Jim groaned. Turning in his chair to face his accounting manager, he said, “I just heard another dog food producer is starting up over in Ohio. With our sales being flat for the last two years, I’m afraid they are really going to hurt us. I wish we could find more dogs who like our product. That would help us out a lot.”
As you can guess, for Jim to overcome this new challenge, he doesn’t really need more dogs to like his product. He needs more people to learn about the benefits of buying his dog food. One of the steps he needs to take is to examine his marketing channel—is it too narrow or too shallow?
But first, what is a marketing channel?
What is a marketing channel? The word channel is used in two ways in the marketing world. Primarily it refers to the processes, people, and work involved in selling and shipping goods from manufacturer to end consumer. That is what this article is about. A channel can also be a method of communication such as direct mail, newspaper ads, or radio.
Marketing channels are a key component in business, especially when several local businesses are competing for the same market. Developing a marketing channel that will take your product beyond the competitive local market to places where the competition doesn’t go is a key to survival.
Measuring your channel
The concepts of channel dimensions—length, breadth, and depth—in the next three paragraphs were first introduced to me in a training session by marketing expert Drew Boyd.
Length. Channels can be long or short. How many people (companies) are between you and the end consumer? A brand name snack food manufacturer has a five-segment channel: manufacturer, master distributor, regional distributor, retail store, consumer. A world-renowned furniture brand has a two-segment channel: manufacturer, consumer. If you are a manufacturer, consider what would be the ideal length of your channel. The ideal channel length can change as conditions evolve both inside and outside the company.
Breadth. Channels can be wide or narrow. How many outlets sell your product? The brand name snack foods are sold in thousands of retail stores. The famous furniture brand is sold in six strategically located storefronts in major U.S. cities.
Depth. Channels can be shallow or deep. How much of the channel do you own? How much do channel partners own? The brand name snack food company owns only the first segment of the channel--the manufacturing. The furniture brand owns all segments of the channel from manufacturing to final delivery and setup.
Many Anabaptist food companies have a short and narrow channel, for example, produce roadside stands and bakery shops selling directly to the consumer; but like the snack food company, we can also market food through long and broad channels.
Most furniture built in Anabaptist businesses is marketed through a broad, shallow channel—wholesale through a dealer network. Again, the example above shows that furniture sales channels can also be narrow and deep.
Picture your marketing channels as a waterway or canal. For your business to survive, three things need to flow through your marketing channel: information, products, and money. These three need to flow in both directions, and the smoother the flow, the more you will sell.
Smooth information flow
When considering the flow in your channel, focus on the most important aspect, which is information. Communication is necessary before any products or money will flow. Information flow is the water that allows the boats of product and money to float up and down your channel.
Information such as product catalogs and price lists are basic essentials. Warranties, return policies, production times, product weights and dimensions, and shipping rates should also be clearly communicated.
If you want to find out what other information you should be making available to your channel partners, keep a list of the questions people ask. You may already know the three most commonly asked questions. Include them in your marketing materials for your channel partners. Not only will this save you time, but more importantly, it will also make it easier for your channel partners to do business with you.
Make sure your pricing is as complete as possible. You might protest, “But we sell custom products. We can’t make a price list.”
Think of it this way—what methods do you use to set your prices? Could you give that information to your channel partners so they can calculate their own pricing? What can you do to make it simple for them? A custom door company developed a system that allowed distributors, lumber supply companies, and even contractors to generate a price for a custom door. They gain a lot of sales simply because it is very easy for potential buyers to get a price.
Be sure there is a simple and clearly defined procedure for handling complaints. When a channel partner or end consumer has a problem, please don’t compound it by making it difficult for them to communicate with you. Rather, give them clear direction up front about how to file complaints. Put people and systems in place so you can respond quickly to address their problems.
Educate your channel partners and end customers as much as possible. The more they know, the more they are empowered to make a good buying decision. Explain why you do things the way you do and how it benefits the customer. Provide your channel partners with brochures, catalogs, price lists, diagrams, illustrations, pictures, charts, research, stories, sample kits, and anything else you can think of that will empower them to sell. Inform them of new products, new production methods, and new policies and procedures as soon as they are available.
In today’s world it is not good enough to simply communicate—you must communicate quickly and completely. Answer phone calls if at all possible. Return voicemails as soon as possible—within five minutes is not too soon. According to one report, sales reps that responded to online questions within five minutes were seven times more likely to have meaningful conversation with a decision-maker than reps who responded to questions an hour later. 1
Sometimes we delay calling someone back because we don’t have an answer to their question. Call them back anyway and let them know you got their message and that you are working on the answer. Don’t make them wait until tomorrow to hear from you. Provide an estimate of how long it will take you to have the answer. When you do give information, make sure it is complete so they won’t need to ask more questions later. A fast satisfactory answer makes a huge positive impression.
Information should also flow from your customers back to you. You should be asking questions and gathering information that will help you improve your products and services. It is a good practice to get out into the field and talk with the partners in every segment of your channel. You should also be talking with your consumers to discover their frustrations and challenges. Discuss possible solutions. Solve their problems for them as much as possible. The more of their problems you can solve, the more they will value your relationship.
Invest deeply in your channel partners. Pay attention to them. Teach them, train them, listen to them, learn from them, and help them. Give them all the tools and information you possibly can.
What part of your marketing channel needs the most improvement? How can you turn that trouble spot into the smoothest, most effective part? When your channel is structured properly and information is flowing both directions, products and money will float along with it.