Resolving Channel Conflicts: Chicago FCMO Strategies

Managing distribution channels and getting products into customers’ hands involves many moving parts (no pun intended). Various conflicts are bound to pop up, possibly affecting customer satisfaction and business performance (and not in a fun way).

Conflict always makes its way into the workplace, and when you are in a fast-paced, competitive business environment like Chicago, experiencing channel conflict is almost as unavoidable as traffic. Luckily, there’s a solution for channel conflict. 

When two or more parties do not see eye to eye, you can always seek the help of Chicago’s best fractional CMO service. A fractional chief marketing officer (CMO) is a C-suite-level professional who manages all things marketing.

Fractional CMOs also bring leadership and mediation skills to the involved parties and help them find common ground to prevent issues with product distribution.

Let's talk about what channel conflict is and why it happens. Then, we'll discuss how a fractional CMO consultant helps with channel conflict resolution in Chicago.

But first, check out this video about what it's like to work with a Chicago FCMO:

The Role of a Fractional CMO

A fractional CMO or chief marketing officer helps businesses with all their marketing needs. They are C-level professionals with years of experience across different industries. They are hired part-time or on a contract basis, making them more affordable than a full-time CMO.

Check out these four reasons to hire a fractional CMO consultant for channel conflict resolution in Chicago:

• Successful Track Record: Fractional CMOs have a proven track record that shows their capabilities and proficiency in the marketing industry. Having worked under several companies in multiple industries, FCMOs are the ideal people to bring their experience to new clients in the Windy City.
• Branding and Messaging Expertise: Chicago fractional CMOs help you stand out and speak to relevant audiences by creating your brand’s own identity and messaging.
• Go-To-Market Strategy: Fractional CMOs give Chicago companies a clear picture of how to approach their marketing efforts. They help create impeccably tailored campaigns that meet even the most specific criteria (and regulatory standards).
• Sales Leadership: Chicago FCMOs oversee the entire sales process and provide guidance and support to the sales team. They also help create mixed sales channel management tactics that facilitate sales distribution and generate profit.

What is Channel Conflict?

Channel conflict refers to any disagreements, issues, or problems between a company’s distribution channels.

A product goes through a long journey before reaching the customer. Sometimes, products come from the manufacturer and go straight to the customer. Other times, it goes through a network of middlemen before it reaches the customer, including the agent, wholesaler, and retailer, also known as distribution channels.

These issues may arise within any channel and at any point during the product distribution process. If not all channels are on the same page, it may lead to inefficient product distribution, dissatisfied customers, and strained relationships with the people involved.

Channel dynamics are complex; there are four main types of conflict to consider:

1. Vertical Conflict

Vertical conflict refers to conflict between two different distribution channels operating at a consecutive level. This may depend on the distribution channels present in the company.

For example, let’s say a wholesaler wants to buy products in bulk from a manufacturer. The latter has a set price for a specific number of products, but the former wants to buy it for significantly less than the agreed price.

Since neither side is willing to compromise, the distribution and release of the product may be delayed, leaving customers to wait longer to receive their product. Longer waiting times result in customer dissatisfaction. This is the perfect time to pull in a fractional CMO consultant fpr channel conflict resolution in Chicago.

2. Horizontal Conflict

A horizontal channel conflict refers to issues between two members operating in the same channel. A horizontal conflict may slow down the distribution process and prevent other channels from moving forward.

For example, two wholesalers plan to sell the company’s products to the same retailer, but the retailer can only afford to work with one wholesaler. This leads the two wholesalers to try to undermine each other in hopes of selling their products. This may be in the form of price undercutting or devaluing the products of the other.

As a result, the retailer decides not to purchase the products until the conflict is resolved, slowing down the distribution process.

3. Multi-Channel Conflict

You can set up the best multi-channel sales management tactics, but it will only be effective if all channels work harmoniously. A multi-channel conflict arises when various distribution channels compete for the same market by selling the same product at different prices. 

Example: A company sells its products through both online platforms and brick-and-mortar retailers. If the manufacturer offers lower prices or exclusive deals online to drive e-commerce sales, physical retailers could feel upset and may respond by reducing their inventory of the manufacturer’s goods or switching to a competitor. They may also increase the price of the goods, which can irritate the customer, who could feel misled. 

Clear pricing strategies and open communication are the name of the game here.

4. Inter-Type Conflict

An inter-type conflict is a type of horizontal conflict where two channel members of different sizes have a disagreement. To differentiate, horizontal conflict involves two channel members of the same level, while inter-type conflict involves two channel members of different levels.

