Channel Partners: Just like marriage?

Thinking of co-branding or forming a strategic partnership? Time to air out all the dirty laundry.

Too often, companies don't do their due diligence when vetting potential partners.  It is much akin to early romantic relationships where; all a-flutter- with stars in their eyes, two people totally overlook each others flaws in the name of love.  Then; when the romance fades and life kicks in, all that rubbish comes out.

Take Apple and Foxconn; a very profitable match- on paper, who have been in the headlines lately for appalling working conditions in their Chinese factory. Proper research into Foxconn's practices would have lead Apple to make a more suitable partnership.  And what about Nike?  No stranger to distribution chain scandal; they still maintain buildings named after disgraced professional athletes and coaches.

To think, all of this trouble could have been avoided with just a little more research.  I believe this excerpt from CBI Consulting hits the nail on the head (click here to read the full article):
    

• Proper due diligence must be conducted. You would investigate your domestic business partners, so why not your overseas partners? Due diligence in Asia should, however, be done on a more thorough level, including researching the company’s debt history and verification of hard assets. Some effort must be made to verify the company has the equipment, personnel, and time to produce your orders. Otherwise, it’s possible the company will lead your order through an endless maze of subcontractors, some of which might not conform to the high standards you expect.
• Contact should be initiated with the potential supplier’s customers — and its own suppliers. If a supplier says it can product your order in 30 days, does it mean 40 days is close enough?
• Unannounced, pretext visits must be made — but NOT BY YOU. If you can read
  this in English, you will probably stand out in an Asian crowd, and if you visit a factory, you will not see things the way they really are; you will see what the principal want you to see. Visits must be made periodically by local people. If you have a branch near your potential associate, ask a local worker to visit for you. If you don’t have a branch in Asia, find professionals you can trust.
• The partners’ reputation in the media should not be ignored. Most Western companies are keen to the role the media plays in business, and few things sting like being criticized in the press. Find a market researcher or hire a consultant, but learn what the local newspapers are saying about your potential partner.
• Finally, remember Ignorance Is No Excuse. When in doubt, imagine how your CEO will look with a microphone in his face explaining that he really didn’t know the soccer balls were being made by nine year olds chained to sewing machines.
• CBI Consulting, March 28th, 2011

Soft Market Research: Leveraging the front line.

Think about your favorite client or a regular at your business... What do you know about their preferences?  Do they always come for the same thing?  Shop for others?  Have they ever made a off-hand negative comment about their experience?

Target market analysis is a very important part of market research.  These days it seems covert and impersonal when done by online companies like Google or though reward programs at retailers.  Whatever happened to leveraging the front line?

Every day your front line employees are servicing regulars and viewing shopper trends first hand.  Why is it that their insights are never valued?  I could tell you in five minutes the favorite products of all of my regulars and why.  I could tell you what they wish was improved. I could tell you personal information about other products they use.

I believe that when marketers have a theory about a new business opportunity the first line of defense for testing that idea should be front line staff. They could gather information on your current customer base in the most gentle and inconspicuous manner. A simple poll, completed online by salepeople, front line managers and account specialists would be a very efficient way to scrap long-shot ideas without alerting ones consumer base.

You don't KNOW me!?: CRM & Personalization

Effective CRM of the future will focus on psychographic customer profiles in addition to traditional demographic profiles.  Beyond the basic principles that determine how profitable a relationship with a customer will develop, successful businesses should seek to know WHO their customers are and WHAT motivates them as accurately as possible.

Why?  Understanding the belief systems and circumstances that motivate your customers to buy or BUY MORE can increase incremental value if your communication is in line with those factors.  Below is an example based on my favorite hobby; video gaming. (Refer to this chart to understand psychographic jargon.)

Amanda is a 25 year old female in social grade B living in a metro area with a steady job at the same company for many years. Classified as a Reformer, Amanda has been a loyal subscriber to Microsoft's online gaming service for at least 5 years.  During this time, she has never changed her profile name.  Microsoft wants to sell her on their name change service.  As a member of social grade B, she is a good canidate for purchase as she has some disposable income and has attained enough social status that titles matter.  As a Reformer, she regonizes that value often comes in small packages and a hefty price tag is not required for satisfaction. 

In order to properly sell their name change service, Microsoft could use the following dialogue:
-"Thank you for being a loyal member of XBL.  We've noticed your tag has not changed in the 5+ years you've been a member.  While you are welcome to retain your name for as long as you are a subscriber, we'd like to offer you a 30% discount on our name change service.  Think of it as a chance to re-brand yourself and find a title that fully grasps who you are now.  For just $5, you can select a new name that reflects your individuality." ( This tactic speaks to the thrifty and anti-establishment tendencies of a reformer, the status of a grade B, the targets age and gender within the life-cycle of a loyal customer.)

However, Microsoft should NOT use a tactic like the one below to speak to Amanda:
-"Did you choose the wrong name?  Does your title scream WIMP?  You can fix that by ordering a name change for $8.  In just seconds, you can go from lame to fame as you let our name generator provide you with the ULTIMATE handle!  Don't be stuck with xX01Loser10Xx!  Get a new, cool name today!" (This tactic speaks more to young, male D status NEW subscribers with a Struggler or Aspirer psychographic profile.)

By choosing a specific dialog suited to a small group, CRM marketers can almost guarantee a sale.  Don't believe me?  Look at my new "DarqueDuce" xbox gamertag.