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Channel conflict: No longer a showstopper for B2B e-commerce

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When it comes to B2B e-commerce, buyers are unquestionably in the driver’s seat. Customers are acting more like free agents, preferring to search and buy online with any computer or mobile device within reach. This trend is so pervasive that B2B companies will experience 25%–50% more revenue risk if they are not capable of conducting commerce online, according to Forrester.

Unfortunately, such observations do not mean that establishing an e-commerce storefront is a slam-dunk decision. After much consideration and discussion, executives are often paralyzed by the realization that online commerce could potentially mess up – and even anger – the existing ecosystem of sales reps, distributors, retailers, and dealers. Just as quick as fear, doubt, and uncertainty sets in the boardroom, the idea of an online store is tabled until the time is perfect.

But here’s the problem: There’s never a perfect time to do anything, not even e-commerce. With some conscious thought, planning, and collaboration, B2B businesses and sales channels can overcome conflict by working through their differences to drive more collaborative, mutually beneficial opportunities ahead.

Digitizing commerce: Is it worth the risk and effort?

Sales channels are the main reason why any B2B company is generating revenue, making the decision to do something different from the status quo incredibly difficult. Executives are hyper-focused on giving customers what they want. There’s also a desire to not upset the rest of the business, even at the risk of inconveniencing the customer.

It’s apparent that an e-commerce platform increases competitiveness and delivers on customers’ demand for 24×7 self-services. Still, executives inevitably redirect the discussion back to how it creates channel conflict – and the status quo just doesn’t seem as bad as the imagined worst case scenario.

As Laurence J. Peter, the Canadian educator best known for the Peter principle, once advised, “Bureaucracy defends the status quo long past the time when the quo has lost its status.”

And when it comes to B2B e-commerce, the status quo is quickly losing its relevance, if it hasn’t already.

The threat facing B2B organizations now is the market itself. Like it or not, customers and competitors are on a freight train to digitizing the commerce function. If companies don’t find a way to manage their channel conflicts now, they will become highly vulnerable to the competitor that figures it out first, as well as the customer who will accept nothing less than what everyone else is delivering.

But take heart: None of these challenges are insurmountable. The key is to rethink the structure of the value chain between production and the customer.

Five B2B e-commerce strategies for managing channel conflicts

Eliminating channel conflict isn’t as easy as setting up a browse-able website without an “Add to Cart” button. I refer to this approach as the “do nothing” plan. Your customers still don’t get the level of service they need. Your business doesn’t realize a revenue bump that can recoup the money invested. Meanwhile, your sales channels are left confused by an investment that benefits no one.

Instead, try these strategies to minimize channel conflict and pave the way for a mature e-commerce model for direct and channel-powered selling:

  1. Compensate through revenue sharing: Give local channels a percentage of the revenue generated from online customers located in the sales partner’s immediate territory.

  1. Set a recommended price for direct sales: You can’t control the price point of every sales partner, but you can recommend a retail price for the e-commerce channel. By maintaining a minimum price for the online store, you will not undercut the field.

  1. Offer leads: An online presence inevitably helps to build brand awareness and brand loyalty. This is an excellent opportunity to allow your e-commerce site to play double duty in the form of transactional purchases and lead generation. Solid referrals can then be shared with the relevant sales partner for further customer relationship building. Just make sure you have a clear way to track and credit those leads.

  1. Support BOPIS: “Buy online, pick-up in store” (BOPIS) is a widely adopted B2C approach, so why not try it for B2B? With increased foot traffic, sales partners have a better chance to engage the customer and sell more products to increase the value of the initial purchase.

  1. Promote support services: It’s important to remember that the opportunity for revenue does not end with the transaction. By offering complementary professional services, support, and upgrades, every sales channel can play a significant role in the overall customer experience and retention, while increasing its own cash flow.

Bottom line: the sales channel wins when the B2B business succeeds

Whenever the e-commerce debate comes up in the boardroom, it’s important to remember whom you are serving. Yes, it’s the customer. But at the same time, you are creating new sales opportunities for your channel partners.

Salespeople who understand the business, customer, and market typically do not enjoy order taking. No matter how easy the interaction, these incremental sales will not help them achieve their annual sales goals. It’s the higher margin deals and the acquisition of newly engaged buyers that will help. And investing in B2B e-commerce may be exactly the tool that they need to win.

 

George Giovani
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June 9, 2017
George Giovani

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