For example, a product manufacturer supplies two retailers, a discount brand and an upscale shopping mall store. They are competing for the same customers since they sell similar products. 

If the clothing brand starts promoting sales or exclusive lines at discount retailers, department stores may feel threatened, perceiving that their upscale image is being undermined. The department store might then reduce its stock, damaging the brand’s overall presence in the market. When shoppers become aware of the price disparity, it can dilute the brand's value proposition.

What Causes Channel Conflict?

Conflict is inevitable and can be caused by many things. Keep track of these important causes to be ready and address them before they escalate.

Different Goals

If two channel members may have opposing goals and approaches, this could cause an issue. Additionally, they may have different ideas of what success looks like or they may not agree on previously-set KPIs.

Everyone on the distribution team needs to have their goals aligned with one another. This is one of the most crucial elements to successful and efficient product distribution, which results in happy customers.

Different Marketing Approaches

Another cause for conflict would be different marketing approaches. While it is understandable that two or more people may have different ideas on promoting their product, the important thing is to decide on what will lead to the best results.

However, if the involved parties believe their own method is the best, it could cause a disagreement. Failing to come up with a unified approach slows down the entire process, leading to rash decision-making. Unfortunately, it could increase the likelihood of everyone choosing the least effective method.

Pricing Discrepancies

Pricing discrepancies can be caused when channel members disagree on the product sticker price. This may be a fault in market research or a failure to understand the product’s full value.

Furthermore, if two channel members do not agree on a price, it may lead to mistrust and dissatisfaction from the customer. You do not want a customer to find largely different prices on the same item.

Lack of Communication

Miscommunication is one of the most common yet serious causes of channel conflict. When channel members misunderstand each other or fail to articulate their points to one another, it can lead to significant consequences during product distribution.

One small misunderstanding can set back the entire operation. Not only does it affect the business side of things, but it may also put a strain on the relationship between the channel members.

Strategies For Channel Conflict Resolution

Conflicts are normal and cannot be avoided. Despite this, they can be resolved if the involved parties can work out their differences.

Managing channel conflict is essential in establishing a healthy working relationship with your distribution channels. 

Here are four ways to prevent channel conflict:

Maintain Open Communication

Communication is key, especially in the realm of business. The only way two or more parties can succeed together and avoid misunderstandings is by maintaining open communication. 

Clearly and transparently articulate your points and opinions without taking things personally. It is also important to listen to team members and try to understand things from their perspective.

One way to achieve this is to hold regular meetings and check-up sessions. These open up opportunities to address any concerns before they escalate and bring everyone back on the same page. It is also beneficial to utilize partner relationship management (PRM) software, which facilitates easier communication and overall partnership.

Proper Resource Allocation

Allocate your resources strategically and equitably to prevent any favoritism, unfairness, or unnecessary competition. This is an effective way to ensure all channels are supported by the company and are equipped with the exact resources they need.

This does not apply to physical resources like products only. These resources may also include marketing support or tools to conduct proper market research. When everyone has what they need to succeed, the entire process moves smoothly, lessening the likelihood of conflicts. 

• Tip: Working with your Chicago fractional expert or an analytics company in Chicago is the best way to get the data that matters when it comes to high-impact decision-making.

Reduce Distribution Channels

Adding different channels to the distribution process may increase efficiency and performance, but having too many channels in the picture can lead to things getting out of order. In other words, you might be able to accomplish more with less.

Keep your distribution channels to a minimum, only including the most essential channels. Having fewer people in the chain makes it easier to control and lessens the likelihood of conflicts arising. It also makes the process more straightforward, allowing products to reach customers sooner.

Offer Exclusive Products

Exclusive products are a good way to strengthen the brand without creating conflict with others. This is especially useful if you run an e-commerce site. These exclusive products are competing or undermining your retailer because you are not selling the same products.

For example, if you run a clothing brand, your website can allow customers to customize their own designs, something that retail stores do not offer. This way, the two channels can focus on selling their own products without getting in each other’s way. 

• Tip: Ask your Chicago FCMO about their work with a Chicago web development agency—a better site is only a few clicks away. 

Hire a Fractional CMO Consultant For Channel Conflict Resolution in Chicago

You can get more than marketing from fractional CMO services in Chicago. Not only do you have a marketing expert guiding and overseeing the whole process, but you also have a moderator who can help resolve conflicts and maintain peace between distribution channels.

If this situation sounds all too familiar, this is your chance to sign with Digital Authority Partners. From market research to multi-channel B2B branding tips, our fractional CMOs are the best at providing concrete, proven methods that bring measurable results.

Give us a call to kickstart your journey with us and take the Windy City by storm!