8.6 Customer Channels

The Customer Channels is the building block that describes how a company communicates with its Customer Segments to deliver a Value Proposition.

A. Channels have several marketing functions, including:

1. Raising awareness of the company's products and services 2. Helping customers evaluate the company's Value Proposition 3. Allowing customers to purchase specific products and services 4. Delivering a Value Proposition to customers 5. Providing post-purchase customer support

B. Companies commonly examine their performance to answer such questions as: What channels are best suited to our Customer Segments? How are we reaching customers now? How well are our Channels integrated? Which ones are working best? Which are most cost-efficient? How are we integrating them with sales and after-sales routines?

C. Companies may also distinguish between their Owned and Partner Sales, and between Direct Sales (using their Sales force and web site) and Indirect Sales (own stores, partner stores and wholesalers). Partner Channels have lower profit margins, but they allow a company to extend its reach and to benefit from partner strengths. Owned Channels, particularly direct ones, have higher margins, but can be costly to establish and maintain. Most companies use both, finding the mix that maximizes customer Value Propositions and company Revenues.

Channels also posses five distinct temporal phases, any or all of which may apply to aspects A to C above.

1. Awareness: how are customers to be made aware of products and services?

2. Evaluation: how can customers be helped to evaluate our products and services?

3. Purchase: how are purchases to be facilitated?

4. How are Value Propositions to be delivered to the customer?

5. What after-sales services do customers expect?

Relevant Case Studies

Commerce Bancorp reached out-of-hours customers and busy mums by keeping retail rather than banking hours.

Craigslist expanded from an email listing to an Internet-based classified ads.

Amazon expanded from selling books to general retail and other services.

Andhra Pradesh bypassed centuries of corruption to open free channels between government and citizens.

Intel marketed its chip to PC purchasers.

Ipswich Seeds eventually found new customer channels (online catalog).

OpenTable used the Internet for its restaurant reservation booking service.

Proctor & Gamble marketed Chlorox as a 'green' product.

Fine Arts Ceramics found new customer channels through third-party auction sites.

Questions

1. What are customer channels? What functions do they serve?
2. List the three types of customer channels and five temporal phases of them.
3. Briefly illustrate the importance of customer channels with three case studies.
4. What ebusiness topics can help improve customer channels?

Sources and Further Reading

1. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers by Alexander Osterwalder and Yves Pigneur. Wiley 2010.