Can we make it all more organised? With so many different channels and ways to communicate with our customers and markets, how can we prioritise our effort, spend and activities?

As in previous KAE articles, we would like to start by pointing out that when it comes to best practice marketing leadership, it is often short-sighted to differentiate between B2B and B2C.  Customers are customers, be they consumers or businesses.  The product, service or proposition may be different but the marketing mix comprises the same elements.  Marketing is still about understanding diverse needs and reflecting those needs in your communications, your proposition and deployment of available channels.

Make it all more organised

It is both possible and relatively straightforward to make it all more organised.  This article offers a framework that can be used to prioritise the allocation of resources – be they effort, spend or activity – to either maximise efficiency (by minimising time and cost) or maximise effectiveness (by growing revenues and market share).

One benefit of developing a framework that shows how channels are being deployed, is that this can then be communicated to the customer, allowing the customer to select the way he or she engages with you.

This is vitally important: if your customer’s switching cost is low (i.e. he or she can easily find an alternative supplier of the product / service or is able to transact according to their personal / company preferences) then you have to allow your customer to transact when and how they want, in order to keep that customer.

The customer experience that you offer enables you to differentiate your offering from the competition, making the decision-making process about more than just the switching cost alone.  It comprises not just the features, benefits, price, availability and service; rather it reflects all elements of the transaction, from start to finish.  It is a true Ecosystem (see previous article for reference: http://www.themarketingleaders.com/articles/aug07/huw_watkins.html). 

As we have noted previously, positive customer experiences generate loyalty, encourage retention, drive advocacy and – in this context – help you to defend and fortify your client base if they have low intrinsic switching costs.

To measure your customers’ desired experience, you must engineer every aspect of the experience.  This is particularly important when they move from one channel to the next, such as a move from the web to the contact centre and then from the contact centre to a visit from a field sales person.

In order to develop a framework, a simple set of questions needs to be answered:

What is the channel being used for?

Channels can be used to find information such as price, availability, specifications, alternatives and other users’ experience of the vendor, product or service.

Some can also be used to fulfil a service, such as to supply what is being bought, as well as enabling communication between parties.

Note that these may differ for new and current customers as well as for first time and repeat sales.

What is the impact of the channel?

Different channels have different impacts and these may vary according to where the buyer is in his or her buying cycle.  Most buyers go through conscious and unconscious processes that involve the discovery of meaning, trust, value and commitment.

What is the value of the customer?

Some customers are more valuable than others, both in terms of their life time value (LTV) to you and in terms of the number and value of transactions or length of time they remain a customer.

Additionally, different channels have different costs: a visit from a sales person may cost £500, while a call from a call centre may cost £5 or a visit to a website £0.05.

Channels can be mixed either by increasing the average value through cross selling and upselling, or by increasing the number of transactions or extending the period of time the customer continues to buy.

What is the value of the transaction?

The mix of channels can be adapted to match the to the value of the transaction: use a lower cost mix for a lower value transaction and a higher cost mix for a higher value.

What is the potential?

What is your potential to increase the value of the customer versus the cost of losing them?  Spend more on the channel mix as required to grow or retain the customer.

What is the customer’s switching cost?

If your customer has a large range of competitors from which to choose, you can differentiate your offering by allowing them to work according to their personal preferences, enabling them to transact when and how they want.

What is the customer’s preference?

Preference for channel use will vary by customer: it will also change over time and switching costs will shift.  Preferences will also vary according to the customer’s stage in the buying cycle, all of which suggests that you compile a different mix of channels for each customer type or segment.

Channel capability: how much can be automated?

This will vary according to the customer.  Some will be happy to provide details that allow more of the cycle to be automated, especially as their trust and confidence grows with experience, while others will require more coaxing.  There are also a range of channels that afford more automation than others.

The framework

The grid below lays out the impact and cost of each cell in a channel map:

KEY:   I = IMPACT
$ = COST
distrib. = distributor

Note: the impact and cost can be high, medium or low – you do not need to have precise numbers, although this can help.

Do this for each customer type:

You can then work out the impact and cost and allocate your resources of effort, spend and activity accordingly, according to the potential value of each customer type.

More sophisticated users will use activity based costing (ABC) to identify the costs in each step in each channel.  Really sophisticated users will apply optimisation techniques (to optimise resource allocation across channels) by their stage in the buying cycle and by customer type to maximise revenue or share, maximise profit or minimise cost to serve, continually adjusting the resource allocation as costs, objectives and opportunities change.

In summary, multichannel marketing isn’t just for the consumer brands.  Customer Experience is as valuable in the B2B context as it is for B2C; multiple channels provide an opportunity to offer a tailored marketing mix and message that reflects and caters to the needs and expectations of your diverse client base.  Developing a prescribed framework in this way informs resource allocation, optimises efficiency and – most importantly – can help you to achieve the much-sought after consistency and richness of experience across multiple channels.

By Nick Coutts and Huw Watkins

About the authors:

Nick Coutts. One of the world’s leading authorities on routes to market, Nicholas helps clients select and maintain the optimum mix of direct and indirect channels and routes to market that will maximise market share, profit and brand value.

An expert in the design and marketing of services, he develops models, tools, processes and services which help companies go to market more effectively and efficiently.

As Vice President, Global Distribution Channel Strategy for IBM, he was responsible for channel strategy and development and the effective use of distribution channels. He has a masters degree in economics from Kings College, Cambridge. Nicholas is a trustee and chair of The Dialogue Trust, which runs dialogue groups in prisons and in the local community to help reduce reoffending.

Huw Watkins is account director at kae: marketing intelligence. He has over 15 years of marketing experience as both a client and a consultant operating at senior levels in the UK and overseas. Working across multiple B2C and B2B sectors, his focus has been upon identifying new market opportunities and generating and delivering innovative and sustainable solutions to drive revenue growth.