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Channel Conflict: How to Manage When It All Goes Wrong
HubSpot Sales Blog
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It does this by selling its most expensive items on its eCommerce website while selling cheaper items on Amazon, which targets different demographics. 2. Harry’s Harry’s takes a different approach to the potential price problem. Instead of selling at different prices, the company sells its products at the same price regardless of the channel. This tactic has helped the company avoid price competition between marketplace retailers. 3. Skinny & Co While great for the consumer, discounts undercut retailers and can cause channel conflict. One brand that has prevented this conflict is Skinny & Co. The organic cosmetics brand bundles different products into a travel kit. Doing this gives extra value to customers without cannibalizing sales or shortchanging retailers. 4. BeardBrand BeardBrand identified channel conflict between selling on Amazon and selling on its website. It solved this by moving completely off Amazon and focusing resources on selling through its DTC channel. The result? A 20% increase in sales! These examples show what channel conflict could look like and how some brands have avoided them. Next, let’s look at some common conflicts your brand might face and how to avoid them. To avoid channel partner conflict, set clear boundaries on customer targeting. From the beginning, define which customer segments your partners shouldn’t target. It’s also important to be transparent about who you’re working with and why. Create a quarterly review cadence to keep this information top of mind. Conflict 1: Market saturation If your product helps your partner sell their existing products more effectively, it’s in their best interest to pursue a market penetration strategy. This means they will target a broad pool of customers and potentially go after your existing prospects. After all, it’s less about the sale of your product and more about starting their relationship with a new customer to sell their whole suite of products. “Setting clear boundaries in the contract will ensure your internal sales and marketing unit can function without worrying if your partner will swoop in and take over the relationship.” Ask yourself, if another partner found out about their deal and offered the same value, would you provide the same terms? That’s a good sign you’re on solid footing to partner with both companies. Solution 2: Schedule a quarterly review cadence. Partnerships need to change as businesses change. Get face time with your partners several times a year to see how they’re doing and if there are ways you can help them be more successful. In turn, this helps you get in front of potential conflicts and accelerates your relationship. Have a standing quarterly meeting and at least one face-to-face meeting annually to keep the relationship on good terms. Don’t be afraid to ask for an amended contract if things come up. A built-in annual review helps here as well. Manage Channel Conflict Like a Pro As true partners, you win and lose together. By establishing clear boundaries, having an open conversation around who you work with, and setting terms for the partnership, you put yourself on the path to success. Reviewing the relationship regularly will also ensure you won’t fall out of it. Editor's Note: This piece was originally published in 2018 and has been updated for cohesiveness.
It does this by selling its most expensive items on its eCommerce website while selling cheaper items on Amazon, which targets different demographics. 2. Harry’s Harry’s takes a different approach to the potential price problem. Instead of selling at different prices, the company sells its products at the same price regardless of the channel. This tactic has helped the company avoid price competition between marketplace retailers. 3. Skinny & Co While great for the consumer, discounts undercut retailers and can cause channel conflict. One brand that has prevented this conflict is Skinny & Co. The organic cosmetics brand bundles different products into a travel kit. Doing this gives extra value to customers without cannibalizing sales or shortchanging retailers. 4. BeardBrand BeardBrand identified channel conflict between selling on Amazon and selling on its website. It solved this by moving completely off Amazon and focusing resources on selling through its DTC channel. The result? A 20% increase in sales! These examples show what channel conflict could look like and how some brands have avoided them. Next, let’s look at some common conflicts your brand might face and how to avoid them. To avoid channel partner conflict, set clear boundaries on customer targeting. From the beginning, define which customer segments your partners shouldn’t target. It’s also important to be transparent about who you’re working with and why. Create a quarterly review cadence to keep this information top of mind. Conflict 1: Market saturation If your product helps your partner sell their existing products more effectively, it’s in their best interest to pursue a market penetration strategy. This means they will target a broad pool of customers and potentially go after your existing prospects. After all, it’s less about the sale of your product and more about starting their relationship with a new customer to sell their whole suite of products. “Tell your potential partner who you are working with, their restrictions (i.e., geography, market segment, etc.), and lay out your typical channel relationship terms.” Ask yourself, if another partner found out about their deal and offered the same value, would you provide the same terms? That’s a good sign you’re on solid footing to partner with both companies. Solution 2: Schedule a quarterly review cadence. Partnerships need to change as businesses change. Get face time with your partners several times a year to see how they’re doing and if there are ways you can help them be more successful. In turn, this helps you get in front of potential conflicts and accelerates your relationship. Have a standing quarterly meeting and at least one face-to-face meeting annually to keep the relationship on good terms. Don’t be afraid to ask for an amended contract if things come up. A built-in annual review helps here as well. Manage Channel Conflict Like a Pro As true partners, you win and lose together. By establishing clear boundaries, having an open conversation around who you work with, and setting terms for the partnership, you put yourself on the path to success. Reviewing the relationship regularly will also ensure you won’t fall out of it. Editor's Note: This piece was originally published in 2018 and has been updated for cohesiveness.
It does this by selling its most expensive items on its eCommerce website while selling cheaper items on Amazon, which targets different demographics. 2. Harry’s Harry’s takes a different approach to the potential price problem. Instead of selling at different prices, the company sells its products at the same price regardless of the channel. This tactic has helped the company avoid price competition between marketplace retailers. 3. Skinny & Co While great for the consumer, discounts undercut retailers and can cause channel conflict. One brand that has prevented this conflict is Skinny & Co. The organic cosmetics brand bundles different products into a travel kit. Doing this gives extra value to customers without cannibalizing sales or shortchanging retailers. 4. BeardBrand BeardBrand identified channel conflict between selling on Amazon and selling on its website. It solved this by moving completely off Amazon and focusing resources on selling through its DTC channel. The result? A 20% increase in sales! These examples show what channel conflict could look like and how some brands have avoided them. Next, let’s look at some common conflicts your brand might face and how to avoid them. To avoid channel partner conflict, set clear boundaries on customer targeting. From the beginning, define which customer segments your partners shouldn’t target. It’s also important to be transparent about who you’re working with and why. Create a quarterly review cadence to keep this information top of mind. Conflict 1: Market saturation If your product helps your partner sell their existing products more effectively, it’s in their best interest to pursue a market penetration strategy. This means they will target a broad pool of customers and potentially go after your existing prospects. After all, it’s less about the sale of your product and more about starting their relationship with a new customer to sell their whole suite of products. “It might even stand to reason you get them different splits on revenue depending on what they bring to the table (tier one support, installation services, etc. … ).” Ask yourself, if another partner found out about their deal and offered the same value, would you provide the same terms? That’s a good sign you’re on solid footing to partner with both companies. Solution 2: Schedule a quarterly review cadence. Partnerships need to change as businesses change. Get face time with your partners several times a year to see how they’re doing and if there are ways you can help them be more successful. In turn, this helps you get in front of potential conflicts and accelerates your relationship. Have a standing quarterly meeting and at least one face-to-face meeting annually to keep the relationship on good terms. Don’t be afraid to ask for an amended contract if things come up. A built-in annual review helps here as well. Manage Channel Conflict Like a Pro As true partners, you win and lose together. By establishing clear boundaries, having an open conversation around who you work with, and setting terms for the partnership, you put yourself on the path to success. Reviewing the relationship regularly will also ensure you won’t fall out of it. Editor's Note: This piece was originally published in 2018 and has been updated for cohesiveness.