Middlemen Are An Endangered Species

Middlemen Are An Endangered Species

Gee Ranasinha Business 1 Comment

Back in 1995, I landed a job at a London-based systems integrations company that sold their wares into – amongst others – the printing industry.

It was a transitory time, from both a technical as well as a commercial perspective. The publishing industry was coming to terms with – for example – no longer being able to charge £70 (about $110) for printing out a “proof” of a magazine page for an advertising agency or publishing company.

It was also to be the beginning of the end for the newspaper advertising “Gate Keepers.” These were a group of perhaps five premedia companies that, together, pretty much had the monopoly on preparing and sending ads to the major UK newspaper publishers. Their rationale was that preparing files for newspaper printing needed specialist knowledge – their knowledge.

This was back in the day when preparing a PDF file that was fit for the printing press was a lot more complex than it is today. It was before the time of industry standards such as PDF/X-1a, for example. If your company wanted to run an ad in any of the major UK newspapers, the file could only be sent to the publisher via one of the Gate Keepers. Newspapers wouldn’t accept your file submission directly. It was their way, or the highway.

For many years this cartel enjoyed this market monopoly. Prices could be held at an artificially-high level. Well, where else was a advertiser going to go?

The Demise Of The Middleman

Of course, it was just a matter of time before the Gate Keepers lost their exclusive hold on UK newspaper advertising. Technology streamlined the file creation process, ironing-out the bumps in the road that used to befall advertisers unfamiliar with the peculiarities involved in preparing files for print. Making print-ready PDFs became easier and more predictable. The print process itself got better – faster, more accurate, more predictable and more consistent. Suddenly, advertisers realized that they had the same premedia capabilities that the Gate Keepers had. The middlemen got cut out of the equation.

Not so long ago, many products or services could only be purchased through intermediaries. Real estate property. Flight tickets. Computers. Books and CDs. Today it’s easy enough for anyone to buy/sell their own home, to book a flight directly with an airline, order a new laptop – or even publish their own content – without having to go through someone else. In many industries the barriers-to-entry have been broken down, though some middlemen continue to maintain their hold on the consumer. An example today is the case of car dealerships, though even here this is being disrupted by companies such as Tesla.

Today, many middlemen are having a tough time. Such “Intermediary Companies” are seen as being no more than commercial parasites. They’re seen as taking a cut of the sale’s proceeds after having done very little – if anything – to have earned it.

So, are middlemen becoming extinct? Not at all. Just like with most businesses, the good ones are growing and the bad ones are dying.

Value Chain Evolution

The difference between success and failure, as with many industries, lies with adding perceived value to the transaction. Yes, I can book a flight, reserve a hotel room or renew my car insurance by directly dealing with the company concerned. Or I can go onto a price-comparison website to ensure that I’m getting the best deal. The range of tariffs, plans, exclusions and penalties for a mobile phone contract is bewildering to me. I’d much rather talk to someone to explain what I’m looking for – and am happy to pay for the privilege.

Research shows that having the best price is rarely the sole reason why a consumer chooses to buy from a particular vendor. Sure, price is important – and it’s probably in my top-five list of why I buy from XYZ Company. But it’s not Number One. Not even close.

What’s just as important (I’d argue it being more important) is the 360-degree customer experience that the vendor builds for me. How they see every customer touchpoint as an opportunity to instil in me their values of credibility, dependability, assurance, support, human connectivity and so on. How they’re more interested in solving a customer problem than simply selling them something.

Creating Added-Value

If your business is reliant on an ‘agency’ model – you’re taking something that’s made by someone else and selling it on – then your customers need to see the added-value that you’re bring to the equation. If that’s not made obvious to them, they’re not going to continue to buy from you.

Take a look closer to home, and how your company’s brand experience is applied to your own customers. How easy do you make it for them to buy from you?  How do they feel they are treated?  How much do they trust your advice, your brand – your promise?

Each and every single time that anyone in your organization has the opportunity of interacting with a customer, they have the chance of getting it right – or wrong.

About the Author
Avatar for Gee Ranasinha

Gee Ranasinha

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After founding a successful media production firm, Gee became worldwide director of marketing for a European software company. As well as CEO of KEXINO he's an author, lecturer, husband, and father; and one hell of a nice bloke. He lives in a world of his own in Strasbourg, France, tolerated by his wife and young son. Find out more about Gee at kexino.com/gee-ranasinha.



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  1. Pingback: Marketing Today: Doing It Your Way | KEXINO

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