Channel Management: What is it?

With the rising popularity of digital marketing, channel management becomes a term that we hear more and more.

In this post, I will give you all the information that you would ever need about channel management.

This includes channel management definition, channel strategy examples, and other important points about channel marketing.

So without further ado, let’s get into it!

Channel Management Definition

Channel management is the process of channeling your company’s marketing efforts to where they will be most effective. It involves analyzing current channel usage, determining channel preferences, and matching these with business goals.

With channel management, you can improve customer satisfaction by tailoring messaging for specific channels in order to create a more personal connection.

A channel can be described as a medium (a road, or a channel 🙂 ) through which you communicate to and acquire your customers.

This can include anything from direct mail (on behalf of your business), digital channels like e-commerce websites, social media platforms, or pay-per-click advertising.

Types of Channel Management

There are two main types of channel management: horizontal and vertical.

Horizontal channel management

This type of channel management is used when all channels have the same value to your company. Meaning that you do not prioritize one over the other.

In practice, it would mean that you could use channel management to sell products on your website, also sell through email marketing, and do social media shout-outs for a discount – to sell even more.

So let’s say that website, email, and social media discounts each bring 33% of your sales. That would mean that you have a horizontal channel management structure.

Each of these three channels would have the same value to your business. Therefore the resources that you will invest would also be the same.

Vertical channel management

This type of channel management is used when the channels have different values to your company; some are more important than others.

Let’s imagine a similar structure as in our previous example, but now website drives 50% of the sales, social media discounts 40%, and email only 10%.

Goes without saying that you would do your best to constantly improve the performance of each of the channels. However, you would put more resources and effort into the channel that drives most of your business. That is vertical channel management in a nutshell.

What Does Channel Marketing Do?

Proper channel marketing will increase your sales since you are focusing on the channel that seems to be working well for your business.

It comes down to your target audience and demographics. It is important to get channel management right, or you will miss out on a lot of sales. With channel marketing done properly, your business can grow exponentially and become more successful than ever before.

Channel marketing comes down to products and services that you are selling. If your product is specific to a particular audience, you may do better through one channel over the other. Depending on where your customers tend to hand out.

LinkedIn will have a different target audience than TikTok. What channel marketing does is that it helps you test various channels, calculate which ones are financially the most feasible, and focus on that one.

Channel Management Examples

Let’s have a look at some of the channel management examples. As we discovered in the previous sections, channel management is about matching your products and services for your customers.

Offline Channel Management

In the offline world, a channel management example can be pretty simple. You sell shoes, so you build a store on one of the “fashion streets” in your city. That is a sales channel. Let’s call it Channel 1.

Or, you decide to leverage channel partners. So you talk to five shoe stores and offer them to distribute your products for a commission. This way you can increase your growth while taking a smaller risk. This will be Channel 2.

Lastly, you decided to make an ad in the local newspaper with a promo code (to identity who is coming through this channel). This will be Channel 3.

After 3 months you have the following results:

  • Channel 1 – Income $1,000 / Cost $900 = $100 Profit
  • Channel 2 – Income $500 / Cost $300 = $200 Profit
  • Channel 3 – Income $2,000 / Cost $1,500 = $500 Profit

There are a lot of considerations that companies need to add to the calculation. Is this channel scalable, how much time does each channel consume, do you have specialists to manage those sales channels?

So the calculation above is significantly simplified. But now you see how much each channel weighs in your final result. This way it is quite easy to identify the communication and distribution strategies that you need to work on to get closer to your customer.

Online Channel Management

This is all great but how does this translate into the digital marketing world? In a world where people are constantly online, channel management is a key part of any business strategy. Since this has to be done in real-time and there is so much information going on – you have multiple channels, several platforms with different use cases – it requires special software that can handle all those tasks without breaking your budget or sacrificing quality.

Channel 1 will be your website and organic traffic that is incoming on it. You are spending resources on organic traffic and you are getting a conversion on your page.

For channel 2, let’s assume that we would have PPC. You spend money on ads and drive customers through a new channel to your offer that you are trying to convert.

And channel 3 would be social media. Where you would just share the relevant topics with your target market.

There is no need to set up any specialized tracking as in digital marketing, channel management is much simpler than that.

Just set up the right KPIs for each channel and measure them against your objectives, e.g., increased customer engagement or increased sales. Then you can optimize where it’s necessary!

  • Channel 1 – Income $5,000 / Cost $3,000 = $2,000 Profit
  • Channel 2 – Income $1,500 / Cost $1,000 = $500 Profit
  • Channel 3 – Income $2,000 / Cost $500 = $1,500 Profit

As in the previous example, while attributing income is not that difficult, with costs it gets a little bit tricky. For example, if you would consider organic traffic you have to count in all the content marketing and SEO that was done on your site to get a monthly number.

Anyway, this allows us to see what channels work best for your services and gives you the biggest profit. Notice that I am not talking about sales, but profit. You can sell a lot but if you also spend a lot, it will result in a channel that works but you have no money to spend on other channels. Content marketing is a very promising channel for this if done right.

You can see how many visitors each channel sent and also the cost per channel at the top of your Google Analytics screen under Audience / Channels.

