Experience?
This approach allows managers to make structural and not just tactical changes on the way in which the company relates to the market and its customers.
For example, you may come to the conclusion that a D2C (Direct to Consumer) strategy not only would be actionable for you, but improves margins and turnover. Or you may find out that your retail network does not justify the investments, while it would be more profitable to expand the indirect channel as most of the stakeholder involved in the value chain suggest the possibility of an expansive strategy.
Conducting a survey therefore is the only way to rapidly collect objective, unique and structured information, to allow you to plan your strategic, tactical or operational actions in detail.
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If you analyze the experience that is created in your sales channels and within your market segments, you will have information about your particular situation. However, while each company is different, there are some prevailing trends that can help you understand how to evolve your approach with the experience that you offer to your B2B customers.
In product categories where retailers, external sales representatives, or other partners are involved in selling, clarify their role in your strategy. Is it mainly about cost efficiency: can that partner perform key tasks at a lower cost than yours? Is it about market access: does that partner provide access to certain sectors or decision makers of your potential customers? Or is it about integrating key elements to your solution: does that partner provide the necessary complements to the product you sell?
These roles have different implications for channel design and management. Distinguishing “sell-with” partners dealing with your end customers, from sell-thru partners filling a gap in your product or service offering, is becoming even more important.
Global ecommerce transactions are about six times higher than B2C, where sites like PowerReviews and Marketo’s Marketing Nation provide B2B prospects with customers’ opinions and usage experiences throughout their customer journey. This is the reason why it is becoming more and more important to distinguish what you sell against how customers buy and the implications of a consistent and appropriate choice of channel partners. In many B2B categories, you can sell the same product to multiple segments but each customer buys in more and more different ways. It therefore becomes important to take into account the selection criteria adopted by customers, based on the channel through which they are reached and served. This trend is also reinforced by these factors that are influencing the way in which B2B customers generally approach the market:
- Your B2B customers have complex needs. How can you manage the creation of useful products and services and, at the same time, control research, marketing and sales without making mistakes? There is no easy answer, but we must remember that creating for your customers the feeling (ie The Experience) that they did the best purchase choice hiring you instead of your competitors, is becoming increasingly difficult. This is the reason why investigating the experience becomes interesting, because it allows you to have a precise picture of where they are and how the information available is used to continue to choose you in the future.
- YourB2B customers prefer to invest in durable relationships. They want to know that they are not only getting a cheap and practical product or service, but also that they will always be able to get it. Your customers therefore choose you especially if they understand that you will be trustable over time. Investing in the quality of relationships and in the professionalism of people is therefore a priority today, and it is a challenge that for some companies is becoming even greater with the conversion to remote communication models, based on video calls and virtual meetings.
- The expectation of finding perfect product content will be increasingly common. The next generation of shoppers is experiencing the world in new ways and with a digital-first approach, as we also explained questa pubblicazione customers search online first, then asks for the support of the sales force later. Fortunately, providing great product content has also become easier than ever. Digitalization is empowering old tools and supporting new ones that make managing, optimizing and sharing product content an easy process. Part of the experience we offer starts with how marketing activities are set up, therefore, this is also an aspect that must be carefully planned and developed to improve not only the customer experience, but also the channel.
Consumers know more about your products than some of your representatives. When your B2B customers meets your channel partners, they’ve already done their research. He may have inquired about you and your products through his professional network but he will also have checked every information available online. Often customers have already made comparisons with your competitors have already matured ideas about you and your partners. Making sure your channel representatives have the right tools and training to show why your products outperform the competition has therefore become crucial to success.
Sometimes your channel representatives, so your partners, can (and do) point customers in the wrong direction. You may have a valuable mix of products/services designed for a specific customer segment and in line with your business strategy, but your partners may have different ideas. It could also happen that the Distribution Model on which you have invested millions, may not pay a high enough commission to your resellers or worse, as often happens, your partner is also a competitor in certain product areas, which could lead to the risk of compromising the relationship. Investigating the experience of your partners is the only way to avoid information gaps, misunderstandings about the communication of the roadmap and unnecessary cannibalism on common market segments.
Much of this evolution is related to the type of products and services you offer and the type of B2B customers you serve. However, compared to the past, today you may have to set up different logics with your partners such as transactional, collaboration / co-creation or service subscription (SaaS, Subscription).
Whatever your case is, the nature of the relationship is evolving rapidly. In most cases, it is moving from being a “product-retailer” transactional equation to a “partnership” one. But in the best cases, it is an even more committed relationship of “collaboration and co-creation”, driven by the growing market preference for the approach (Value)-as-a-Service.
The preference for value-based and SaaS outcomes rather than traditional models based on design, delivery, and implementation logic stems from changes in the behavior and expectations of B2B customers who want the technology to deliver business value, along with agility and flexibility. If we talk about technology in particular, we see the immediate consequence of a shift from a “license” approach to a “subscription” approach in purchases.
Some big players in this industry such as Cisco, Dell and IBM have already switched to subscription-based or consumption-based pricing models. This factor has a direct impact on the supplier-partner equation, because it clearly emphasizes the importance of customer relationships, retention, renewals, and how both suppliers and their partners define customer service determines success in sales channels. Microsoft CEO Satya Nadella calls Microsoft a partner-first company and sees every change in the business model through a channel lens, asking how it would impact partners and help them drive technological acceleration.
The challenge is to understand your partners’ key priorities and align them with your business goals. Getting and maintaining their attention and loyalty needs more than standard affiliate programs: they need differentiated PX strategies that make it easy, predictable and profitable for them to sell.
This often means investing in survey programs to understand the Partners Experience, drive the strategic sale of flagship product lines, and provide technical and operational support to measure results and ROI reporting. This also means having the opportunity to engage meaningfully in the product development roadmap, and this can be very valuable for both parties.
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