Gartner: Web-driven channel conflicts

Channel conflict isn’t something companies only need to worry about when they launch their e-commerce initiatives. If not handled properly, such conflicts can sabotage how businesses deal with their customers long after a Web site is in place, a Gartner Group Inc. analyst warned this morning at a conference here.

A case in point: Gartner’s Claudio Marcus said the Web site of a PC maker that he declined to identify wouldn’t accept his order for a particular system configuration. When he called to report the bug, a call centre worker at the company simply tried to take his order by phone – a transaction that would have would let her earn a commission on his purchase.

Marcus said he later learned during a meeting with executives from the PC maker that the bug he reported was never documented or forwarded to the company’s development organization to be fixed. The problem, he noted, wasn’t simply that the call centre worker had no incentive to help the e-commerce team. In fact, Marcus said, helping to improve the Web site would actually lessen her potential commission earnings.

Those kinds of conflicts illustrate the pitfalls facing corporate customer relationship management (CRM) systems, Marcus said during a talk at the Internet & E-Business Conference & Exposition, which is co-sponsored by Stamford, Conn.-based Gartner. “The majority of CRM systems fail not because of technology, but because of people,” he said. “Organizational structure is key to successful implementation of CRM [systems].”

To maximize improvements in customer satisfaction, users need to look at CRM across their entire companies, Marcus said. But, he cautioned, that’s a risky endeavor that often runs up against sensitive politicial issues created by the existence of channel and departmental fiefdoms within a corporate enterprise.

Marcus said success depends on organizing a CRM system around the customer, instead of around product lines or geography. Companies also should offer incentive rewards to employees for improvements that are made in overall customer experiences, not merely for sales, he added.

“If you have conflicts, you have to solve them to enhance overall customer satisfaction,” Marcus said. “It’s a very, very daunting challenge. And the potential risks of an enterprise wide CRM project are compounded because mistakes often come out in the open for customers to see, especially when e-commerce is added into the mix, he said.

Conference attendee Maureen Brown, a call center team leader at Eaton Corp.’s Cutler-Hammer subsidiary in Moon Township, Pa., agreed that channel conflict issues are an important concern for companies that want to use the Web to augment their traditional methods of selling products.

Brown said Cutler-Hammer, a $2 billion maker of electrical control devices and power distribution equipment, is assuring its distributors that it doesn’t plan to bypass them and sell directly to customers. The Eaton unit also has helped dealers get online themselves. “We’ve handled [the issue of channel conflict] with kid gloves,” she said.

Now, Brown added, Cutler-Hammer is looking for different ways to gather information about its dealers in order to devise a plan for better serving them both online and off-line. But even with all the e-commerce initiatives, she noted, companies like hers “cannot pass up personal relationships” with business partners.

Marcus said corporate CRM systems are the only way for companies to avoid making customers answer the same questions again and again as they deal with different workers or departments. One good way to find out what the customer experience is like, he suggested: Call into your own company as a customer.

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