What is the nature of your go to market channels and your suppliers? 
Published: Mar-31-14
 

Technology changes channel economics, capabilities and capacities, also changing the rules in favor of some and disrupting others. Evaluating changes in the go-to-market channels is another technique for assessing the silent signs of disruption. 
 
Customers disrupt companies when they choose alternative approaches to meeting their needs. When this happens the average age of a company’s customer base tends to lengthen as current customers stay and new customers materialize at competitors or even in different industries. Diagnosing those signs of disruption was the focus of a prior post. 
 
Choice disrupts channels

Channels create disruption. Customers choose more than a company, product or service; they choose a channel and where there is choice there is the opportunity for disruption. Channels are disruptive in multiple ways including traditional channel strategy and commerce tactics such as:

  • Channel partners no longer offering your product or service, or
  • The channel placing competing products or services ahead of yours, or
  • The channel is no longer effective at attracting customers, or
  • Their economics and commercial terms turn negative

The points above address channel strategies and tactics. However, if channels are a source of disruption, then there should be a way to assess the signs of disruption.
 
Thinking of channels as another form of customer
 
What is the average age of the people working with you in the channel? The same concerns with customers apply to channel partners and suppliers. If they are not attracting younger professionals, then chances are talent is going to other players, channels and markets – besides yours.  This is an early disruption indicator, one that is playing out in several industries where digital technology changes channel structures.
 
The next question looks at channel partner strategies and actions. How has the structure of the channel and suppliers changed? Market structures change based on how executives see the future, they change based on seeking greater opportunity and moving away from other the status quo.
 
Are channel players and suppliers consolidating to gain scale and buy growth? Disruption is a factor behind consolidation strategies as companies seek to grow scale through acquisition while organic growth opportunities wane.
 
What is their relative investment in new capabilities and capacities? Look at investments over the last three to five years. Channel partners and suppliers who switch to a cash cow approach are saying much about their expectations for future growth. What constitutes an investment? Hiring more people is more operational than strategic. Investing in new tools, new geographies, and new relationships represent strategic choices that reflect confidence in the future.
 
If you are tempted to increase vertical integration for either of these issues, think again. Ask why growing up is better than growing out into adjacent markets and if the opportunity to grow up is because others are making room by leaving. If players are leaving the value chain or they are losing their effectiveness, then you may be seeking vertical headroom for all the wrong reasons. 
 
Channel disruption is particularly disruptive
 
Companies, products and services come and go, but change the channel and the industry changes. The technologies that comprise ‘digital’ differ from their big iron predecessors. Mobility, social, analytics and even cloud support fundamentally human solutions like the apps on your phone, the intelligence in recommendations etc. 
 
People choose and their choices create disruption. Choosing channels creates a dynamic for disruption as choosing a path to the market changes everything in the market. Understanding the path to market and the investments of players along that path helps identify sources of digital disruption.

 
 
 
 
Apr-07-14
Great article. I believe Wall Street had better read this before it is too late. The retail sales channel for the distribution of "advice" is old, confusing and costly. Companies like Regional Family Offices are using new technology, a unique organizational structure to control costs and deliver an excpetional experience for the successful family.
 
 
James C Ea.stman   |   Apr-07-14   |  07:38 PM
Apr-03-14
One can do something , but not everything , can be somewhere not everyhwere, so we Choose Channel partners looking for operational efficiency, cost-benefit.,Best of the Quality n service to customers ,TAT etc.but the technologies are so dynamic that changing the mode of channel operations ,communications.Customers should be well informed of the same continuously.Choosing a partner or setting up channels in New markets is also a challenge to counter the strategies of the already existing players .Summing this article as Consider channel partners as customers and avoid disruptions by implementing preventive maintenance mechanisms . Its very nice article Mark and Glen. Happy weeekend. srinivas srinivascrm123@yahoo.com
 
 
Srinivas   |   Apr-03-14   |  11:02 PM

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About the Authors
Mark P. McDonald
Managing Director, Accenture Strategy

Mark McDonald is a Managing Director and Digital Business Strategy Lead in Accenture Strategy, which helps clients to strategize, architect and ...

 
Glen Hartman
Global Managing Director
Digital Consulting, Accenture Interactive

Glen Hartman is global managing director of digital consulting for Accenture Interactive, a business unit dedicated to delivering integrated mar...

 
 

 

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