Digital River Blog
Keep current with commerce, payments and marketing news, education and best practices.

The Unintended Consequences of a Channel-Friendly Approach

By Luke Frandrup / April 30, 2015

Let your channel drive acquisitions to you, not from you.

If you manage a website for any reputable product manufacturer, chances are you’ve thought about what to do when your site visitors want to buy. Do you sell your product direct? Do you refer the potential customer to your channel partners and allow them to convert the traffic into a sale? What’s the industry best practice?

To deal with this situation, I often see manufacturers taking a hybrid approach. They invest time and money to create, maintain and optimize a storefront so their customers can purchase their products directly. At the same time, they provide links to their channel partners to convert browsers into buyers. Their rationale for connecting to the channel? For many, the thought process goes like this: these retailers are part of my channel and are experts at converting traffic into customers. I assume that many customers already have an account with Amazon or Best Buy, so why not allow them to buy where they want to buy? While this strategy might sound good in practice, it unfortunately, doesn’t always play out as expected.

Every day, I work with manufacturers that take this hybrid approach. They work incredibly hard to ensure that the customer experience is seamless, and heavily optimize their own purchasing experience to convert as many customers on their storefront as possible. They track every click. They understand the purchase paths their customers take. They make hundreds of changes to their site to fine tune their checkout flows and capture as many customers as possible. Then they also give their customers an option to purchase from their favorite retailer–and with a single click that person is off to that retailer. Despite all the work that was done in advance, the manufacturer now has no idea what happened to that potential customer. Did they purchase? Did they become distracted by another product they needed from the same site, or did they ultimately choose to purchase a competitor’s product because people who viewed X product also viewed Y?

These questions peaked my curiosity and I decided to figure out what was happening when that customer left the manufacturer’s site for a retailer’s site. What I found was incredibly interesting. In order to understand what happens to your customer when they leave your site, you need to offer a “Where to Buy” functionality. This functionality can do a many valuable things, but most importantly, it tracks the customer through the purchasing experience and provides data around who left without purchasing, who bought your product and who ended up purchasing a competitive or an unrelated product.

Putting this functionality to the test, I explored a few customer purchase scenarios and  found a couple of troubling points:

  1. Customers who left the manufacturer’s site converted poorly. In fact, if those same customers would have simply stayed and purchased directly from the manufacturer’s site, they would have converted between three and five times more.
  2. Even more troubling? I ran into multiple scenarios where more than 50 percent of customers that left the manufacturer’s site ended up purchasing a competitive or unrelated product.

Think about that. The customer went to your website to research or purchase your product, used your “channel-friendly approach,” and then ended up buying a competitive product – and you made it easy for them to do so.

I used to work with a gentleman who loved to drive home that idea with this point: “What is Best Buy’s #1 selling SKU?” The answer? Diet Coke. Now I don’t know if that statistic is accurate, but it still makes the point that retailers will often sell whatever is easiest and best for their bottom line.

The moral of the story is simple – you need to understand what your potential customers are doing once they leave your site. Are they purchasing? Even more importantly, are they purchasing your product or a competitor’s product? This type of data is incredibly valuable, especially for those of you who are sending your customers to retail partners without understanding the ramifications. You may be suffering from the unintended consequences of using a channel-friendly approach.



Filed under:

Tagged as:

Leave a Reply

Your email address will not be published. Required fields are marked *

Search Our Blog

Contact Us
Contact Us