HomeSymVolliSales FocusBlogResourcesContact

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?

It is possible and not difficult 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 and activity, to either maximise efficiency, ie minimise time and cost, or maximise effectiveness, ie grow revenues and market share.

One benefit of having developed the framework of how channels are being deployed, is that the framework can then be communicated to the customer, which allows the customer to select the way he or she wants to engage with you.

This is vitally important, as if your customer’s switching cost is low, ie he or she can easily find an alternative supplier of the product or service, or transact according to either or both their personal and company preferences, then you have to allow your customer to transact when and how they want, if you want to keep the customer.

The brand experience you offer your customer is often the only way of maintaining or raising the switching cost. The brand experience is not just the features, benefits, price, availability and service; it is also your customer’s experience of the transaction, from start to finish.

To ensure the experience required by your customer, you must engineer every aspect of the experience, especially when the customer moves from one channel to the next, such as a move from the web, to the contact centre, and from the contact centre to a visit from a field sales person.

In order to apply the framework, a simple set of questions, which can be used as a checklist, 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 channels can also be used to fulfil a service, ie supply what is being bought, the channel can be used for both communication and fulfilment.

A different channel may be used by the customer in each stage of their buying cycle:

• Developing awareness of what is available
• Assessing needs and building a specification of requirements
• Obtaining quotations
• Placing the order
• Taking delivery
• Getting after sales service and support

Note that the buying cycle may be different for new and current customers and also for first time and repeat sales.

What is the impact of the channel?

Different channels have different impacts, and these impacts 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, in terms of their life time value (LTV) to you, in terms of the number and value of transactions and the number of months or years they remain a customer.

Different channels have different costs: a visit from a sales person may cost £500, while a call from a call centre may cost £5 and a visit to a web site might cost £0.05.

Adapt the mix of channels, ie the total cost to the lifetime value of the customer and the potential to increase that value, 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?

Adapt the mix of channel 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?

Assess the potential to increase the value of the customer, or the cost of losing the customer. Spend more on the channel mix if needed to grow or retain the customer.

What is the customer’s switching cost?

If you customer has a large number of choices rather than buying from you, make sure you allow the customer to work according to their preferences, ie to allow 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 change. Preferences will also vary according to the stage in the buying cycle. You will probably have to have a different mix of customer for each customer type or segment.

Channel capability: how much can be automated?

Some customers are happy to do more of the work through the buying cycle than others. Some will provide details that allow more of the cycle to be automated, especially as their trust and confidence grows with experience. Some channels allow more automation than others.

The framework

Work 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 buying cycle stage and by customer type, to maximise revenue or share, maximise profit or minimise cost to serve, continually adjusting the resource allocate as costs, objectives and opportunities change.

© Nicholas Coutts October 2007

www.nicholascoutts.com