Article at a glance:

Steering customers to the right channels

Customers who use a number of channels—stores, the Internet, direct mail—have a tendency to spend more money than those who use only one. But in many industries, the proliferation of channels has had the unintended consequence of increasing costs and diminishing revenues. To regain control, companies should actively guide customers to the right channels during sales and service by offering incentives. Carefully tailored "routes to market" can become important sources of differentiation, as they are difficult to imitate and can become strongly associated in the minds of customers with actual product or service offerings.

The take-away

Companies can reduce their sales and service costs, increase their revenue per customer, and penetrate underserved segments by guiding customers to the most appropriate channels. To do so, companies should gain a clear understanding of their channel economics and develop plans to manage relations with their channel partners.