Synopsis: Utility Service Vehicle – Conflict Management Strategy
Our client was a leading manufacturer of utility and industrial service equipment. The business had grown over the years through acquisition and organic growth. Over time the industrial market, which was made up of contractors, became primarily served by a dedicated channel and service group, while the utility market which was a combination of local utilities and specialty contractors, was served through a different dealer network.
Over a similar timeframe product lines evolved and customer groups evolved to the point where contractors were active in all market segments and the many dealers had expanded their market footprints, initially because their customers expanded their markets but also because their product categories overlapped both markets.
Conflict between the channels was becoming destructive. QDI conducted research with all the players in the market to understand the nature and scope of the overlaps in market segment coverage and product lines between different channel players.
QDI then worked with the internal management team to develop strategies to minimize the conflict and leverage the capabilities of both channel organizations and company brands. One of the key elements of the proposed change in the design of the channel programs was to make sure that the economics for the channels were essentially equal in terms of compensation for the work done. This meant that the pricing structures, the deal support, the promotional program, training, etc., need to be equally available to both channels.
The second key element was to identify product lines that fit one channel’s market better than the other and to assign that channel lead status, which meant that this channel was to be the primary channel for these products. Sales through the second channel would be coordinated with the primary channel.
As these programs were implemented the level of conflict dropped to a manageable level and in some territories the channels were actually learning to work together for their mutual benefit.