Is 2013 the Year to Add a Direct Consumer Sales Channel?
For some companies, there comes a time when sales strategies require some tweaking. While that might entail minor changes, there are also instances when organizations need to make more monumental alterations such as expanding opportunities and adding a new sales channel. To meet their 2013 goals, some businesses that have focused on business-to-business (B-to-B) markets since their inception are looking to move into the business-to-consumer (B-to-C) arena as a matter of both opportunity and necessity.
This strategy shift isn't new. Sporting goods companies that once generated all of their sales by selling their products wholesale to specialty stores and big-box retailers now have their own e-commerce sites in response to consumer demand. Take Nike, Under Armour or any of the top name brands as examples. This trend is no longer limited to the big brands; other companies are considering expanding their channels as turnkey direct sales platforms have significantly lowered the barriers of entry for them.
If your business is starting to receive consistent feedback from consumers requesting items directly, it might be time to consider implementing a direct sales channel. Before doing so, here are five things to consider:
1. Modifying the risk management plan. It's important to have a plan in place to foresee risks, estimate impacts and have responses to issues that may arise. With B-to-B, there are fewer end users of a product or service who are more homogeneous, with the average user being fairly knowledgeable. With B-to-C, many end users of an organization's product are heterogeneous, and the average user is less knowledgeable than their B-to-B counterpart, but the distribution is more extreme.
This represents a shift from "buyer beware" to "seller beware." When a product is sold B-to-B, the responsibility for its performance is in the hands of whoever has possession of it. When a product is transferred to the end consumer, the responsibility usually stays with the seller.
Adding a B-to-C sales channel will require a big change in focus and scale. For example, a B-to-B customer service department is going to have to starting answering a wider range of questions. In addition, legal and regulatory infrastructure and costs will increase. A PR department will receive more work because communication is going to move more in the public eye than it was in the B-to-B space.
2. Increasing business development. In terms of growth, B-to-B companies work directly with purchasing managers who are responsible for buying a narrow range of products and services. On the other hand, B-to-C companies work with consumers directly who buy a wide range of products and services. It's important that organizations looking to make this move have the bodies on board to develop and maintain strong relationships with retail buyers and consumers.
3. Establishing well-timed campaigns. While every campaign requires planning, B-to-B campaigns can essentially be launched over the phone or via email to known buyers. It's as simple as that. On the other hand, B-to-C campaigns take a tremendous amount of planning, precision channel management, public relations and a host of other marketing efforts in order to reach the intended audience. Clearly, there's a lot more work and specific targeting required in the latter model. Moving to a B-to-C model might call for additional marketing staff or the need to create new positions such as a mobile marketing or social media strategist.
4. Increasing internal bandwidth. When it comes to adding a consumer channel, there are some very important questions that a company must be able to answer. First, do you have the capacity to handle production? Do you have the ability to interface? These are crucial questions that you need to be able to answer "yes" to before moving forward. With B-to-B, purchasing managers provide a forecast of what product is needed and when. The business can push back if delivery dates are unrealistic. Only high-end customer service is required, as the end user should be familiar with product capabilities.
B-to-C retailers might provide a forecast, current consumption rates and inventory level, but the consumer will provide none of these things. Therefore, a big data solution is one of the few ways to stay ahead of the curve by simulating these metrics. There's also an increased need for capacity in customer service in all areas to provide the aftercare that will cover a broad spectrum of issues.
5. Develop a comprehensive messaging platform. In terms of messaging, it's fairly easy to target and provide a customized experience for B-to-B customers. However, B-to-C targeting is possible when dealing directly with retailers on a micro scale. A macro scale requires the dedication and expertise of marketing agencies, public relations firms and other marketing-related service companies in order to obtain more information and ensure the messaging is consistent for certain audiences.
Undeniably, adding a consumer channel can be a smart move for B-to-B retailers. The benefit is enhanced loyalty to the brand and an ability to deliver a unique product directly to consumers that would have been cost prohibitive if it went the way of B-to-B. The payoff can be big, but it's important to go about it the right way.