Challenges in multi-channel and omni-channel management
The degree of digitization and the associated share of online business varies greatly by industry. An increasing channel shift from traditional channels (for example, brick-and-mortar retail) toward online channels can be observed.
Problem 1: Rash action
In order to seize the opportunity for sharply rising sales and not be the last one standing without a chair when the music has stopped, many companies are rushing into business with online channels and on online platforms without a sustainable strategy.
Online activities are operated on an ad-hoc basis and are rarely integrated into the framework of a multi-channel or even omni-channel strategy in which existing offline channels and partners are sufficiently considered. Internally, there is often a lack of organizational brackets to manage all channels in an integrated manner.
Problem 2: Lack of omni-channel strategy
The lack of an omni-channel strategy coupled with the enormous price dynamics on the one hand, and driven by the almost unlimited price transparency on the other, is quickly pushing the entire distribution and pricing system to the limits for many B2B companies. Soon, many companies with traditional offline sales will find their products at extremely low prices in the online world.
The partners that are important for sales and service, such as specialist retailers or installation companies, can no longer compete with online prices.
Consequences of inadequate omni-channel management
The consequences of rash action and a lack of an omni-channel strategy are fatal. Here are some of the problems:
- Cannibalization of online and offline channels
- A slippage in the price level
- The discontinuation of own products from long-standing trading partners
- Tamage to the manufacturer’s brand
However, based on our cross-industry experience of numerous projects, we can say that whether you perish from omni-channel sales or grow with it is 100 percent up to you.
The core question
How can B2B and B2B manufacturers build profitable multi- and omni-channel distribution that leverages the reach and revenue potential of online commerce as well as the benefits of traditional distribution channels, such as service and branding?
Solution approach: With a clear sales strategy to omni-channel excellence
The first step towards sustainable e-commerce growth is to detail the sales strategy separately for each sales channel.
Many questions must be answered in advance to provide strategic direction for omni-channel sales:
- Which (new) regions or countries are in focus and why?
- What are the relevant customer segments and how should they be addressed in the future?
- Is the existing product range well-rounded in terms of breadth and depth?
- Does it offer differentiation potential for an offline and online range?
- Which products will be sold to which customers via which online and offline sales channels in the future?
Depending on selected evaluation criteria such as:
- Market volume
- Market growth
- Competitive intensity
- Price pressure
- Influence on branding
you should formulate clear targets (such as revenue or contribution margin) for each sales channel and translate these into corresponding KPIs.
These targets are usually competitive and form the basis for deriving a cross-distribution-channel price and condition system. Thus, in order to gain market share in strategically important channels, you can also deliberately forego part of your margins there (in the sense of a target margin system).
Also use other channels to ensure the profitability of the product group or the company. When calibrating the prices of the sales channels at a later stage, it is important to consider the corresponding dependencies (cannibalization).
In addition to your own goals, don’t forget your customers
Defining the sales and pricing strategy is essential, as it will help you make all the decisions necessary in the following. In addition to your own goals, you should always ask yourself the questions:
- What do customers actually want (keyword: “customer centricity”)?
- How do customers want to order today and in the future (keyword: “digital natives”)?
How to: Omni- und multi-Channel im B2C und B2B?
Die Beantwortung der Frage ist eng mit der Überlegung verknüpft, durch welche Kanäle sich die Zielsegmente mittel- und langfristig am effektivsten bearbeiten lassen. Dabei ist die Ausgestaltung des Kanal-Mix so spezifisch wie die Anforderungen der Kunden und die Produkte Ihres Unternehmens. Der Kunde der Zukunft wird ein System erwarten, bei dem alle Kanäle reibungslos ineinandergreifen und er jeweils die Vorteile jedes Kanals zielgerichtet für sich nutzen kann.
Successful omni-channel management
Profiting from e-commerce without “damaging” existing channels and partners is only possible if appropriate control instruments such as an omni-channel-capable condition system are implemented. This makes it possible to respond appropriately to online market dynamics and price transparency without neglecting the requirements of strategically important offline partners.
Especially in the introduction and test phase of digital sales channels, we recommend limiting the number of products and closely monitoring the impact on traditional retail partners.
Leverage your potential in the R&P Sales Audit
In the R&P Sales Audit, we identify the relevant levers for your company that you need to move to set up your omni-channel sales profitably. Together with your sales team, we develop a customized omni-channel strategy and measures to increase topline and revenue without cannibalizing your existing channels.
Gregor Buchwald is Managing Director of Prof. Roll & Pastuch – Management Consultants. He has over 20 years’ specialist industry knowledge and consulting experience. His focus is on the areas of strategy, pricing and sales. His customers include multi-national companies as well as medium-sized B2B customers. Mr Buchwald has also written numerous publications about strategy, sales and pricing and speaks at numerous events.
Christoph Krauss is a senior director at Prof. Roll & Pastuch – Management Consultants. He has more than 20 years of experience in marketing and sales with leading consumer goods manufacturers and in advising clients on sales, strategy and pricing. Mr. Krauss has focused in particular on clients in the B2C sector.