Saturday, September 02, 2006

The NEW Direct Model

Dell has built a highly effective customer proposition around their direct transactional business model. Not only does it save on the channel margins but it enables ideal stock management, which in turn drives additional cost savings. I hardly need to repeat this remarkable story, except to add that customers are not just interested in price these days.

It is possible to view traditional broadcast customer communications as working through another multi layer channel. Advertising agencies, PR agencies and media organisations introduce several layers of complexity each with their own profit requirement.

The internet cuts through these layers directly connecting customers and companies and blogs especially create a two way dialogue, which builds key relationships. These relationships are instrumental in driving future business (through evangelism) and protecting existing business (through loyalty).

Obviously in the direct communications model there are savings on “channel” margin, publication and media costs. However there are additional costs in time and resource. Nevertheless for many organisations I believe this new direct approach offers potential market advantage and improved ROI over traditional broadcast communications, which today are becomeing less and less efffective.

1 comment:

Anonymous said...

Having worked both client and agency side in marketing and corporate communications for over 20 years I am constantly amazed when CEO's and senior managers state they 'want closer communications with employees and customers' and so use newsletters, customer 'round-tables', satisfaction and attitude surveys. Yet at the same time are outsourcing call centres and service functions as 'non core' just as Dell does I expect. Did I miss something? What cannot be more core than customer care! Blogging has an important role to play here. There is a risk that you will hear something from customers you rather you didn't but better you hear and act on it before your competitors. In addition a CEO of a large corporation risks becoming isolated and 'faceless' to many in the organisation. A blog is a great way to communicate with employees and help share the vision and the message.