Channelizing a Product

Product-channel fit is not just about finding an appropriate channel for a given product. On the contrary, as soon as a new channel is being evaluated, companies discover that product-channel fit works the other way around too. New channels almost invariably require at least some redesign or reconfiguration of the product. To succeed in a new channel, a product usually must first be made "channel-ready."

Salesforce.com took the old CRM technology that required expensive hardware, database software, and IT support—which was sold through a field sales force or partners—and redefined it for new channel, the Internet, using the Software as a Service (SaaS) platform. Hence, the company redefined how a complex CRM solution is sold using low-cost channels. You can do it too. Below are six principles that you can use to reconfigure your products for low-cost channels:

Tools for Channelizing a Product

There are few products that aren't successfully sold through low-costs channels. More and more products, from complex software to jet aircrafts, are showing up in low-cost direct marketing channels every day. This has been the key trend since the beginning of the millennium, one which will continue to proliferate across more industries as customers become increasingly comfortable with and enthusiastic about doing business through low-cost, self-service channels. Companies looking at channel opportunities need to stay on top of this trend and benefit from it. If you have a complex product, you can use the following six tools to modify it for low-cost channels:

• product simplification – Reduce the number of features so that it becomes a simple and cost-effective product to be sold through low-cost channels, as Salesforce.com did for CRM.

• product standardization – Eliminate unnecessary model variation and customization options. Opt, instead, for mass customization, as car companies do—same model, different colors, different accessories, yet standard product.

• channel pricing – Customers believe they can find bargains on the Internet, so price your products accordingly. Learn from Progressive.com, which offers instant price quotes, price comparison and name your price options.

• user self-sufficiency – Include training, procedures and post-sales as part of the basic product. Email support or ticketing systems offer an effective way to deliver customer support cost-effectively.

• purchase streamlining – Eliminate complex and confusing contractual and financing terms. Have you ever read the full terms of reference before buying a product from Dell? Exactly my point. Adding one-click financing options, as Dell or eBay does, makes it even easier for your customers to buy your complex products.

• support integration – Create a secondary support channel to provide any necessary services or post-sales support that cannot be provided well in the alternative channel.

Again, product-channel fit is not always about finding a new channel for a defined product. Frequently, it works the other way around. In many cases, products must be redesigned or reconfigured to fit well into a new channel. This is especially true when existing products are migrating to lower-cost channels. Lower-cost channels are lower-touch channels, and they require simpler, more standardized, more complete products to work effectively.

At the end of this step, you should have a well-defined set of channels that fits well with existing products and a buy-in from production to change/reconfigure existing products for new low-cost channels. The last step is to map these channels against business goals to create a prioritized list of channels.

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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
        
      • Channelizing a Product