Wednesday, December 03, 2003
ISSUE: Bad Retailing Hurts The Whole Industry
In my mid October post, A Tale of Two Retailers, I contrasted the self-serve buffet retail model with the made-to-order deli. Both models can work, but too often the experience is abysmal regardless of which venue you choose. When customers opt for no interaction, it is an indictment of the retail experience. I agree with Robert Scoble, “The retail industry seems to be giving up the fight. …you're gonna buy a Dell anyway” Just as a VAR with bad service loses business to the low cost retailer, the ineffective retailer will lose business to less painful direct or on-line providers.
So what, you say. Doesn’t Microsoft get its cut anyway?
Well, for starters, not all channels are equal in their contribution to profits. The massive shift from VARs to SPs cost Cisco several hundred million. But the reason Microsoft and Intel and HP and IBM and the rest of the industry should care is that bad experiences reduce demand. Scoble’s anecdote of shopping in Silicon Valley is very, very telling. When the Dave Winers' of the world walk out without spending the $3,000 in their pockets, the whole industry loses out! Dave Winer is not the only customer sitting on discretionary cash.
How can Microsoft address this issue?
Recognize that good service alone is not enough. Retail also needs good merchandising. Last month in Changsha China we visited a multi story computer product mall. Each store had 3 to 5 employees and 4 tables to sit down, discuss user needs and design a BTO computer. Service was attentive; as we entered each store, someone immediately asked us how they could help us. (The fact that my associates did not speak Chinese did not deter them in the least.) Problem was that all 40 stores in the mall were exactly the same. Worse yet, all of them were uninviting.
Change the status quo. A Intel Premier Provider in Turkey told me last month that when he visits his channel partners, he beats them up if they have poorly executed branding or merchandising. He sits down with the executives and together they decide how to improve productivity and profitability. I saw him do it with other Intel Premier Providers. That is channel management.
Get to know your customers business model better. We have been working with channel providers to benchmark and evaluate their businesses. We identify the metrics that drive business by business model segment. An article in December's FSB stated that every business has a core metric. When you ask a channel provider to do unnatural acts, contrary to their business model, you destroy trust.
Expect more from your CAMs. Task them with improving the viability of their accounts. Evaluate their ability to interact with executives. Require them to live and breathe business models and issues. Measure their ability to identify opportunities and drive past traditional channel support issues of price and availability. Document their successes and failures to manage their accounts. Drill them on skills until they succeed or wash out.
Scott Karren, The Channel Pro
In my mid October post, A Tale of Two Retailers, I contrasted the self-serve buffet retail model with the made-to-order deli. Both models can work, but too often the experience is abysmal regardless of which venue you choose. When customers opt for no interaction, it is an indictment of the retail experience. I agree with Robert Scoble, “The retail industry seems to be giving up the fight. …you're gonna buy a Dell anyway” Just as a VAR with bad service loses business to the low cost retailer, the ineffective retailer will lose business to less painful direct or on-line providers.
So what, you say. Doesn’t Microsoft get its cut anyway?
Well, for starters, not all channels are equal in their contribution to profits. The massive shift from VARs to SPs cost Cisco several hundred million. But the reason Microsoft and Intel and HP and IBM and the rest of the industry should care is that bad experiences reduce demand. Scoble’s anecdote of shopping in Silicon Valley is very, very telling. When the Dave Winers' of the world walk out without spending the $3,000 in their pockets, the whole industry loses out! Dave Winer is not the only customer sitting on discretionary cash.
How can Microsoft address this issue?
Recognize that good service alone is not enough. Retail also needs good merchandising. Last month in Changsha China we visited a multi story computer product mall. Each store had 3 to 5 employees and 4 tables to sit down, discuss user needs and design a BTO computer. Service was attentive; as we entered each store, someone immediately asked us how they could help us. (The fact that my associates did not speak Chinese did not deter them in the least.) Problem was that all 40 stores in the mall were exactly the same. Worse yet, all of them were uninviting.
Change the status quo. A Intel Premier Provider in Turkey told me last month that when he visits his channel partners, he beats them up if they have poorly executed branding or merchandising. He sits down with the executives and together they decide how to improve productivity and profitability. I saw him do it with other Intel Premier Providers. That is channel management.
Get to know your customers business model better. We have been working with channel providers to benchmark and evaluate their businesses. We identify the metrics that drive business by business model segment. An article in December's FSB stated that every business has a core metric. When you ask a channel provider to do unnatural acts, contrary to their business model, you destroy trust.
Expect more from your CAMs. Task them with improving the viability of their accounts. Evaluate their ability to interact with executives. Require them to live and breathe business models and issues. Measure their ability to identify opportunities and drive past traditional channel support issues of price and availability. Document their successes and failures to manage their accounts. Drill them on skills until they succeed or wash out.
Scott Karren, The Channel Pro
