All markets are getting more and more crowded with an increasing abundance of product and service offerings. And, although there has been an increase in the number of channels through which customers can be reached, they are also becoming pretty crowded. The only way to prevent our business from fading into the noise is to maintain control of our marketing and sales processes. Two examples of where a business needed to regain control of their key marketing and sales processes are Leica, and Pangea Organics.
In the case of Leica, they are a German manufacturer of precision cameras, where their dealer network in the US was declining. So the company decided to open a flagship retail store in 2012 in Washington DC. But not your average everyday retail store. It included a studio to properly demonstrate the products, a gallery to show the photographic results, and the ability to hold photography courses. Leica is in direct control and their marketing message is now resonating as it should.
In the case Pangea Organics, a skin-care company, they felt they had improved their customer reach, by finally achieving the big time distribution in Macy’s and Whole Foods. But these were powerful partners who controlled their channel to the point where Pangea was hampered in how it promoted within the store, and the costing structure that it had to work under. So they made a drastic change. They exited this distribution channel and moved to multilevel marketing model, which effectively is a network of independent sales agents. Although they are independent, their commitment and motivation is much better suited to the product offering, and their results are now better.
There is no question that those who own the customer relationship, control the fate and direction of the business. But owning that relationship means that you must maintain a level of connectedness that suits your specific product offering. And if you put too much in between your business and your customer, there will undoubtedly be less opportunity for communication. Less opportunity to show the value you provide. And less opportunity to gather that all important market intelligence from real and prospective customers.
The more that the value of your product or service offering needs to be communicated to your prospective customer, the more important it is that you stay in control of the process. No one is in a better position to communicate the value of the offering than the business that is actually creating it. But the reality of penetrating any marketplace means that it is necessary for you to find channels to the prospective customer that you are after. And this is where the whole intermediation process starts to set in. So it is a bit of a Catch-22. You need to go through some intermediation to get in the channel. But as soon as you add a layer of intermediation, your level of control and influence is reduced.
Whether you are going through the internet, or whether you are going through dealers or agents, as soon as there is an intermediary, it is vital to understand the nature of the relationship between you and the intermediary and how it will impact your control of the customer relationship. Too many layers weakens the connection. Too many sources of conflict weakens the connection. Too much power imbalance weakens the connection. Too much cultural differences weakens the connection. The more dimensions along which you and the intermediary differ, the more dilution to your entire marketing and sales process.
When it comes to an intermediary, you must ask yourself the question: Are you part of their business model? Or, are they part of your business model? But even though you may be able to answer yes to both questions, you need to ensure that you are able to retain the degree of connection to the customer that you need. Without it, you will lose the ability to control the direction of your business, and that is a losing proposition.