Optimize your distribution channels: Issue

We face a strange dilemma: the more distribution channels we offer consumers, the more they embrace, without abandoning any of the more traditional channels.

The retail banks are possibly the poster child for the distribution channel conundrum: over the past few decades they have added ATMs, call centers, and online banking to their branch operations. Their customers have adopted each development enthusiastically. Consumers are increasing their online banking activities, but continuing to patronize branches, call centers and ATMs. The costs of supporting these systems are burgeoning, but the revenues generated from the customer base has not kept pace.

If you're an incumbent you can't afford to let quality of service levels slip - if you do, you can be sure there's a competitor waiting in the wings to out-perform you. But neither can you afford to allow your 'cost-to-serve' to spin out of control: it must be aligned with the economic value contributed by your customer base. If you are a new entrant to the market you may not be attracting new customers (or keeping those you have) because you don't have enough channels.

The answer must be to place a deliberate focus on delivering to each customer segment the products and services they most care about.