I’m always on the lookout for interesting solutions to unusual problems because I find the related problem solving that was behind the solutions fascinating to ponder. I also find that talking through the solution helps me to think out of the box, which helps my performance as an analyst. I ran into Cyber Investigation Services years ago when looking into reputation protection and the problems people were having with hostile actors attempting to destroy (defame) their or their companies’ reputations.
They have a new service called eEnforce which focuses on MAP (Minimum Advertised Price) violators, which coincidently was a problem I was asked to address back when I worked at IBM. My team never was able to come up with a viable solution that would scale. A MAP violation is when a customer (not a reseller) buys in high volume to get a deep discount and then resells part of what they bought at or below the price they paid for it. It is a way to game a discount. I even found I had sales reps that were either doing this themselves to max out their incentive plan or advising customers how to do it. It was then a huge problem for us and, apparently, with the emergence of on-line selling resources like Amazon and eBay, it has become a lot worse.
Let’s talk about that this week.
The Problem With MAP Violators
Now this problem is often hard for folks to understand because you’d think that it would be OK to buy and then resell something you bought at any price you wanted to charge for it. But often, the low price charged assumes that the products will be serviced and supported by the buyer or fall under an enterprise support contract which preserves the margins. When a buyer resells the products as new, the new buyer expects support but generally doesn’t have that service contract, nor do they have the capability of servicing themselves. In addition, the product bypasses the vendor’s channel which creates channel conflict (a partner can get upset if they own a region and find someone else selling the same product in that region) and the mechanisms assuring customer satisfaction are also bypassed by this process which can do ugly things to customer satisfaction and the brand.
Back when I did customer satisfaction surveys, we often found that products that were either violating MAP or were Gray Market (illicitly sold in one market from another) did horrid things to customer satisfaction because the buyer didn’t realize or accept the lack of service those products often got. Oh, and products that illicitly cross borders often aren’t homologated for the region they ended up in. This practice means the customer gets something they think will work, and it either won’t or won’t work well due to this lack of regional compatibility.
The end result is margin erosion, brand damage, and lowered customer satisfaction resulting in long term problems for the company.
Fixing The Problem
First, you have to identify the problem—which isn’t easy because that requires broad monitoring of online sales sites specifically looking for high volume activity and new products at unusually low prices. Then you have to formally investigate the problem so you trace back the product to the firm that resold it (often they sell to a reseller of some type) and this requires someone licensed to investigate, and your legal recourse often depends on where the contract violation occurred as well as the language in the sales contract which requires legal expertise.
What makes eEnforce different is they blend technology, investigation, and legal resources into a package that identifies the problem, investigates the cause and then works with the vendor/client to eliminate the cause—protecting the vendor/client’s margins, reputation, and customer satisfaction scores.
Wrapping Up
When I was at IBM, bulk resellers like eBay and Amazon didn’t exist and our products weren’t resold through Walmart. We’d find out about a problem when a sales rep or reseller reported it and then we had to hire investigators to run down the source. Even then, this practice didn’t scale both because my organization was small and we had another full-time job as an Internal Audit function. Back then, a service like eEnforce would have been a godsend and, I expect, it would be for anyone still trying to do that job.
I’m not in that business anymore but because I know there are still folks out there that are, I’m sharing this solution to make their lives better because I truly wish someone had been able to do the same for me back then. Plus I think these out-of-box solutions are fascinating.
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