Crafting a Winning Customer Channel Strategy

Every business has a different approach or route to market. Businesses serve a variety of different customers, they can be direct consumers of your products, wholesale customers, and retail customers. Each model is different depending on the “steps” taken to get your goods into the hands of the final consumer. Devising a robust customer channel strategy is vital for reaching and engaging with your target market effectively. A well-thought-out channel strategy not only enhances customer experience but also optimises sales and marketing efforts, driving growth and profitability. This blog post delves into best practices for developing a customer channel strategy, drawing on insights from academic research and our experience with industry best practices.

Understanding Customer Channel Strategy

A customer channel strategy involves selecting and managing the pathways through which a business communicates with and sells to its customers. These channels can range from physical storefronts and online marketplaces to social media platforms and direct sales teams. The goal is to use these channels to create a seamless and satisfying customer journey, from awareness and consideration to purchase and purchase recurrence [1]. For example, within the tool industry tool manufacturers often sell direct to tradespeople (B2C), to wholesalers (2 Steps, who then sell to retailers), to retailers (1 step, who then sell to tradespeople) or direct to businesses (who use the tools within their business) and so on. This complex channel mix makes it critical that the tool manufacturer actively manages each effectively.

Best Practices for Customer Channel Strategy

1.      Identify your business's strengths and weaknesses: It is important to know whether your business has the competencies and resources required to engage with customers within different channels. From the tool example, are you able to engage with tradespeople at scale? Can you credibly engage one-on-one with end users of your tools? Do you have the logistics capabilities to economically fulfill orders to multiple retailers?

2.      Identify Your Target Customer Segments: Understanding your customers' preferences, behaviours, and needs in each channel is foundational to selecting the right channels to participate in. Research suggests that customer segmentation can significantly influence channel effectiveness, underscoring the importance of aligning channel choices with customer segments [2]. Different channels can address different consumer groups. Again, using our tool example, it is important to understand if there are established retail or wholesale players that have the scale and reach of end users that your business does not. Is it more cost-effective to sell to a wholesaler, retailer, or both?

3.      Leverage Data and Analytics: Utilising data analytics can provide valuable insights into customer behaviours and channel performance, allowing SMEs to make informed decisions about channel optimization and personalization [5]. Again, using our tool example, big box retailers can draw in tradespeople to their stores, and wholesalers can have established contractual agreements with businesses and retailers that can be leveraged.

4.      Focus on Customer Experience: Every channel should be optimised to deliver the best possible customer experience, from the ease of navigation on a website to the responsiveness of customer service. Enhancing customer experience across all channels can drive repeat business and positive word-of-mouth [6]. For tools, certain trades can prefer to incorporate their purchases with a wholesaler or retailer.

5.      Continuous Evaluation and Adaptation: Customer preferences and the effectiveness of different channels can change over time. Regularly reviewing and adapting your channel strategy is essential to stay aligned with market trends and customer needs [7].

Embracing Omnichannel Presence

Increasingly, customers expect to interact with businesses across multiple channels seamlessly. An omnichannel strategy, which integrates various channels to offer a cohesive customer experience, has been shown to enhance customer satisfaction and recurrence [3]. This must however be managed proactively to minimise conflict between channel customers. From a communication perspective, with the increasing importance of digital presence, SMEs should prioritise digital channels such as social media, websites, and email marketing. These channels offer cost-effective ways to reach a broad audience and engage with customers directly [4]. This can be used to drive demand back into your customer channel mix effectively.

 

Common Processes in Developing a Customer Channel Strategy

1. Market and Customer Research: Conducting thorough research to understand market trends, competitor channel strategies, and customer preferences is a crucial first step.

2. Channel Selection and Integration: Based on research insights, select the channels that best reach your target segments and integrate them to provide a unified customer experience.

3. Training and Support: Ensure that your team is well-trained to manage and optimise each chosen channel effectively, focusing on delivering excellent customer service.

4. Monitoring and Analytics: Implement tools and processes to continuously monitor channel performance and gather customer feedback, using this data to refine and improve your strategy.

5. Flexibility and Innovation: Stay open to exploring new channels and innovative approaches to customer engagement, keeping your strategy adaptable to changes in the market and technology.

For SMEs, a strategic approach to customer channel management is not just about selling products or services; it is about building lasting relationships with customers across multiple touchpoints. By understanding your customers, embracing an omnichannel presence, leveraging data, and continuously optimising the customer experience, SMEs can develop a powerful channel strategy that drives growth and customer recurrence.

At Marlton Capital Partners we are experienced in devising and managing complex channel strategies. When we invest in a business, as a value-adding partner we will assist in this channel management process through assessment, strategies, and our broad network of contacts. Often it is the unexpected clashes and conflicts within a channel mix that can impact customer experiences, importantly we will help anticipate these via the planning process.

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Disclaimer: This article serves as a guide and is not intended as financial or investment advice. Seek professional advice before entering into any equity partnerships.

 

Footnotes:

[1] General insight based on industry best practices in channel strategy development.

[2] Adapted from academic research on the impact of customer segmentation on channel effectiveness.

[3] Based on studies highlighting the benefits of an omnichannel approach to customer satisfaction and loyalty.

[4] Reflecting the growing importance of digital channels in reaching and engaging customers.

[5] Derived from research on the role of data analytics in enhancing channel selection and personalization.

[6] Based on insights into the critical role of customer experience in channel strategy.

[7] Adapted from best practices on the need for continuous evaluation and adaptation in channel management.