Search Our Catalog of Articles

  Decreasing Friction in a Disaggregated Sales Environment
 
The current business environment is forcing both large and small businesses to evaluate their operational procedures and to explore "out of the box" business structures. As an example, certain areas of the financial services sectors are taking a hard look at what is truly their core business and outsourcing non-core competencies through a fluid and flexible set of relationships. Not surprisingly, many of these companies are discovering that distribution and sales are much better handled through extensive networks of small, neighborhood level businesses rather than captive divisions located far from the markets they are trying to serve.
 
To realize this vision, the company must "disaggregate the value chain" and become focused on its core competencies of manufacturing (in the generic sense) and marketing. At the same time, the company must create a newly empowered independent sales network that must be "convinced" rather than "directed". As an independent sales network, each member is free to sell whichever product meets their customer's needs. It is up to the manufacturer to convince the network that its products are superior and will yield the most sales activity. Throw in the fact that many financial products have become commodities with little differentiation, and it becomes obvious that the host organization must have a cohesive strategy to facilitate its independent network and must work to add value to the sales process. Well-executed extranets are a powerful mechanism to differentiate and add value during the sales cycle.
 
At Organic, we have had significant experience helping large financial services companies facilitate eBusiness in a distributed sales environment. Through the implementation of "distribution extranets", forward-looking organizations have assisted independent sales and created a channel to communicate with and manage their independent sales agents. Effectively blending the functional nature of specialized applications and the Internet's innate power to communicate, these extranets not only improve the way people do their jobs, but also gives the parent organization a subtle and continuous mechanism for influencing a widely disparate, and sometimes capricious, workforce.
 
Corporate Sponsorship
One interesting facet of distribution extranets is the broad base of motivations exhibited by the project stakeholders. Since distribution extranets span the distribution chain, a typical set of stakeholders may include representatives from product manufacturing, wholesale distribution, retail distribution, customer service, and information technology. In a disaggregated organization, the parent organization may directly employ a minority of these stakeholders - typically manufacturing, customer service, and IT. Wholesale distribution is handled through a set of independent broker/dealers and retail distribution falls to a set of independent agents.
 
The distribution extranet must serve the independent distribution community within the organization, but it is defined and supported by the corporate set of stakeholders. By disaggregating, the organization hopes to increase the competitive spirit and foster innovative business practices by placing previously allied business units into competition. Since manufacturing cannot assume that a captive wholesale distribution channel will focus solely on its products, it must create value through differentiated products and ease of distribution. The distribution extranet facilitates doing business associated with a complex sales cycle, as is the case with financial services instruments. In commoditized markets such as insurance and equities, manufacturing units in a disaggregated environment must cater to their distribution channel in order for them to 'choose' their products first. Since volume is the key for revenue generation within the independent distribution community, a frictionless transaction can become the key differentiator.
 
Customer care can also be facilitated by the distribution extranet. As an independent entity, wholesale and retail distribution creates costs through interactions with the call centers and other corporate support personnel. By creating a Web based vehicle for servicing simple help requests, the extranet both cuts support costs and, if done well, facilitates transactions. Information Technology can benefit the same way. Instead of fielding calls from the agents, the extranet can enable self service for software upgrades, computer help, etc.
 
Serving the Independent Community
In order to attract and retain the hearts and minds of the independent community, corporate project owners must dedicate themselves to easing their transactional burden. The sales cycle for certain financial products involves a myriad of forms, verifications, approvals, and, in the case of life insurance, even medical tests. This complexity maintains the requirement for the broker/agent model and keeps the parent organization from bypassing the independents and going directly to the consumer, via the web or otherwise. A successful distribution extranet must clearly target the broker/dealer/agent's transactional burden without threatening to eliminate the intermediation of the independent community. The strategy is to facilitate, not supplant, the wholesale and retail links in the value chain.
 
Even with a crystal clear strategy to empower the independent community, organizational and technical hurdles can threaten to derail the extranet project. To truly facilitate the transaction, an integrated view of the sales cycle will have to be presented to the agent. Unlike internal or captive users, the independent does not 'have' to use a poorly designed or badly functioning system. Instead, the independent may simply choose a competing carrier with a better transactional format. Make no mistake, the quest for a highly adopted distribution extranet is a battle for the independent's desktop.
 
Many corporate IT systems rely on an inherent knowledge of the business structure to function. For example, the user may be presented with multiple systems each targeted to a specific step in the business cycle. Perhaps there is one system for 'Possible' business, one system for 'Pending' business and one system for 'Current' business. Captive sales professionals are directed to access the leads or 'Possible' business system while pursuing customers. Along with dedicated customer care employees, they might use the 'Current' business system for accessing already closed business. To access customers in the process of signing, they would share the 'Pending' system with line of business specialists.
 
Captive employees with intimate knowledge of the corporate structure and a well-defined role in the organization must tolerate this highly 'siloed' approach. However, to fundamentally reduce friction within the transaction, systems must be integrated to give a 360-degree view of the business environment from a single point of access. The independent agent simply wants to know who his or her customers are, and does not want to use three different systems to uncover the information. If they cannot get that level of information from the offered system, they will go to a competitor, a third party application, or even a Microsoft spreadsheet. In any case, the opportunity to 'own' that independent agent's desktop is lost - along with the top spot in the independents consideration cycle.
 
Collaborating to Compete 
The distribution extranet is a vital demonstration of the parent carrier's commitment to the independent network. By creating a vehicle that first and foremost caters to the independent or general agent's needs, the sponsor is waging a subtle battle for the loyalty and attention of this unfettered and dynamic group. In the high volume, fast paced world of the independent agent, the frictionless transaction is key. By creating an effective functional and messaging workspace, the distribution extranet is a foundation for the successful and profitable collaboration between the corporate carrier and the independent distributor. This collaboration allows both the carrier and the distributor to focus on what is most important - their customers, whether they be end consumers, brokers or independent agents.
 
Godfrey brings over 15 years of technical development experience to Organic where he is currently the Group Director of the New York engineering department. Godfrey has managed some of Organic's highest profile accounts including Federated Direct, the MONY Group, and Lucent Technologies. Prior to joining Organic, Godfrey co-founded and managed a technical consulting group serving clients such as Liberty Mutual, ModemMedia and Compuserve. Godfrey also has experience implementing classified systems under the MILSPEC 2167A and has designed private network routing software for MCI. His company's web site is at www.organic.com, and he can be reached at gbaker@organic.com.