Integrating Clicks and Mortar

One of the major challenges companies face is how best to integrate their web-presence with their traditional sales force and physical infrastructure.

Traditionally, companies developed distribution channel models that reflected the nature of the goods. Thus, convenience goods - consumer non-durables such as newspapers and pop, received intensive distribution. Example: Coke's distribution strategy is to be within an arm's reach of thirst. Shopping goods, such as clothing and other semi-durables, were distributed selectively, while specialty goods, such as automobiles, were distributed exclusively, such as by geographic territory.

The advent of the Internet has changed the rules by altering the importance of distance. Companies have much less control over access to their products than before - this is just one of the many areas where the roles of customer and company have become inverted. Now, in the Internet-era, customers target companies, not the reverse. In the old economy, channel strategy involved segment targeting, then development of the appropriate combination of novelty (channel innovation), variety (types), density (how many) and directness (number of levels between the company and its customers). In the e-Economy, companies create capabilities for dialogue, transactions, logistics (inbound and for returns) and relationships. Customers decide how, where and when to access and engage with the companies. Companies plan the integration of their traditional sales network and web-presence by developing a matrix of activities for each type of customer, in respect of dialogue, transactions, logistics and relationships. Companies consider the entire customer lifecycle and determine what capabilities need to be created for each element of the lifecycle. IBM has done substantially this, with considerable planning to resolve complexity and achieve needed collaboration. To achieve integration that really works, companies need a single, real-time view of the customer. Additionally, the role of Sales may merit redefinition, as Sales is no longer either hunters or the exclusive lens on the customer.

Companies should have a distribution channel strategy that explores four key dimensions: novelty, variety, density and directness. The advent of the Internet makes this particularly important as it creates as much opportunity for confusion as it does for profit.