Channel-Product Fit

How you sell has to match with what you sell. Ever heard of a jet aircraft being sold in a supermarket? Products are a key factor in the selection of sales channels. Some products can be sold through only one channel, while others offer more flexibility. For example, if you want to sell to the federal government, the only channel opportunity you have is to respond to a RFQ—okay, there are some tricks, too, but you got the point.

The idea behind this step is not to shorten your channel option list based on your product. Instead, the idea is to prioritize channels into two categories: i) channels that fit perfectly with your product, and ii) channels that don’t immediately fit with your product but which customers are demanding.

There are numerous product attributes that affect the product-channel fit. A few important ones are:

• Definition – How recognizable a product and how well-articulated are its benefits e.g., a pair of shoes from Nike is very well-recognized as compared to business advisory services.

• Customization – The level of customization needed in the sales process. For example, Microsoft Office can be bought off the shelf, but it requires a good deal of customization to deploy the company's middle-ware application.

• Aggregation – Does the product need to be integrated with other components to make a full solution? For example, an Intel CPU and ball bearings both need to be combined with other components to make a full solution.

• Exclusivity – Is the product designed for mass production or exclusive use? For example, Rolex watches are for limited markets and sold through exclusive channels.

• Customer risk – How much education does a customer need to make a valid decision? The riskier the product, the more education is needed eg., open heart surgery as compared to hair implantation.

• Negotiation – Negotiation could be needed on price, customization, post-sales support, etc. The higher the need, the more complex the solution.

The chart below compares product attributes to generic channel attributes. You can use this grid as the starting point to divide your list of channels into two categories.

As the chart shows, complex products require high-touch channels. Simple products, on the other hand, can be sold through low-cost, low-touch channels. This commonsense wisdom works very well. However, the goal of this exercise is not to do what everyone else is doing. Rather, we want to innovate how we sell. For example, as the chart shows, complex products like strategic management consulting or customized customer relationship management software are generally sold through high-touch points like a field sales force and partners, but companies are selling a complex CRM solutions using low-cost channels like the Internet e.g., Salesforce.com. What gives? Next section "Channelizing a Product" answer this question.

Related:

• Table of Content
• Red Queen Effect – An Introduction
  
• The Billionaire Code
  • Secret of World Class Companies
    
  • Impact of Using Secrets of World Class Companies
    
• Cracking the Code
  
  • Customer Experience
    
  • Customer Engagement Channels
    
  • From Multiple Channels to Integrated Multichannel Selling
    
  • Benefits of Integrated Multichannel Selling Models
    
  • Customer Relationship Lifecycle
  • Integrated Multichannel Selling Models
    
    • Reduced Costs
      
    • Improved margins
      
    • Broader market coverage
    • Rapid revenue growth
      
  • In Conclusion
    
• Implementation Plan
  • Renovation or Innovation?
    
  • Implementation Process
  • Baseline Current Go-To-Market Activities
    
  • Protect & Renew
    
    • You've Got Customers. Now What?
      
    • Net Promoter Score
      
    • Customer Profitability – A look from inside
      
    • Finding Treasures
      
    • Customer Life Time Value
      
    • Calculating Customer Life Time Value
      
    • Unearthing the Treasure
      
    • In Conclusion
      
  • Plan for New Sales
    
    • Targeting the Right Market
      
    • Market Segmentation
      
    • Prioritizing Target Markets
    • Align with Your Customers
      
    • Example of Customer Experience Mapping
      
    • Mapping Customer Experience
      
    • Drawing Customer Persona
      
    • Customer's Moments of Truth
      
    • Identifying Appropriate Levers to WOW Customers
      
    • Establish Channels to Deliver the WOW Experience
      
      • Applying Customer Filters
      • Channel-Product Fit