Channel management is an important part of your channel marketing strategy because it allows us to find out what channel brings the most customers so we can focus on this channel and improve it further if necessary. This way, you do not waste any time or resources on a channel with less potential than other channels.  

Channel management techniques

Some of the channel management techniques are :

  • Channel and profile research (e.g., LinkedIn, Twitter) to find out how it works for your industry;
  • Testing PPC to have an idea of the channel’s strength while split testing to know how different ads affect your channel performance.  
  • Choosing the right partner. Distributor or an affiliate, build good relationships and choose the right partner that will help you to expand your reach and increase performance.
  • Community. Create a community around your brand with the use of social media. The attention and relationship with your audience is one of the most important things for successful
  • Managing channel expectations by setting up clear targets, monitoring channel performance, and providing management reports that show results.  
  • Allocating the budget efficiently is key to success as well as testing different strategies such as using multiple channels or promoting ads across a number of platforms simultaneously.
  • Optimize. Never stop optimizing everything that you are doing. Determine what can bring your the most value and double down on that. Build relationships test a new service, improve your operations and provide new solutions for your customers.

Channel Management Process

The usual channel management process involves the following steps:

  1. Channel research. Identify new channels that you want to integrate into your marketing strategy and find out what is already available for promotion, along with their costs and performance metrics.  
  2. Channel set up.  With this step, you can determine how much traffic each channel contributes by analyzing its performance using data from Google Analytics or other online traffic tracking tools.   
  3. Channel integration planning. Make sure all of your existing campaigns are working well together so there will be no bumps the road when adding a number of additional platforms on top of them.      
  4. Channel management reporting. Measure channel initiatives while taking note of campaign KPIs such as conversions per channel, per click (CPC), conversion etc.
  5. Improve and repeat. You do not need to make 50% improvements. Just 1% in every part of your funnel will make wonders is repeated time and time again.

Who is involved in channel management?

Depending on your ambitions, channel management may require a few or more people to do it efficiently.

Keep in mind that you can do it all yourself depending on the time capacities that are available to you. In the points below I am just showcasing everyone who is engaged in the process in big companies.

Marketing manager

This person should have a good understanding of channel management and the customer journey in general. The marketing manager will be able to make sense out of channel data, identify trends and work with other teams such as sales or product development.

Channel reporting analyst.

Is a person who should know how reports and analytics tools function and what they mean when it comes to channel performance metrics. He/she can also help you interpret conversions per channel, campaign referrals, etc. And finally, ensure that your reporting structure works efficiently so that all team members have access to relevant information at any time by making sure you keep organized dashboards up-to-date which includes important KPIs for your campaigns (CPCs, conversion rates)

Social media manager.

This role would usually focus on Facebook ads but it can be applied to another channel. They are responsible for assigning the right amount of budget for each social media channel, group, or campaign.

They should also be finding the best-performing channels and design efficient strategies based on those insights; – Creating audience lists (for example “clients who visited our website last week”). You should also keep your Facebook page up-to-date as well as maintaining a good relationship with Facebook community managers because they may help you boost posts at some point;

PPC Expert

The main role of a pay-per-click expert in channel management would be to take charge of Google Adwords, Twitter Ads, TikTok Ads, etc. There can even be some degree of overlap with Social media managers as Facebook PPC is one of the best when it comes to audience specifications.

Their job is to constantly test and tweak the ads that they are running to make sure that their channel is as successful as possible.

SEO Expert

An SEO expert would be responsible for generating organic traffic through on-page and off-page optimization. They would be responsible for making sure that all of the content is optimized with your channel’s keywords and they are constantly monitoring rankings to make sure you aren’t losing ground.

Copywriter

This role would predominantly serve the needs of organic traffic generation (so collaborate with SEO Expert).

A copywriter would be in charge of writing and editing the channel’s blog posts, articles for publication on third-party websites (like Huffington Post or Business Insider), and any other content that aids with channel growth.

They should also work closely with SEO Experts to make sure all content is optimized properly so it can better serve both traffic generation needs as well as channel management needs.

As mentioned above. You can outsource many of these roles, or you can do a lot of them yourself. Do not think that in order to start channel management or work with channel partners you will need a 20 people team.

What are the steps of channel management?

Channel management steps are mostly covered in the previous sections. I would use this part to get another point across.

First of all, consider the budget and resources you plan to put into channel management. If you are just starting by yourself, you will be investing all of your budgets into content and PPC.

If you are a small company, you may have an employee who is already engaged in PPC and would take on additional roles as a channel manager, working on relationship development with channel partners and expanding your reach.

In case you are a big company, you can likely afford to hire a channel manager who would hire additional people under them (from the list above) and focus the team effort on promoting products and services that your company offers.

When this is done – start researching various channels and how they work for your business and what impact do they have on your sales or distribution of your products.

Conclusion

So, what should you do to take advantage of this information? The conclusion is simple.

Take the time to make a marketing plan for your business and include all channels that will work best with your target audience.

Do not focus on one channel alone because it could lead to an ineffective marketing strategy or missed opportunities.

Remember, even if you think you know everything about digital marketing and its many channels, there’s always room for more knowledge!

FAQ

What is channel management?

It is a discipline focusing on analyzing and improving various marketing strategies and their contribution to your business’s bottom line.

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