Choosing the Right Channels to Market in the E-Economy
For more than 100 years, chemical companies have gone to market using a combination of a direct sales force, brokers or sales agents, and distributors. However the recent opportunities presented by e-commerce compelled many chemical companies to establish a variety of new channels, often without analyzing the choices in detail. Several valid reasons are responsible for this approach: uncertainty over future winners and losers, fear of being left behind, a desire to "block out the competition," and an immature and changing e-commerce landscape. Whatever the reasoning, the result for many chemical companies has been a confusing and costly assortment of channels through which to sell and serve customers.
Chemical companies must now begin to sort out the various e-channels they
will use, given the new business landscape. They must exploit e-commerce as
a competitive weapon to meet customers' needs and not simply to enable existing
processes. The leaders of tomorrow will focus on the following strategic uses
of B2B e-commerce:
o Reducing the cost of interactions with trading partners
o Penetrating new customers and markets
o Reducing the total cost to serve customers across the extended value chain
o Growing share of wallet with target customers
We believe the winners will take a holistic approach to creating their channel
vision. An approach that helps them identify the viable choices, assess their
relative ability to meet the strategic goals of the business, and build consensus
around future paths-to-market that should be pursued. Specifically, we recommend
an approach that answers the following questions:
o How does each channel align with the value proposition of the products and
services offered?
o Which channels will customers want to use?
o Which channels do we want customers to use?
o How is each channel leveraged and aligned with all other channels?
o How will external channel issues and conflicts be managed?
o What is the impact of the new channels on business processes, systems and
people?
Additionally, developing a directionally correct channel vision will require
that companies understand four key decision factors:
o Types of products/services offered
o Customer needs and values
o Channel economics
o Channel power
Knowing the buyer values of your customers, internal costs to serve them, and
the channel power equation will enable you to identify which channels to market
you should use to serve each customer segment.
Choosing the right channels and go-to-market strategy can drive significant
benefits. Accenture recently conducted a study across six industries and with
more than 500 companies on how much CRM capabilities impact a company's profits.
In the chemical industry, out of 54 Customer Relationship Management (CRM) capabilities,
the top five accounted for 40% of the total profit impact. Two of these are
heavily influenced by the channel choices a company makes. If you get it right,
the rewards can be impressive.
