Disintermediation is a term which has gathered considerable momentum in the last couple of years. Far from merely serving as an annoying piece of business jargon used by financial journalists and FTSE fat cats, this mouthful of a word has plenty of contemporary significance, especially when approaching the subject of the customer experience.
In a nutshell, disintermediation can be defined as a reduction in the use of intermediaries between producer and consumer. It is a word which gives both context and meaning to the potential of the internet to change buying behaviour and redefine the transactional process.
There can be no doubt the rapid advances in personal technology over the last 20 years have impacted the business models of intermediary companies. It has now never been easier for a service provider to speak directly to their audience without the need for a third party. The sector in which this has been most obvious is the travel industry, which has changed immeasurably from the days when Lunn Polly and Thomas Cook dominated the high street. The rise of online bookers and low-cost airlines such as EasyJet, Ryanair and Expedia, with their easy-to-use interface, has cut out the need to use a travel agent to make the necessary arrangements for a holiday.
Focusing in more depth on retail, we see disintermediation occurring before our very eyes. Let’s take a quick look at those world-renowned department stores which are subconsciously synonymous with ‘quality’. Selfridges, John Lewis, Harrods, Macys and Le Bon Marche are all businesses which essentially aggregate products, making selections which they believe will appeal to their customers; they are all intermediaries.
So, why do we continue to use them and how do they maintain their role in a world where we can find a product cheaper directly? The answer is service.
Face-to-face customer service and all the connotations associated with it have ensured disintermediation has not caused the marketplace to collapse. I believe the middle man/woman will always have relevance and value. However, I do believe that they need to be much more vocal and persuasive in communicating their value to all parties involved in the transaction.
From a personal perspective, I’ve seen disintermediation influence the speaking industry. There’s no doubt the internet and social media have made it incredibly easy to engage directly with individuals (especially high-profile ones). If we historically perceived our value as simply providing access to people, then essentially our job is of little worth in the current marketplace and our approach is terribly dated. We are challenged to communicate succinctly and passionately with our clients, breaking down the traditional perception of transactional intermediaries. We need to be regarded as consultants, not a mere catalogue of names and biographies.
One wonders why disintermediation has become a byword for market transparency. I’m afraid the buck stops with us, the intermediaries, many of whom arrogantly thought we could control consumer behaviour by ring-fencing the marketplace. This strategy worked for a long time, and then the internet happened. Combine that with the advent of services such as online payment and more robust distribution networks and you had a recipe for disaster. Effectively it hinted at redundancy for the intermediary model.
Of course, this implies that disintermediation is the best option available to the consumer. We need to recapture the discussion and redefine market conditions to ensure this perception does not consume us. To survive we need to truly understand what we bring to the party, this is not secured by ring-fencing (another topic for discussion altogether), but by adding value to the basic buyer journey.
The main reason for the longevity of the department stores is that they provide everything under one roof, making the shopping experience seamless. For the customer, it’s the unique service they are receiving and the knowledge that the luxury shopping experience will outweigh the savings of going direct. For the supplier, it’s the assurance that their product is being sold with care and attention.
Ultimately, I feel the view that disintermediation is a force overturning the marketplace is a superficial one. By re-focusing, and understanding service we (the intermediaries) are delivering, we are re-asserting our relevance to the consumer. This, in turn, proves we can deliver bespoke and informed experiences where customer value is the number one priority.