Managing Channel Conflict

As more and more channels are being introduced into the marketplace, conflict among those channels becomes inevitable. This can happen when multiple sales resources target the same account. For example, an inside sales representative and international account manager both engage with a client because it is not clear who owns the account. As one salesperson admitted, “If you contact three different channels, you will get three different quotes.” It also can happen when a customer is assigned to one channel but chooses to interact with a channel other than the one assigned to their account. As an example, a customer may engage a local distributor to buy a product rather than call their business account representative because they need it quickly. If contingencies are not in place to handle these occurrences, inefficiencies for both the buyer and the seller can result.

To prevent situations where multiple sales resources are reaching out to the same customers and creating redundancy, customers (or customer segments) can be assigned to specific sales channels or resources. To do this appropriately requires a strategic approach to market planning, differentiating customers and segments by preferences, behaviors, needs, and, ultimately, potential to the organization. Further, these decisions need to be clearly communicated to sales channels. No salesperson wants to waste time prospecting an account for which there will be no reward. Therefore, setting clear guidelines for which resource owns each account or customer segment can reduce the likelihood that two different sales resources will target the same customer or segment.

Although this can help in the case of seller-initiated communications, there is still the issue of ongoing relationship management and instances where the customer can initiate channel conflict. This can even be intentional, as one sales representative noted, “Sure conflict exists, it’s just the nature of the business. Sometimes customers will often stir it up [between manufacturer sellers, brokers, and distributors] just to make sure they are getting the best deal.”

Customers will need to be in control of many aspects of the relationship and will need to engage the selling organization to meet their needs. Some organizations have left the choice of what channel to use for these interactions up to the customer. For example, consumers wishing to book rooms with Marriott may do so with their travel agent, in an electronic marketplace, or with a reservations center—any way they wish. In other cases, it may make more sense for a customer to be primarily engaged with a specific channel (e.g., HP assigns dedicated account teams to large corporate accounts). Therefore, customers would engage those resources to manage all the aspects of their relationship because a dedicated team will be closer to the account and will be staffed specifically to support them.

Even when customers or customer segments are carefully assigned to specific channels, however, they are often reluctant to confine channel usage in all cases. A good illustration once again can be found in the banking industry (financial services institutions were at the forefront of multichannel delivery and much can be learned from their early experiences). With the advent of Web banking, some banks created Web-only accounts whereby customers were afforded unlimited ATM use and Web banking for a very low monthly fee. Any use of tellers, however, resulted in high per-transaction fees. The strategy backfired for many institutions as customers originally shifted their activity but then wanted to use the branch for select transactions. The press characterized the branch fees as punishment and fear was fueled that banks would close branches and force customers to use electronic channels. Banks quickly realized that even customers who self-selected for single-channel usage did not want their options restricted.

Suppor ting Customer Preference at Taishin International Bank

Founded in 1992, Taishin International Bank provides general commercial banking services through a wide variety of channels to market that permit customers to interact with them according to their preferences.

The bank has a direct sales channel that sells via a face-to-face sales force, telephone banking, branches, and Internet banking. Sales representatives engage with clients using a variety of methods. Importantly, Taishin has created an integrated multichannel delivery system and is able to support interactions that cross channel boundaries, such as face-to-face meeting at a retail establishment followed by fulfillment at a branch or processing on the bank’s Web site. Additionally, the bank utilizes an indirect channel including alliance partners, such as real estate agents, mortgage brokers, construction companies, and notaries, as well as third-party marketing firms. In this manner, customers have a choice of how to engage with the bank and are able to not only utilize different channels for different transactions but to also complete the same transaction using different channels.

The reality is that even with the best-laid account assignments there will be cases where a customer might prefer to engage an organization through a variety of channels. There also will be times when account assignments enter gray areas and multiple resources sell into the same account. Therefore, organizations should have processes in place to address these events. Sometimes an organization may be able to reroute a transaction (e.g., if a business customer contacts an inbound call center, they might be able to be forwarded directly to their account rep). Other times, the organization may be able to support the transaction using an integrated data system (as in the Office Depot example where a business customer can use a card to access their account pricing in a retail branch). In other cases where this is not possible, it is usually the sales manager who is called on to mediate disputes (usually regarding revenue recognition and transaction expense).

As such, sales managers will negotiate between business units, or other organizations, to arrive at an outcome that benefits all parties and is seamless to the customer. Because this kind of negotiation can occur across different entities with different business models, it can be challenging as well as time-consuming. Furthermore, as Mehta (2000) and other researchers have noted, this responsibility comes in addition to the other coaching and management duties of the sales manager. (For more information on the increasing complexity of sales management, see Chapter 7.)

To assist managers in this activity, many organizations in our study had established guidelines to determine how to resolve conflict. Increasingly, we noticed that organizations were more willing to engage in “double-counting.” This means that credit for sales activity may be awarded to two different channels. For instance, referring back to the Office Depot example, if a business utilizes a retail store, the account rep gets credit for the sale and the store counts the sale toward location revenues. Similarly, at Marriott, if a local hotel does business with a global alliance account, that business is counted toward the revenue goals of the local hotel as well as the account goals of the alliance account manager. Because compensation can be one of the most contentious issues in a sales organization, this double-counting philosophy eliminates the majority of channel conflict issues. Furthermore, it supports a holistic view that the selling organization’s goal is to engage customers regardless of channel.

Finally, it should be noted that even though it can damage productivity, some level of channel conflict is not only inevitable, it’s desirable. Remember that the idea behind using multiple channels to market is that they can vastly increase an organization’s sales footprint and access to a variety of customer segments that could not be efficiently served by a sole field channel. Therefore, a lack of channel conflict can mean that there is not adequate coverage of the prospect universe. As one sales manager noted in our study, “Channel conflict in itself is not bad as long as you can manage it. If you did not have it, it would be because there is not enough activity.”